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The best TFSAs in Canada for 2023
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The best TFSAs in Canada for 2023
Here are the best accounts to hold your savings and investments.
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By Keph Senett and John Loeppky on September 12, 2023Estimated reading time: 16 minutes
Tax-free savings accounts (TFSAs) are more than a simple tax-sheltered savings account. TFSAs allow Canadians to hold cash, guaranteed investment certificates (GICs), stocks, bonds, exchange-traded funds (ETFs) or mutual funds within a structure backed by the government. Any interest made during your investment is yours to keep, tax-free.
There’s a lot that goes into choosing the best TFSA, like your use of other registered accounts such as registered retirement savings plans (RRSP), your life stage, your level of comfort with investing on your own, and your wealth-building strategy.
Keep scrolling for our list of the best TFSA rates and accounts and to learn everything you need to know about TFSAs in Canada…
Making a plan: How to withdraw money from a retirement account
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I have a $180,000 DC pension plan from my old employer, and I have to decide whether to transfer it to a LIRA within Manulife as a personal plan (where the group plan is right now), or to transfer to another LIRA (ETF direct investing with my bank).
I am 52 and am considering retiring at 55. I have about $120,000 in RRSP. I also have an LAPP of approximately $600 a month, if I start collecting it at age 65.
My husband is 53 and will be retiring in two years with an RRSP of about $37,000 and a DBPP of approximately $33,000 a year, if he retires at 65. It is between 0.3%-0.4% less if he retires at 55.
I can start collecting CPP at 60 ($600), 65 ($940), and 70 ($1,335); while my husband can start at 60 ($669), 65 ($1,045), and 70 ($1,484).
We currently have a mortgage of $280,000 and will have about $230,000 by the time he retires, approximately nine more years to pay or longer at higher interest rate. Our kids will be finished in university in two years…
What investments can I put in my TFSA?
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The less tax you pay, the more money you keep for yourself. How can you apply this to investing? By using registered investment accounts like the tax-free savings account (TFSA) and the registered retirement savings plan (RRSP). The TFSA is often the first investment account a new or young investor opens because, unlike the RRSP, your contribution room isn’t based on your income. So, you can invest in a TFSA even if you earned little or nothing in a particular year.
TFSAs can hold a wide range of investments—they aren’t just a place to park your cash (although you can do that, too). Before we get into eligible TFSA investments, let’s review what makes these accounts so useful.
The TFSA’s superpower: tax-free investment growth
Why open a TFSA? Any money contributed to a TFSA and any income earned in a TFSA—including interest, dividends and capital gains—are tax-free forever! Here’s an example: If you invest $10,000 in an exchange-traded fund (ETF) held within your TFSA and the value of your investment grows to $22,000 over the next 10 years (assuming an annual growth rate of about 8%), the $12,000 gain is tax-free…
