The numerous advantages of a tax-free savings account
The tax savings over the course of your working life work out to a 35% to 40% benefit toyour investment portfolio
A tax-free savings account (TFSA) is a great long-term investment opportunity for anyone looking to build wealth andsave for retirement. At first glance there are some obvious benefits. Because you pay no tax on interest, dividends or capitalgains tax, the savings compounded over time can substantially enhance your returns over the life of your investment. If you compare that to putting your money into a traditional savings account, though this approach may offer less risk, it will never give you the kind of returns you would see investing in exchange-traded funds (ETFs) and managed portfolios. Thismakes a big difference when you consider a long investment timeline.For people under 35, opening a TFSA is an absolute no-brainer. Investing in a TFSA happens after you’ve been taxed on your salary. As a young earner you have two things working in your favour: a lower tax rate due to a lower income bracket and lots of time.