It is not often that I find myself on the side of the majority (as a card-carrying contrarian), but in this case I feel kinship to the 67% of my fellow Canadians who, according to the latest Angus Read Poll asking Canadians to rate the party’s fiscal promises (in the 2015 election), are opposed to a lowering of the annual TFSA contribution limit from the newly instituted $10,000 level, back to $5,500.
Again: 67% of Canadians oppose a change in the TFSA contribution maximum.
Hopefully Mr. Mulcair and Mr. Trudeau will take note.
It really is a fantastic saving’s vehicle, in many cases more useful to savers in the long-run than an RRSP.
An RRSP only “defers” taxes. You still have to pay tax (you will get a T4) when you take money from your RRSP or RRIF at your current income tax rate. It is helpful if you put the money in when you are in a higher tax bracket and have the ability to take it out in a year when you are in lower tax bracket (ie you are earning less income).
With a TFSA you will never pay any tax when you take money out.
When we do 30 and 40 year wealth forecast's, the biggest asset growth is in the TFSA, if you maximize your annual contribution limit.
If you have maxed it out from its inception in 2009, you should have $41,000 (plus growth) currently.
$41,000 now, earning an annual average 6% and maxing out a $10,000 contribution each year will give you almost $1,000,000 in 30 years.
If 67% of Canadians are aware of and care about the TFSA, then that is a huge step in the campaign for financial literacy.
It is a great step forward that Canadians understand the need for diversity.
On average, approximately 60% of Canadian household assets are tied up in real estate. If this asset class should suffer a set-back in value, the impact on the Canadian household balance sheet might be staggering.
Encouraging Canadians to continue to diversify their assets away from highly illiquid real estate assets should be a top priority in strengthening the Canadian household net worth.
The TFSA is a great vehicle with which to promote this.
The TFSA is good for Canada's future financial stability.
Take note Mr. Mulcair and Mr. Trudeau, this is not a small issue.
Scott Tomenson,CIM Managing Partner, Chief Investment Strategist