Monday, January 17, 2011

Better off than 5 years ago: The TFSA

Micheal Ignatieff is asking Canadians "are you better off than you were 5 years ago?" 

Of course things are better for just about everybody.  Most people take a personal interest in their own well being.  Its only natural that in a society that still values personal responsibility things would get better for most of those people.

Canadians can take credit themselves for their hard work, luck and perseverance.  Individual success does not come because of government but the skillful stewardship of this country's economy in the last 5 years is a key factor in that success. 

One of the greatest tools for our success was given to us by Jim Flaherty and the Conservative Government is the Tax Free Savings Account (TFSA).  It allows a person to put away money after taxes that are never taxable again.  Any returns your money earns while inside the TFSA is yours too keep.  All of it.

Normally, any time you make any kind of income the tax man takes a cut.  The gains you make in a TFSA are not taxed.  Its yours and you can withdraw it any time.  You don't have to wait until you retire. 

The amount you can put in a TFSA is $5,000 a year.  The program was started in 2009 and that means we can each stuff $15,000 into a TFSA in total.  You can make any kind of account into a TFSA.  Turn it into an investment account and watch your profits compound monthly just like a credit card.  This time you are the visa and the tax man has to keep his pudgy fingers off your returns.

There's a discussion about which is better the RRSP or the TFSA.  This is a different question than asking which investment a person should make.  A person should make both, because they will need to save for retirement and save money for other large purchases too.    The advantage to the RRSP is that the money you put there is all before taxes.  Your RRSP is lent out into the economy and goes to work until its your turn to retire.  Its a very good thing, however you still have to pay taxes on it once you retire.  The idea being that retirees have a far lower tax bracket than a working person. 

The TFSA is superior because of the potential to make a lot more money.  It may use after tax money to do it, but once the money is in there its never taxed again no matter how much it grows.  You can pull it out any time to buy that car or house or vacation. 


The only criticism you can level at the TFSA is that people have been slow to get into it.  Its okay.  Its never too late, its just that people have missed out on all that growth.  Its a free country still and missing out is your right and responsibility.  Only a Liberal could complain that the government spent too much telling people about it and that not enough was spent.  Nope.  The right amount was spent irregardless of what any Liberal windbag thinks.  I watched some talking head on CBC give financial advice today and they didn't say a word about the TFSA.  They just kept pushing the RRSP.  Makes me wonder if Liberals would turf the TFSA all together. 

I'm not a financial guru so check it all out for yourself.  What I do know is that I'm making about 10% on the money I saved so far and its all mine.  Not only am I saving for some major purchase, I'm simultaneously putting money into the economy.  The only regret I have is that I couldn't save even more to have made even more.  If you haven't got a TFSA already, do yourself a favor and get one.  There is more growth to be had, a lot more.  Now is the time.

That is the kind of work a government should be doing, not thinking up stupid ways to blow the money they took from me. 

Yes, Mr. Opposition Leader, we are indeed better off than we were 5 years ago.  We are better off individually and collectively, and the TFSA is a perfect example of that.  Its absolutely certain that had we instead been under a Liberal regime we would have suffered under a Green Shift during the worst recession anyone could remember.  There would be no TFSA and the recession would have been so much deeper and the deficit so much larger.  This is to say nothing of the instability, insanity and political chaos a socialist/separatist coalition would have caused while somehow coherently steering us through this past recession.   Who even knows if Canada would have still existed if the Coalition seized power.  What a nightmare Mr. Harper has saved us from.

A reasonable person could only conclude that yes we are much much better off now than we have ever been.  Thank you honourable Jim Flaherty and the Conservative Party of Canada.


Roy Elsworth said...

i am doing it I have like 5000 dollars so far into it I love it I transfer over 500 dollars every 6 months. and it's doing well on the intrest to.

maryT said...

The only ones not better off are those liberals that thought MI would be their saviour. They expected to be back at the trough before we learned the truth about him.
My wish is he would be defeated so he would not get a pension for life.

Alex said...

@Roy: Nice job Roy. I don't even have that much but I started in Q2 and I'm being pretty aggressive. I should catch up to my limit in 2 years or so.

@ MaryT: I know, those penions are better than a full time job for most people. So good to know that I'm slaving away for that puffball's gravy train.

Anonymous said...

I had about $5000 this year to put away and was trying to figure out if a TFSA or RRSP was better for me. I found a calculator that helped out quite a bit at

Alex said...

Thats cool Anon. Did you build it yourself? I feel a bit weird about loading my finances into a random website. Perhaps you should make the income field a drop down range that puts you into different tax brackets. That's less personal.

I'm doing both regardless of which is better. I'm going to need both and the RRSP is more resistant to impulse spending while the TFSA will help me to avoid deficit financing everything. I believe everyone should think about doing both and make some goals and save accordingly.

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