Feb. 7, 2018
TFSA snobbery is a thing. It thrives on mockery of people for using tax-free savings accounts for – gasp – savings. The snobs argue that the best use of a TFSA is aiming for much bigger tax-free returns by investing in stocks.
In a certain wealth bracket, it would certainly make sense to keep your emergency savings in a non-registered high-interest account and use your TFSA for long-term wealth building with stocks. But if you only have modest amounts to contribute to a TFSA and don't have a sufficient emergency fund, then using a TFSA for savings is sensible.
In fact, TFSAs can be used for a wide range of purposes. This point is captured nicely in a blog post by blogger Mark Seed of My Own Advisor. Mr. Seed lays out his favourite ways to use a TFSA, and they're basically all savings-focused. Examples: save for retirement, save for a rainy day, save for your children's post-secondary education if you're already maxed out on registered education savings plans. One point I'd add to the list: save for a house down payment.
Some people have had monumental investing-success using TFSAs for aggressive speculating on stocks – kudos to them. But let's not let the snobs make people feel bad for using TFSAs as a plain old parking spot for savings. The beauty of TFSAs is their versatility. Something for everyone.
Curious about how much your TFSA could be worth? Check out this Globe TFSA calculator I built with my colleague Michael Pereira.