When it comes to Tax Free Savings Accounts (TFSAs), Canadians are confused.
That’s the conclusion of a new poll conducted by Royal Bank of Canada, which found that more Canadians now have tax-free savings accounts over registered retirement savings plans, but many still don’t know how to use a TFSA to generate wealth.
The survey found that 43% of Canadians are misinformed about the funds, believing TFSAs are for savings and not for growing investments. While 42% of Canadians use their TFSAs to hold savings and cash, only 28% hold mutual funds, 19% use it to hold stocks, 15% for GICs or term deposits, and 7% for exchange-traded funds, the poll found. Only 6% of TFSA holders use the account for fixed-income investments.
Meanwhile, more than two out of three TFSA holders (65%) said they have not withdrawn money from their account. The survey also found that more Canadians have a TFSA (57%) than an RRSP (52%). For people over age 55, a demographic that’s traditionally focused on RRSPs, TFSAs are now the preferred investment vehicle, with 64% of respondents saying they prefer TFSAs.
RBC’s poll was conducted by Ipsos and surveyed 2,000 Canadians over the age of 18 online.
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