A Little More on TFSA's

A Tax Free Savings Account is a great way to not only save, but watch your money grow.  As the name indicates, it is tax free, which means you do not pay any tax on money you make in interest accumulated within the account.  When you first open an account you are permitted a maximum $5000 limit by the Government of Canada for investment into a TFSA.  Every year after, you gain an additional $5000 in which you can invest, tax free.  So, for example:

YEAR	LIMIT PERMITTED	LIMIT USED	LIMIT LEFT OVER
Year 1	$5,000	$3,000	$2,000
Year 2	$10,000	$2,000	$5,000
Year 3	$15,000	$4,000	$6,000

From the example, you can see that by Year 3, you are permitted to invest up to $15,000 tax free, and with investing $9,000, you still have $6,000 left to invest tax free.  If you are not able to invest the full limit allotted each year, it simply carries over.  Additionally, if you withdraw money from your permitted amount, you don't lose the ability to re-invest that amount.  For instance, if you withdraw $1,000, you will gain the ability to re-invest that $1,000 beginning the next year.  So in our example, your $15,000 limit is not reduced to $14,000.

ING Direct Canada currently offers 2% interest on the Tax Free Investment Savings Account, which is higher than the 1.5% offered at BMO, the 1.4% on TD Bank's so called High Interest TFSA Savings Account, 1.4% at RBC and 1.25% at CIBC.  Better yet, with ING Direct, there are no service charges to eat away at your interest.

Just remember, open your TFSA with a minimum $100 deposit and use Orange Key 35638912S1 to get an additional $25!!

For more info:
http://www.ingdirect.ca/en/save-invest/taxfreesavingsaccounts/index.html