Get the most out of your Savings!

We all save money for rainy days because we understand how it feels to have a bad day with unexpected costs like:

  • Car repairs
  • Pet eating the wrong stuff (Vet bills can mount up hundreds)
  • Injuries and Accidents i.e. Broken Leg
  • Natural Disasters hits i.e. Flood, Severe snow storms, black-outs
  • Losing your job

but we also save for the good days like:

  • Unplanned trips, vacations or day at the spa
  • Special family events
  • New gadgets (laptop or game console) and personal items like Michael Kors bag 
  • Weddings (Yes, the invites keeps coming)

Where can I put this money? Should I invest it? If so, how aggressive? Do I pay taxes?

Everyone has different goals in mind but let's assume that you are saving up as an emergency fund for the listed events because we all know how it feels to be stuck with debt if we didn't save. 

I am recommending individuals who plan to use their TFSA not to invest aggressively due to the short-term nature of the account. You can invest it in Guaranteed Income investments like GICs, Bonds and etc to ensure little risk to your principal of your account.

Life will be hard if you don't plan for these unexpected events. By saving, it helps eliminate unnecessary stress and you will feel confident to take on future problems.

Tax-free Savings Account (TFSA) is very ideal for current emergency funds. 


  • As of January 1, 2013, Canadian residents, age 18 and older, can contribute up to $5,500 annually to a TFSA. This is an increase from the annual contribution limit of $5,000 for 2009 through 2012 and reflects indexation to inflation. (Therefore, you may be eligible up to $31,000 limit for TFSA)
  • Investment income earned in a TFSA is tax-free.
  • Withdrawals from a TFSA are tax-free.
  • Unused TFSA contribution room is carried forward and accumulates in future years.
  • Full amount of withdrawals can be put back into the TFSA in future years. Re-contributing in the same year may result in an over-contribution amount which would be subject to a penalty tax.
  • Choose from a wide range of investment options such as mutual funds, Guaranteed Investment Certificates (GICs) and bonds.
  • Contributions are not tax-deductible.
  • Neither income earned within a TFSA nor withdrawals from it affect eligibility for federal income-tested benefits and credits, such as Old Age Security, the Guaranteed Income Supplement, and the Canada Child Tax Benefit.
  • Funds can be given to a spouse or common-law partner for them to invest in their TFSA.
  • TFSA assets can generally be transferred to a spouse or common-law partner upon death.

For more information on TFSA, feel free to contact Katherine Le.

To look into TFSA details, visit CRA Website.