BMO Annual TFSA Study: Usage and Contributions Climb, However Knowledge of Contribution Limits and Tax Penalties Remains Low Among Canadian Investors
BMO Annual TFSA Study: Usage and Contributions Climb, However Knowledge of Contribution Limits and Tax Penalties Remains Low Among Canadian Investors |
[18-December-2018] |
TORONTO, Dec. 18, 2018 /CNW/ - According to the BMO Annual TFSA Study, while Canadians are increasingly turning to Tax Free Savings Accounts (TFSA) for their savings and investments needs, knowledge of key rules that govern usage of the savings vehicle remains low. The report was released ahead of the annual contribution limit going up to $6,000 next year. The annual report, conducted by Pollara, pulls back the curtain on TFSA investment habits, knowledge, and contributions of Canadians. It revealed:
"Canadians are continuing to hold more year over year in their TFSAs, and it's an encouraging trend – there is an emphasis on savings," said Mathieu Lepine, Head, Term Investments, BMO Bank of Montreal. "Whether they're starting out or looking towards retirement, Canadians are flocking towards TFSAs as the account of choice. There is an opportunity for Canadians to leverage more than cash in their accounts like GICs and Mutual Funds to help the money that is being contributed work harder for them and grow." Gaps in TFSA Knowledge Widening However, with general knowledge of TFSAs, gaps are carrying over from 2017 and widening in some cases. The report revealed:
"Each year, we're seeing Canadians get increasingly comfortable with the TFSA," added Mr. Lepine. "But there are a few things that Canadians need to watch out for. As Canadians of all age groups continue to look to these accounts, it's important that they track how much is being contributed. The TFSA gives Canadians the ability to grow their savings and investments tax free and carry over unused contribution room each year, but those benefits can be negated if tax penalties are being incurred due to over-contribution." The report also pointed to how Canadians are using their TFSAs and why they aren't maximizing the contribution limit:
Mr. Lepine added that the TFSA can be a great savings option to help with retirement but Canadians should seek out advice to help them understand the advantages of contributing to a TFSA over an RRSP. The regional findings suggest that financial headwinds and economic conditions in the Western provinces are making it harder for Canadians to put money aside to save. But there is still the opportunity to look to solutions like Continuous Savings Plans to help make automatic contributions to a TFSA. It is a frictionless way to save, without having to think about it. For more information on BMO tax-free savings accounts, opening an account, or looking for help, please visit www.bmo.com/tfsa. The BMO TFSA Survey was conducted by Pollara Strategic Insights via an online survey between November 30 and December 5, 2018, with an online sample of 1,518 adult Canadians. Data has been weighted using the latest census information to be representative in terms of age, gender and region. The margin of error for a probability sample size of 1,518 is ± 2.5% 19 times out of 20. About BMO Financial Group SOURCE BMO Financial Group | ||
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