How does a TFSA work? + MORE Dec 3rd

If you’re starting to save the money you’ve received from birthdays, holidays and part-time jobs, you may be wondering how you can invest your savings. An important life lesson for any young person is the habit of saving—so, investing those savings for some teenagers can be the next step. 

In Canada, many provinces have upped their personal finance curriculum content for elementary and high school since I was a kid. Social media also has a lot more information about money and investing, as well as trending content about spending money as well. One word of caution: There may be good non-professional advice out there on social media, but some of it is downright bad. Get qualified advice before making any decisions, and you could even take a free investing or personal finance course.

How to start saving as a teen (or younger, or older for that matter)

A minor —under the age of 18 or 19, depending on the province or territory—will generally need a parent or guardian to be listed on an account as well…

For Canadian investors and savers, it’s always some of the best news to come each year: new TFSA room that becomes available each January 1. For 2025, the TFSA contribution limit is $7,000 (the same amount in 2024).

The actual TFSA yearly limit was set at $5,000 back in 2009 when the investment account was first created, but it’s indexed to inflation each year and rounded to the nearest $500 to simplify things for investors. The exception was 2015, when the TFSA limit was hiked up to $10,000 for a single year before being decreased to $5,500.

Someone who has never contributed to a TFSA and was born in 1991 or earlier could have cumulative contribution room of $102,000 as of Jan. 1, 2025.

TFSA contribution limit—2009 to 2025

Year
TFSA Annual Limit
TFSA Cumulative Limit

2009
$5,000
$5,000

2010
$5,000
$10,000

2011
$5,000
$15,000

2012
$5,000
$20,000

2013
$5,500
$25,500

2014
$5,500
$31,000

2015
$10,000
$41,000

2016
$5,500
$46,500

2017
$5,500
$52,000

2018
$5,500
$57,500

2019
$6,000
$63,500

2020
$6,000
$69,500

2021
$6,000
$75,500

2022
$6,000
$81,500

2023
$6,500
$88,000

2024
$7,000
$95,000

2025
$7,000
$102,000

Investing ideas for your TFSA

TFSAs are not just for savings…

One of the side-effects of working for a personal finance magazine is that I’m always asked for advice. I always oblige, albeit sheepishly, without letting on that I’m still learning, too (which I freely admit here). For instance, the other day I was having lunch with some friends when we started talking about money. The exchange went something like this:

Friend: Ugh, I’m so lost when it comes to money. What should I do?

One of the greatest mistakes young people can make right now is not realize that their money can do more than just sit there.

Me: Well, do you have a TFSA?

Friend: Yes (in a proud voice).

Me: That’s great, you’re ahead of the game. What are you investing in?

Friend: W-w-what?

I then went on to explain what a TFSA really is. The tax-free savings account is not, I repeat, not just a savings account.

sponsoredMCAN Wealth 1-year non-registered GICgo to site

Interest rate: 4.05%

Minimum amount: $1,000

Eligible for CDIC coverage: Yes

go to site

What is a TFSA?

A tax-free savings account (TFSA) should really be called a tax-free investment account…

Savings comparison tool

Find the best and most up-to-date savings rates in Canada using the comparison tool below. Plus, use the filters to assess your estimated return based on the size of your balance.

Why trust us

MoneySense is an award-winning magazine, helping Canadians navigate money matters since 1999. Our editorial team of trained journalists works closely with leading personal finance experts in Canada. To help you find the best financial products, we compare the offerings from over 12 major institutions, including banks, credit unions and card issuers. Learn more about our advertising and trusted partners.

Advertisement

Best high-interest savings account rates in Canada

Generally, savings accounts offer very low interest rates. So, if you want to earn on your deposits (rather than simply using your account as a temporary “holding tank” or directing to longer-term saving and investing vehicles), a savings account with a high interest rate is a no-brainer…

Featured TFSA Accounts

sponsored

TFSA savings account

Earn 2.50% interest tax fee tax-free interest with flexible withdrawals and zero fees.

go to site

featured

TFSA GIC rate (1 year)

Earn a guaranteed 4.05% in your TFSA when you lock in for 1 year.

go to site

Best online brokers

Open your TFSA with one of the best online brokers in Canada. See our ranking.

Read now

Why trust us
MoneySense is an award-winning magazine, helping Canadians navigate money matters since 1999. Our editorial team of trained journalists works closely with leading personal finance experts in Canada. To help you find the best financial products, we compare the offerings from over 12 major institutions, including banks, credit unions and card issuers…