The TFSA will be an ideal vehicle for tax-sheltering the substantial gains that are bound to accompany the economic recovery.
The TFSA has a certain very powerful advantage in that returns on the investments held within the account are fully – and permanently – tax exempt. This speaks in favour of a tactical use of the TFSA, where you might decide to concentrate your investments with the highest potential returns.
Suppose, for example, that you put $5,000 in a FÉRIQUE equity fund and the value of your investment doubled in the space of a few years: you would be able to withdraw the full $10,000 without paying a cent of tax. Even better: the amount of your withdrawal would be added to your contribution room for the next year (which would thus total $15,000).
It goes without saying that this kind of decision must take your investor profile and investment horizon into consideration. An equity portfolio can generate negative returns in the short term and generally only reaches its full potential over a longer horizon. Keep in mind as well that amounts withdrawn from a TFSA cannot be put back until the next year, which places some limitations on the possibility of tactical transactions.
Nonetheless, with the financial crisis having pushed stock prices into the basement, this feature makes the TFSA particularly attractive.
For more information or to open your FÉRIQUE TFSA:
Use our toll-free line from wherever you are, with no waiting, 8:00 a.m. to 8:00 p.m., Monday to Friday.
1 800 291-0337
You can also reach us by e-mail at: service.ferique@bnc.ca
