There are many reasons why investment or savings accounts are part of a well designed financial plan.  Various factors such as net income, the amount available to invest, risk and time horizon all play a role in deciding how to effectively invest savings.  We will take time to develop a wealth preservation and creation plan with you and where necessary, meet with the professionals you rely on, such as accountants and lawyers, to ensure you have the best possible path to your goals.

The following are two account structures to consider when considering opening an investment account.

Tax Free Savings Accounts

Tax Free Savings Accounts (TFSAs) are an excellent option to park your hard earned money.  Growth (capital gains), interest and dividends earned on investments in TFSAs are not subject to tax, and withdrawals made from a TFSA are all tax-free.  Those 18 years of age and older accumulate TFSA contribution room each year and unused contribution room is carried forward to future years. Contrary to what the name might suggest TFSAs aren’t restricted to cash investments or savings accounts, they have a wide range of options including equity, bond and balanced investments. Click here to view current TFSA contribution limits.

Three great reasons to open a TFSA:

1.    Establishing a family emergency fund
2.    Saving for an upcoming expense such as a new home, renovation, trip, wedding or maternity leave
3.    Saving for retirement in addition to or as an alternative to an RRSP

Non-Registered Accounts

If other tax sheltered investments have been exhausted or a larger sum of money is being invested, a non-registered account may be the appropriate choice.  Non-registered accounts, also known as cash or investment accounts, are taxable, however corporate class investments can limit taxable distributions (income) on investments leaving more tax efficient capital gains for the future when the investments are withdrawn.

Four scenarios for considering a non-registered account:

1.    A corporate holding company has been setup for business profits
2.    Investment of an inheritance or employment severance
3.    Selling of a business, farm or farm quota, or real-estate
4.    Taxable income isn’t high enough to warrant adding to an RRSP and TFSA contribution room has been used up.