What To Do With Your Tax Refund (2 of 2)
Have you filed your taxes yet? Are you getting a refund? Don’t forget, the deadline to file is April 30th. In case you missed last week’s primer on Tax-Free Savings Accounts (TFSAs), read it here. (What To Do With Your Tax Refund (1 of 2)
Remember, I’m not a financial advisor – the following are some strategies that have worked well for me. Your mileage may vary.
Part Two: What are some effective uses of TFSAs?
There are various types of permitted investments:
· cash (a savings account)
· mutual funds
· securities listed on a designated stock exchange
· guaranteed investment certificates
· certain shares of small business corporations
You can set up more than one type of account. One of my favourite ways to save is by putting money into a TFSA savings account for long-term, big-ticket items, like renovations, or a really great vacation. Look around for an account with a good interest rate, and set up an amount to automatically move to that account every month. You get to watch your savings grow, and use them when you need them, tax-free! This type of account also makes a great emergency fund.
Having something that will grow a little faster, like a mutual fund account, that you contribute to regularly as well is a great way to sock away some extra retirement cash. Remember, unlike RRSPs, you won’t be paying taxes on your withdrawals! Just make sure you keep an eye on your annual contribution limit, and don’t exceed it, as you will pay on over-contributions.We hope this helps demystify TFSAs for you – share your tax tips in the comments! Take a look at the Government of Canada site for comprehensive information on TFSAs: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account.html