Understanding TFSAs in Canada: A Beginner's Guide

The Tax-Free Savings Account (TFSA) is a powerful tool for Canadian investors. Unlike its name suggests, it's not just a savings account. You can hold a variety of investments like stocks, bonds, and GICs within a TFSA, and all the growth and withdrawals are completely tax-free. ### Contribution Room Every year, the Canadian government sets a new TFSA contribution limit. This room accumulates over time if you don't use it. It's crucial to track your contribution room to avoid over-contribution penalties. You can find your available room on your CRA My Account. ### Investment Options - **GICs**: Safe, fixed-return investments. - **Bonds**: Loans to governments or corporations with fixed interest payments. - **Stocks**: Ownership in a company, offering potential for high growth. - **ETFs & Mutual Funds**: Diversified portfolios of stocks and bonds. Choosing the right investments depends on your risk tolerance and financial goals. For beginners, a diversified ETF is often a great starting point.