Despite its name, the Tax-Free Savings Account (TFSA) is much more than a savings account—it's an incredibly versatile investment vehicle.
How the TFSA Works
Contributions are made with after-tax dollars, but the magic happens inside the account. Any capital gains, dividends, or interest earned within the TFSA are completely tax-free. Furthermore, withdrawals are also tax-free and do not affect income-tested benefits like Old Age Security (OAS).
Investment Options
You can hold stocks, bonds, mutual funds, and ETFs within a TFSA. By maximizing your contribution room and investing rather than just saving in cash, you harness the power of tax-free compound growth.