As the Tax-Free Savings Account (TFSA) hits its 10th anniversary in Canada, it鈥檚 a great opportunity to investigate how it can work to diversify and strengthen your short- and long-term financial plan.

, a consultant with IG Wealth Management in Courtenay, appreciates how this simple, yet powerful savings vehicle can fit in with a person鈥檚 financial planning.

鈥淚 think it鈥檚 one of the best tools the federal government has given Canadians over the years. To be a good tool, however, it needs to be used correctly for each individual 鈥� that means it isn鈥檛 used in the same way for everyone,鈥� he says. 鈥淥verall, this account can significantly increase your cash flow later in life and save you a lot in taxes. Make sure it鈥檚 incorporated into your plan in the best way for you.鈥�

Stu offers you food for thought about TFSAs:

How much can you invest? 鈥� The annual contribution limit for TFSAs has grown since their inception and now stands at $6,000 if you鈥檝e contributed every year. If you鈥檝e never invested in a TFSA, were 18 or older in 2009 and are a Canadian resident, your current total contribution room is $63,500. That鈥檚 a lot of room to work with.

Usage has changed through the years 鈥� Viewed initially as a place to put extra cash, people now understand that virtually anything that can be held in an RRSP can be held in a TFSA 鈥� stocks, bonds, mutual funds, longer-term investments. You can put long-term retirement assets into it.

You鈥檝e got more flexibility 鈥� When the annual contribution limit was $5,000, putting your money into a TFSA didn鈥檛 save you a lot in tax. But with $63,000 of room having accumulated since they began being offered, the tax savings on investment earnings starts to make a difference. And as a viable option for mutual funds and long-term investing, you can make it a larger part of your retirement plan. Plus, the $6,000 annual limit is expected to creep up over the next few years, making it even more relevant to your retirement.

What happens at retirement? 鈥� TFSAs are great for people who max out their RRSPs and need another place to grow their money tax-free. When you pull it out in retirement, you won鈥檛 pay tax on withdrawals, so it can supplement other sources of retirement income.

To arrange a chat with Stu Tunheim to talk about how TFSAs can work for you, contact him at 250-338-7811 or via email at stu.tunheim@ig.ca. You鈥檒l find other investment tips on his or on IG Wealth Management鈥檚 .

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^{Trademarks, including IG Wealth Management, are owned by IGM Financial Inc. and licensed to its subsidiary corporations. This is a general source of information only. It is not intended to provide personalized tax, legal or investment advice, and is not intended as a solicitation to purchase securities. Stu Tunheim is solely responsible for its content. For more information on this topic or any other financial matter, please contact an IG Wealth Management Consultant.}