savings

The Magic Wealth Ingredient

There is a legend about a successful financial advisor in Warren Buffett’s stomping grounds of Omaha, Nebraska. It is reported that this advisor has learned the art of communicating the basics of wealth building with the local farmers. The advisor, who we will call Fred Smith, greets clients in his office with a window behind his desk that overlooks fields of blowing wheat and corn.

How to Achieve Personal Financial Sanity

As the sovereign debt crisis makes its way around the world, creating havoc in its wake, we can be thankful that Canada has weathered the storm in fairly good shape. The media has given us a play-by-play on the action and many people are concerned with the outcome. While we can’t solve the sovereign debt crisis individually, we can focus on our own financial situation. Here are 5 keys for achieving sanity in your personal finances:

Tax Free Savings Account

The TFSA is a registered savings account that allows taxpayers to earn investment income tax-free inside the account. Contributions to the account are not deductible for tax purposes, and withdrawals of contributions and earnings from the account are not taxable.

Any individual (other than a trust) who is resident in Canada and 18 years of age or older is eligible to establish a TFSA.

Each year individuals can contribute an amount up to their contribution room for the year. Your contribution room would be made up of three amounts:

  • Each year you would be allocated and allowed to contribute up to the annual maximum ( $5,500 for 2013.)
  • Any withdrawals made in the previous year would be added to the contribution room for the year.
  • Any unused contribution room from the previous year would be added to the contribution room for the year.

A TFSA is permitted to hold the same investments as a registered retirement savings plan. This includes mutual funds, GICs, fixed income investments and certain shares of small business corporations.

The CRA will determine TFSA contribution room (based on information provided by issuers) for each eligible individual who files an annual T1 individual income tax return.

For more details about how you can benefit from the a Tax Free Savings Account please contact our office.

For answers to other Frequently Asked Questions visit the website link below:

Tax Free Savings Accounts


Copyright © 2010 AdvisorNet Communications Inc. All rights reserved. This article is provided for informational purposes only and is based on the perspectives and opinions of the owners and writers only. The information provided is not intended to provide specific financial advice. It is strongly recommended that the reader seek qualified professional advice before making any financial decisions based on anything discussed in this article. This article is not to be copied or republished in any format for any reason without the written permission of the AdvisorNet Communications. The publisher does not guarantee the accuracy of the information and is not liable in any way for any error or omission.

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