An investor with the liquidity and ability to tie up cash in a retirement savings account, or the willingness to do so today due to the tax benefits of investing in such a long-term vehicle, may one day be in need of the liquidity that a vehicle such as the Tax Free Savings Account (TFSA) provides investors.
It has been my opinion that maxing out a TFSA with any extra income one has should be the top priority for most, as the tax-free returns generated within a TFSA, coupled with the liquidity and ability to pull money out at any given time, make the TFSA a much more versatile investment vehicle than an RRSP, for example.
While the vast majority of Canadians have not maxed out their TFSA (many do not have a TFSA account open), those who have diligently saved and stashed away their hard-earned cash into this vehicle now may be wondering: where to invest next?
Opening up a brokerage account may be the way to go for investors looking to have access to their money all at once, at any given time, however different brokerage accounts have different platforms and trading fee schedules; I recommend taking special care to note the trading fees one is expected to pay over time before opening up such an account.
Maxing out RRSPs do provide a tax benefit today, however, the liquidity an investor gives up is something that can prove to be costly down the road, should access to capital be needed for any given reason.
Invest Wisely, my friends.
