TORONTO, ONTARIO--(Marketwire - Feb. 1, 2012) - As part of BMO Financial Group's ongoing commitment to financial literacy and 'Making Money Make Sense' for Canadians, BMO is releasing a financial tip every week in 2012. In addition, BMO will be providing daily retirement tips during the month of February.
BMO's Financial Tip of the Week:
Investing in a Tax Free Savings Account (TFSA) can save thousands of dollars in taxes over the long term.
A TFSA brings you one step closer to your next vacation, home renovation or even retirement, while offering the flexibility of tax-free withdrawals and no restrictions on how the funds are used.
Here is an example of the benefits of tax-free growth in a TFSA:
|
Invested
in a TFSA |
|
Invested
outside a TFSA
(Taxable account) |
|
Maximum Annual Contribution |
$ |
5,000 |
|
$ |
5,000 |
|
Rate of Return |
|
5 |
% |
|
5 |
% |
Term of Investment |
|
20 years |
|
|
20 years |
|
Total Investment |
$ |
173,596 |
|
$ |
143,903 |
|
Total Tax Savings |
$ |
29,693 |
|
$ |
0 |
|
*5% rate of return for illustrative purposes only |
"When saving for the short or long term, it's important that Canadians take advantage of tax-friendly options wherever possible," said Tina Di Vito, Head, BMO Retirement Institute and author of 52 Ways to Wreck Your Retirement…and How to Rescue It. "TFSAs are powerful investment tools that allow Canadians to enjoy the benefit of tax-free growth, which can help them reach their investment goals faster."
Try the BMO TFSA Calculator to learn how TFSAs can help grow your savings faster. For more information visit: www.bmo.com/tfsa and/or www.bmo.com/smartinvesting.
BMO's Financial Tips of the Week:
Week of January 1st: Consider investing in a Registered Retirement Savings Plan (RRSP) and take advantage of tax incentives when saving for retirement.
Week of January 8th: Secure your retirement by opening a Registered Retirement Savings Plan (RRSP) as early as possible and contribute to it on a regular basis (regardless of the amount).
Week of January 15th: On a $400,000 Mortgage, Have a Mortgage Burning Party 5 Years Earlier and Save $70,000 by Choosing a 25 Year Amortization
Week of January 23rd: Once you retire, consider converting your Registered Retirement Savings Plan (RRSP) into a Registered Retirement Income Fund (RRIF) to manage your retirement income effectively.