Tax free savings accounts are among the best tools out there for Canadians to save their hard-earned cash. The problem is that people have limited knowledge about what exactly they are. And perhaps more importantly, Canadians are woefully ignorant about how to actually set one up. No worries! Tangerine makes it super simple to start saving right now.
What is a tax free savings account (TFSA)?
Think of a TFSA as simply a container for some kind of bank account. They can just simply be setup as a basic savings account (with low-ish interest) or you can actually tie them to an investment account to make even better returns. The beauty of TFSA’s is that the cash saved in them is not taxable when you actually end up taking out the money, as opposed to an RRSP that is. They are a great vehicle to start saving immediately.
The annual TFSA dollar limit is currently $10,000, although this may be lowered back down to $5,500 under the new Liberal government. And this limit is actually retroactive back to 2009 when they were put into place by the Canadian government. That means that if you were 18 or older in 2009 and haven’t yet contributed any money to a TFSA, you actually have a limit of $43,000 to add to that sucker without taking any penalties!
Long story short, if you’re serious about saving for retirement (or a wedding, or that new car) then you should be considering the TFSA as your way to do it moving forward (that is, until you hit your contribution limit).
How to set up a TFSA with Tangerine
Tangerine is probably the easiest way to setup a TFSA. But it’s also probably your easiest way to tie an investment account to that TFSA. And financial advisers always say: The best time to start investing is yesterday. The sooner you start, the sooner you’ll be enjoying compound interest gains that will end build up like a snowball towards retirement age.
Setting up an account at Tangerine
The first step is to simply setup a new account with Tangerine.
Step 1: Go to www.tangerine.ca
Step 2: Go to “Sign me up” in the top right corner of the page.
Step 3: Scroll down until you see Tax Free Savings Account, then click “Enroll Now”
Step 4: If you aren’t currently a customer click “No, sign me up” when it prompts you.
Step 5: Fill in your information.
Earn a $50 free bonus with an Orange Key
Before you finish with your sign up for a new account, why not earn $50? Seriously, this is legit free money. Under the section that says: “Referred by a Friend?” enter the following Orange Key:
This is simply a referral code that will allow Tangerine to know that you have been referred. if you then deposit $100, you will be given $50. It works, and it’s free money.
Create an Automated Savings Program
If you’re anything like me, your Achilles heal is that you simply don’t save as much as you should be. Creating an automated process for this takes out any guesswork and makes sure you “pay yourself first.” Basically you can set up your new Tangerine account to save a pre-selected amount of money every month (or whatever timeline you want) so you don’t even have to think about it.
I highly recommend doing this. You won’t even realize you’re saving!
Link an investment account to your TFSA!
Once you are all setup online you’ll want to setup a “self directed investment fund” to transform that boring old TFSA into a full fledged investment account. This is where Tangerine really excels. They make it super simple for you. There’s no maintenance on the account and you can set your risk profile and mix of stocks and bonds in the account. The easiest way to do this is to actually call Tangerine. They walk you through your risk profile and make sure that they hook you up with the right kind of investment account. They’ll also make sure that they transfer any money from other institutions (ie. from another TFSA) properly so you don’t get any penalties. Give the good folks over at Tangering a call to get rolling at 1-888-826-4374.