Category Archives: Savings Account
The Conservative Party in Canada was first elected to a minority government in 2006, making Stephen Harper prime minister. Since then his Conservative Party has won federal elections twice, both times increasing the size of his constituency.
Finally, on May 2, 2011, Prime Minister Harper won a solid majority for the Conservative Party in the Canadian parliament. This trend towards conservatism at the national level in Canada has led to a number of changes designed to help investors and businessmen. In 2008, one of these changes was the introduction of the Tax Free Savings Account (TFSA).
A TFSA has several perks that allow Canadian savers and investors to earn reasonably high interest rates on their cash. In 2009, any Canadian aged 18 or older could open a TFSA and contribute up to $5,000 per year. The contributions are not tax-deductible, but the money in the account compounds tax-free and can be withdrawn tax-free.
Withdrawals can be made at any time with no withholding tax. Owners may contribute to a spouse’s TFSA, who can withdraw contributions tax-free, which enables income splitting strategies to be used. TFSAs are extremely useful tools for Canadians who wish to save their money. Increased savings may lead to increased investment, which grows the economy.
Another favorable aspect of a TFSA is the ability to re-contribute the full amount of the previous year’s withdrawals. This allows the total savings room in the TFSA to stay constant. Canadians can take advantage of the various TFSA offerings by financial institutions to find the one that best fits their needs.
Several institutions are offering high interest tax free savings account plans, allowing account holders to earn higher-than-usual interest on their money.
A TFSA allows withdrawals to be re-contributed in recognition of the fact that savers have multiple competing objectives, such as buying a house, saving for college and investing. These objectives have different time horizons, which is why the TFSA is structured as it is.
Furthermore, Canadians who do not use the full $5,000 contribution limit per year have their extra room carried forward. For instance, an account owner that only contributes $3,000 in 2010 has the extra $2,000 room carried forward into 2011. Now the owner can contribute up to $7,000 in 2011.
As to investment options, a TFSA allows a saver or investor to put his money in a variety of instruments. The TFSA can be used as a pure cash savings account with a high interest rate. Conservative investment options include Guaranteed Investment Certificates (GICs) and bonds. More risky investments open to TFSA owners are individual stocks, mutual funds, exchange-traded funds and segregated funds, which are offered by insurance companies.
The TFSA puts the decision in the hands of the account owner. They can invest their money however they choose and only pay taxes on the contributions into the account.
Saving money is very important in everyone’s life. The best way to start this is with the help of a bank. Find a bank nearest to you and set up an account. Look for the different features available with the bank where you are setting up the account. After you have opened an account, you will start putting your savings. You will start earning a certain percentage of interests on the balance you have available on that bank account. It definitely an added benefit if you have the online banks access. You will save your valuable time and log into your account from anywhere.
Talk to the different local banks in your area and see the different features they have to offer to their customers while opening savings accounts. You should make sure which bank is offering the highest interest rate so that you have a greatest chance to earn more.
While you are doing the research with different banks, see how much access they are going to give you on your account. If you have unlimited access to your account, you will always be tempted to use the money from that account and save nothing. There are banks will give you limited access to your savings account online. This will prevent you from spending your hard earned money when you go out for shopping. Some banks will offer you secured credit cards attached to your savings account. Make sure that you have the ability to make good financial decisions if you are using this feature.
- Read the tips below to help you in choosing the right account:
Keep a limited number of accounts. This will help you to keep a track of your entire savings.
Make sure that you have done your research before opening an account with any bank. Shop with different banks and find out which account is the best. Go through the fine print and look for any hidden fees. Shop for those banks that have the highest interest rates to offer.
Reduce the amount of access you have to this account. You will not be able to save more if you get unlimited access to your account.
Keep a constant track of the cash flow in the new bank account. Make sure that you are maintaining the minimum balance requirement on that account, otherwise you will be charged some fees and save nothing.
Ask your bank about loyalties and fee waiving. If you have been with your bank for an extended amount of time, or you have frequently used your banks other services they may be able to offer you certain loyalties and discounts on your fees.
For more information on how to do a safe online banking, visit the FDIC website