One of the best ways to build long-term wealth is by saving and investing as much as possible. For those that are looking to save the most amount of money possible, utilizing the benefits of tax-advantaged accounts would be a great option. One great tool to use is a TFSA, which allows your assets and investments to grow tax free. There are several ways that you can use a TFSA as an investment to reach your financial goals.
Minimize Long-Term Tax Liability
When you have money in a TFSA account, you will be able to benefit greatly from the long-term tax benefits. All of the money that you put into a TFSA will be made on a post-tax basis. However, all of the money that you earn over time in one of these accounts will grow without any additional tax liability. This will allow your assets to grow while also minimizing your tax bill, which will leave you more money in your portfolio.
One of the main advantages of using a TFSA as an investment is that you are able to diversify your investments. There are many different investments that you can choose from through a TFSA. This includes investing in stocks, GICs, bonds, mutual funds, and other investment options. With such a large selection to choose from, your investments can match your desired investment strategy that is based on your long-term goals and risk tolerance.
Money In and Out
Compared to other long-term investment options, a TFSA is a good option as it will allow you to take money out of the account whenever you want. While a TFSA is used by many people as a retirement vehicle, it does not need to be. You can use the money in the account to buy a home or car, pay off other debt, or even to take a vacation. Best of all, you will have the flexibility to put the money back into the account as long as it meets certain criteria down the road.
If you are looking to use a TFSA as an investment and want to make it as successful as possible, you should maximize your investments each year. In 2019, you will be able to invest up to $6,000 per year into your account. Further, this maximum investment amount will increase over time with inflation. If you have not yet invested in a TFSA account in your name, you can also take advantage of a catch-up provision that will allow you to put up to $63,000 this year into your TFSA as an initial contribution.
Ultimately, a TFSA is a great investment tool that allows you to see your investments grow tax-free while also giving you plenty of choices to pick from. Because of this, a TFSA can help anyone to reach their financial goals. By following these tips, you can learn how to use a TFSA account as an investment in order to build a nest egg.