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Take full advantage of the TFSA

With the contribution limit raised to $10,000 in 2015, the TFSA is more attractive than ever as an investment tool for sheltering savings from taxes. Attractive, yes... but putting money aside in a TFSA is easier said than done. Especially when we are already saving for retirement or for our children’s education.

A TFSA allows you to realize your plans more easily, since you can finance them without having to pay tax on your investment income. You can generally withdraw as much or as little as you want, whenever you want. No matter what your plan – major purchase, down payment on a new home, travel, starting a business, retirement –, you don’t pay any tax on your investment income or on your TFSA withdrawals.

Less effort, better results

Unfortunately, the annual amount that we hope to save is often eaten up by unforeseen expenses during the year. Even with the best intentions, many of us end up investing little or nothing in a TFSA.
Instead of giving up or resigning yourself to making sacrifices, you can take advantage of a TFSA with deposits that are smaller, but more frequent. Obviously, it’s easier to invest small amounts on a regular basis... and then watch them grow within your account.
You can invest in a TFSA for as little as $50 per month per fund with the help of a FÉRIQUE Fund pre-authorized contribution (PAC) plan. You choose the contribution amount and frequency, and the withdrawals are made automatically from your bank account.
It works best if you synchronize these withdrawals with your payday. In this way, saving becomes a habit and fits easily into your budget. In other words, think about paying yourself first! This will also help you provide for major expenses. Instead of buying on credit and paying interest, you can gradually save up the money you need.

Attractive benefits for investors 

Investing in mutual funds for your TFSA means that you have access to your money at any time while benefitting from attractive growth potential. By using a PAC plan to do this, you increase the benefits even more.

Eliminating emotion

The stock markets go through periods of strong growth and declines that can be steep. Some investors get caught up emotionally and are tempted to buy when the markets are at a peak or sell their holdings when the markets are bottoming out. This amounts to buying high and selling low, or even at a loss, which goes against investment logic. A PAC plan takes emotion out of the equation: no matter what’s going on in the stock market, you invest the same amount and stay in the game. You no longer have to ask yourself if it’s “the right time” to invest, which is impossible to predict anyway.

Counteracting volatility

In a highly volatile, even bearish, market, a PAC plan can help minimize your portfolio’s exposure to market fluctuations. This is because, with a PAC plan, you buy more units when the stock markets are down, since the price per unit is lower. On the other hand, when the markets rise, you continue to invest, but purchase fewer units each time. So as the markets recover, you benefit from gains on a larger number of units and you reduce your average cost.
The TFSA is undoubtedly an interesting option, and it becomes even more accessible with a PAC plan! Try it with a small amount first, and increase it as you are able. Over time, you will see your plans take shape.

For more information about PAC plans and TFSAs, follow these links:
Making sense of periodic investing

To set up a PAC plan with Services d’investissement FÉRIQUE, contact our Advisory Services:
514-788-6485 | 1-800-291-0337

You can also send an email to [email protected] for an answer within 24 to 48 hours.

For more information, please contact the Services d’investissement FÉRIQUE Advisory Services team.

Note: Some conditions apply. Investors must comply with TFSA rules.