Financial Literacy Month-BMO's Tip of the Day: Open a TFSA Account to Maximize Your Savings
TORONTO, ONTARIO--(Marketwire - Nov. 4, 2011) - To mark Financial Literacy Month, which was launched by Finance Minister Jim Flaherty, BMO Bank of Montreal is releasing a series of financial tips throughout November. As part of Making Money Make Sense and BMO SmartSteps, the tips are designed to help individuals and families save and manage their day to day finances more effectively.
BMO's Tip of the Day: Invest in a Tax-Free Savings Account (TFSA) to grow your savings faster by reducing the taxes you pay.
For example, based on the BMO TFSA Calculator, if you contributed the yearly maximum of $5000 over a period of 30 years to your TFSA (with an average rate of return of 5 per cent), you would earn approximately $348,800 on a total investment of $150,000 – which is $88,500 more than earnings achieved from a taxable account.
"Investing in a TFSA doesn't have to be a huge financial commitment – even a small amount will provide Canadians with the benefits of tax-sheltered savings and tax-free compounding," said David Heatherly, Vice President Payment Products, Bank of Montreal. "However, we encourage Canadians who are in a position to do so to try to contribute the maximum amount per year. This will allow for even greater tax savings while building up their investment portfolios," said Mr. Heatherly.
BMO Financial Literacy Month Tips
November 1: Pay more than the minimum payment on a credit card balance.
November 2: Choose a shorter amortization for your mortgage.
November 3: Contribute to a child's Registered Education Savings Plan (RESP) as early as possible.
For more on financial literacy, BMO encourages Canadians to visit http://www.financialliteracymonth.ca/ and http://www.bmo.com/home/about/banking/corporate-responsibility/customers/financial-literacy.
Matthew Duffin, Toronto
Sarah Bensadoun, Montreal
Laurie Grant, Vancouver