A new Fidelity Investments survey has found that British Columbians are the most likely Canadians to open a tax-free savings account (TFSA) when they become available in the new year.
Almost 45% of B.C. respondents who were aware of the TFSA planned to open an account compared to 36% of Ontarians and 35% of Quebecers. In contrast, only 30% of Canadians from the Prairie provinces and 24% of Atlantic Canadians said they planned to open a TFSA.
TFSAs allow investors to contribute up to $5,000 a year to an account, from which earnings and principal can be withdrawn tax-free.
Investors will be able to put their money in a range of products, including high-interest savings accounts, GICs, mutual funds, stocks and other investments allowed in an RRSP.
More than 40% of people planning to open a TFSA said they were going to put their savings in a GIC; 38% said they plan to hold various equity-based investments in the accounts, including mutual funds and stocks.
Funds in TFSAs, unlike RRSPs and RESPs, can be used for any purpose, whether it be a vacation, a major purchase or to accumulate tax-free earnings.
Most people are being encouraged to open a TFSA sooner rather than later to accumulate the $5,000 contribution room that increases each year.