Tax- Free Savings Account
The Canadian government has a scheme called a Tax-Free Savings Account that lets you invest your money with no taxes on capital gains or profits.
With a tax-free savings account, you can invest your money, earn dividends or capital gains, and avoid paying taxes on the growth of your investments. All you have to do is open a TFSA with any financial institution, contribute, and work with Vertex Insurance and Investments advisors to choose your investments.
The ability to take money out whenever you want is a crucial feature. Because withdrawals from the TFSA are tax-free, it is the ideal vehicle. One advantage of a tax-free savings account is this.
Your money can grow in a Tax-Free Savings Account (TFSA) through several investment options that are sheltered from taxes. Here's how it works:
Compound Growth – Tax-Free
Any income earned in a TFSA — whether from interest, dividends, or capital gains — is not taxed, even when withdrawn. This lets your money compound more efficiently over time compared to a taxable account.
Types of Investments in a TFSA
You can hold various investments in a TFSA, including:
- High-interest savings accounts (low risk, low return)
- GICs (Guaranteed Investment Certificates) (safe, fixed return)
- Bonds and bond funds
- Stocks and ETFs (potentially higher return, more risk)
- Mutual funds
Contribution Room
Your growth potential depends on how much you contribute. As of 2025, the total lifetime TFSA contribution room (for someone eligible since 2009) is $95,000, assuming you’ve never contributed before.
Reinvesting Returns
All returns (like interest or dividends) can be reinvested and continue to grow, tax-free. Since withdrawals don’t reduce your lifetime gains, you can reinvest without worrying about tax implications.
