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The Tax-Free Savings Account (TFSA) has to be the most important tool in a Canadian investor’s arsenal. The TFSA allows investors to put aside cash each and every year and take in returns and dividends tax free. As long as you follow the straightforward rules, you really can’t go wrong.
Since 2009, the Canada Revenue Agency (CRA) has added more and more contribution room to the TFSA. Recently the CRA announced it would add a further $6,000 to the TFSA. That will bring the 2021 total to $75,500! In a volatile market, if you’re able to max-out on your TFSA, you absolutely should. All that cash can be invested and kept safe until after the market rebounds.