What is a TFSA?

What is a TFSA?

March 28, 2022

I also cover this in a YouTube video. Click here to watch!


What is a Tax-Free Savings Account (TFSA) and why should every Canadian citizen have one?

In this blog, I will give you all the necessary facts you need to consider so that you can make an informed decision about a TFSA for you and your adult family members.

Let me start out by saying – in my opinion – I think the government named the account incorrectly. It should have been called a Tax-Free Investment Account or TFIA because most Canadians are under the false impression that they can only have a TFSA at one of the major banks, all because of the word “Savings” in its name.

However, a TFSA is allowed to invest in almost anything, and I will share some ideas later in this blog on what I’m doing with my own TFSA in order to maximize my return by taking on additional risk.


So here is the history of the TFSA

It was first introduced in 2009 and you needed to be at least 18 years of age to open up a TFSA. Initially, you were only allowed to contribute $5,000 of after-tax money. This is key, because the money you are putting into the TFSA has already been taxed in your hands. Gradually, the annual contribution increased to $5,500, and then in 2015 – as a part of an election promise – the annual contribution was increased to $10,000. But, like most promises by politicians, once they got elected, they reduced it again to $5,500. Today the annual contribution sits at $6,000.


Now why is this important to you?

Because if you haven’t opened up a TFSA account yet, and you were at least 18 years of age or older in 2009, then you can put at least $75,500 into a TFSA today.

Each year a new contribution room is automatically created and if you forget or don’t have extra money to put into a TFSA for that particular year, then you get to carry that contribution room forward.

Now, it is very important that you don’t over-contribute to a TFSA. If you put too much into a TFSA, then Revenue Canada (the CRA), will charge you an interest penalty equal to 1% per month on your excess contribution. So be careful when calculating your contribution room.

I also advise you to be aware of this: if you take money out of your TFSA in, say, 2021, then you are only allowed to put that money back into your TFSA the following year – in this case, 2022. Because you were contributing “after-tax” dollars into the TFSA, when you take money out, it is completely tax-free money.


Think about it for a minute, if you were to contribute $6,000 per year for the next 25 years – and you received a conservative 5% net rate of return each year – then you would have a bucket of $300,000 in tax-free money. Plus, if you received a higher rate of return – say 7%, for example – then you would have a bucket of $406,000 in tax-free money.


Now, I did promise to tell you what my strategy is for my own TFSA… 

For background purposes, I will share with you that I have a high-risk tolerance – which means that I don’t look at my investment statements when the markets are down. I also don’t look at my investment statements when the markets are up. Why? Because whatever that number is, it is not my number. I am not planning on touching my TFSA for at least another ten or 15 years, so why would I be looking at the value today?

My TFSA is fully funded with shares of a private start-up company. If you research my background, you will know that I initially started my career in the Information Technology world of Corporate Canada before moving into the world of start-up software companies. 18 years ago I left that world to become a Financial Planner. In other words, I know the stats: only one in eight start-up companies survive. So for me, based on my risk profile, I am okay with those odds. 

I will tell you it has been over six years since my first round of financing, and I have since participated in three additional rounds of financing; the company I have invested in happens to now be cash flow positive, with plans to possibly go public in the next two to five years. 

For the record, I did not tell any of my clients about what I was doing with my TFSA, because it brings with it a higher level of risk than what most Canadians are looking for. So investing in start-up companies is not for everybody, but it’s absolutely something we can talk about. 

If you’d like to learn more about TFSAs, contact me at the coordinates below to apply to become my client. Thanks for reading and always remember: when we design financial plans for our clients, we make sure that your money outlives you in retirement.


For the best life insurance advice and information, subscribe to my YouTube Channel and hit the notifications bell to be notified when we post new videos.  The channel allows me to share my passion for personal financial planning and I produce content that I would want to watch – and because of that, I promise to give you 110% effort in every video that I make.


By John Moakler, BMath, CFP, CLU

President and Senior Executive Financial Planner

Moakler Wealth Management


1 416 840 8544

6 Practical Steps to Managing Your Cash Flow During A Pandemic & Beyond

6 Practical Steps to Managing Your Cash Flow During A Pandemic & Beyond

Practical Steps to Managing Your Cash Flow During A Pandemic

1.  Put away your credit card for 3 weeks

      • When was the last time you put away your credit cards and only used debit or cash to make your everyday purchases?

2.  What are you really purchasing?

    • By only using debit/cash it provides you with an awareness of what you are actually buying. By using a credit card, it can hide the fact that you are buying things you “want” versus things you “actually” needed
    • People are willing to spend much more with a credit card versus debit/cash – as much as 83% more in some cases * ( 2018 – Value Penguin – Bailey Peterson)

3. The Latte Factor – Monitor what you are purchasing over a 3-week period

    •  By tracking what you are spending you will have a better understanding of where your money actually goes. It is amazing how much we actually spend on coffee, lattes, drinks out, lunch at a restaurant, etc.

4. Develop a budget…and stick to it

    • Developing a monthly budget is probably a challenging task for most people. However, if you are capable of creating a budget and sticking to that budget, overtime, you will see that retirement will be within reach.
    • Pinpoint at least one or two expense you can decrease or slash in half
    • Review the services or products that you are purchasing each month and ask yourself the question – Do I still need it?
    • Sometimes we get into habits and continue to pay for services we no longer need or we could reduce

5. Good debt versus bad debt – restructure your bad debt into good debt – pay off debt

    • Nobody is going to knock on your door and say, I want to buy your credit card debt or I want to purchase your car loan. However, somebody will knock on your door and say I am interested in purchasing your house/condo. So, credit card debt and car loans are “bad debt” and mortgages on a house/condo is “good debt”. And most houses/condos do go up in value over time.
    • If you own a house/condo with a mortgage and you do have a car loan or you are having difficulty paying off your credit card on a monthly basis, look at consolidating your car loan/credit card debt into the mortgage payment. Interest on a car loan/credit card is compounded monthly or in some cases, daily. Interest on a mortgage is only compounded semi-annually.
    • More than 50% of the home owners who have paid off their mortgages have a Home Equity Line of Credit (HELOC) with an outstanding balance. In some cases, the outstanding balance can be in the thousands or hundreds of thousands of dollars. The interest rate on a HELOC is compounded daily….and you might get into a habit of only paying the interest each month and then you are compounded the problem even further because you are not paying down the principle. By having a mortgage instead, every payment has some portion going to pay interest but also some portion going to pay down the principle.

6. Work with a professional Certified Financial Planner (CFP) or Chartered Life Underwriter (CLU) – seek out their advice

    • Get help with developing a monthly budget. Most financial planners have developed their own tools or templates to help clients with the budgeting process.
    • Also, they will have experience with the targets when it comes to budgeting what the actual or potential monthly lifestyle expenses could or should be.



By John Moakler, BMath, CFP, CLU

President and Senior Executive Financial Planner

Moakler Wealth Management


1 416 840 8544