“Welcome to the PlanEasy blog! We make personal finance easy.

Thanks for visiting.”

– Owen

How Big Is Your TFSA? How Would That Compare To Past Historical Periods?

How Big Is Your TFSA? How Would That Compare To Past Historical Periods?

As of January 1st, everyone in Canada over the age of 18 has the chance to add another $6,000 to their TFSA. If you were 18 or older in 2009 your total original contribution room would be $75,500.

But that’s just contribution room, what about investment growth?

With investment growth where would a TFSA be? How much would it be worth? And how would that compare to other historical periods?

Let me preface this post by saying I don’t like to compare personal finances. Everyone’s path is different and it’s impossible to compare apples to apples. Even in the same financial situation everyone values money differently and therefore two people with the exact same income, assets, debts etc will have very different financial plans, part of the reason why financial planning is so important, and also so interesting.

That being said, in this post we’re going to compare hypothetical TFSA balances of today with those of the past. We’ve had a great “bull run” over the last 10+ years but what would it look like if we had different set of returns? What if we looked at the best periods and the worst periods in recent history to compare how the last 10+ years stacked up?

The TFSA has been around since 2009. Each year, once you reach age 18, you accumulate TFSA contribution room. In 2021, someone who was 18 or older in 2009 would have $75,500 in original contribution room. But with investment growth where would the actual balance be?

What do you think the top 5 and bottom 5 historical periods would be? And how do you think they’d compare with the last 10+ years?

read more
Understanding TFSAs: The 8 Benefits (And 3 Drawbacks) of TFSAs

Understanding TFSAs: The 8 Benefits (And 3 Drawbacks) of TFSAs

Tax-Free Savings Accounts (TFSAs) are relatively new. They were introduced just over 10 years ago in 2009. Even though they’ve only been around for a relatively short time they’re already the most used out of the major tax-sheltered accounts. There are over 5.5 million households in Canada that have an active TFSA account.

(Authors Note: I love it when people use their tax-sheltered accounts. Good tax planning is a key component of any financial plan and can add $100,000’s to your net worth)

The average usage rate for the TFSA is pretty impressive at 40.4%. This is relatively consistent across both age and income. The highest usage rate is in Ontario where over 45% of the households are using a TFSA. The median contribution to a TFSA in 2016 was $5,765.

All-in-all these are impressive numbers for a relatively new tax-sheltered account.

Given the high usage rate the TFSA must be pretty great, right?!?!

In this post we’ll cover exactly how a TFSAs works, the benefits of a TFSA, as well as some of the drawbacks of a TFSA.

read more
Understanding RRSPs: The 6 Benefits (And 7 Drawbacks) of RRSPs

Understanding RRSPs: The 6 Benefits (And 7 Drawbacks) of RRSPs

RRSPs are one of the three major tax shelters available to Canadians. They were created in 1957 and since then RRSPs have been a key way to delay and avoid taxes. There are many benefits to an RRSP but also a few drawbacks.

In general Canadians aren’t taking full advantage of this tax shelter. As of 2015 there was over $1 trillion of unused contribution room. That’s an average of $41,560 per tax payer!

Each year the unused contribution room continues to grow. Over the last 5 years unused contribution room has grown by $1,900 per person per year.

This begs the question….

Why aren’t we using the RRSP to its full advantage?

Out of all tax payers only 1 in 4 used an RRSP last year. While this might seem low it’s important to note that RRSPs aren’t for everyone. There are drawbacks to using an RRSP and it’s because of these drawbacks that some people choose a different tax shelter instead, like a TFSA.

Still, there is a huge potential for tax savings out there. Even at the lowest federal tax rate the potential tax rebate is about $150 million or roughly $6,000 per person. Who wouldn’t like to get a $6,000 tax refund?!?

In this post we’ll cover how RRSPs work. We’ll also cover both the benefits and drawbacks of an RRSP.

read more

Owen Winkelmolen

Fee-for-service financial planner and founder of PlanEasy.ca

“Welcome to the PlanEasy blog! We make personal finance easy.

Thanks for visiting.”

– Owen

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

How Big Is Your TFSA? How Would That Compare To Past Historical Periods?

How Big Is Your TFSA? How Would That Compare To Past Historical Periods?

As of January 1st, everyone in Canada over the age of 18 has the chance to add another $6,000 to their TFSA. If you were 18 or older in 2009 your total original contribution room would be $75,500.

But that’s just contribution room, what about investment growth?

With investment growth where would a TFSA be? How much would it be worth? And how would that compare to other historical periods?

Let me preface this post by saying I don’t like to compare personal finances. Everyone’s path is different and it’s impossible to compare apples to apples. Even in the same financial situation everyone values money differently and therefore two people with the exact same income, assets, debts etc will have very different financial plans, part of the reason why financial planning is so important, and also so interesting.

That being said, in this post we’re going to compare hypothetical TFSA balances of today with those of the past. We’ve had a great “bull run” over the last 10+ years but what would it look like if we had different set of returns? What if we looked at the best periods and the worst periods in recent history to compare how the last 10+ years stacked up?

The TFSA has been around since 2009. Each year, once you reach age 18, you accumulate TFSA contribution room. In 2021, someone who was 18 or older in 2009 would have $75,500 in original contribution room. But with investment growth where would the actual balance be?

What do you think the top 5 and bottom 5 historical periods would be? And how do you think they’d compare with the last 10+ years?

read more
Understanding TFSAs: The 8 Benefits (And 3 Drawbacks) of TFSAs

Understanding TFSAs: The 8 Benefits (And 3 Drawbacks) of TFSAs

Tax-Free Savings Accounts (TFSAs) are relatively new. They were introduced just over 10 years ago in 2009. Even though they’ve only been around for a relatively short time they’re already the most used out of the major tax-sheltered accounts. There are over 5.5 million households in Canada that have an active TFSA account.

(Authors Note: I love it when people use their tax-sheltered accounts. Good tax planning is a key component of any financial plan and can add $100,000’s to your net worth)

The average usage rate for the TFSA is pretty impressive at 40.4%. This is relatively consistent across both age and income. The highest usage rate is in Ontario where over 45% of the households are using a TFSA. The median contribution to a TFSA in 2016 was $5,765.

All-in-all these are impressive numbers for a relatively new tax-sheltered account.

Given the high usage rate the TFSA must be pretty great, right?!?!

In this post we’ll cover exactly how a TFSAs works, the benefits of a TFSA, as well as some of the drawbacks of a TFSA.

read more
Understanding RRSPs: The 6 Benefits (And 7 Drawbacks) of RRSPs

Understanding RRSPs: The 6 Benefits (And 7 Drawbacks) of RRSPs

RRSPs are one of the three major tax shelters available to Canadians. They were created in 1957 and since then RRSPs have been a key way to delay and avoid taxes. There are many benefits to an RRSP but also a few drawbacks.

In general Canadians aren’t taking full advantage of this tax shelter. As of 2015 there was over $1 trillion of unused contribution room. That’s an average of $41,560 per tax payer!

Each year the unused contribution room continues to grow. Over the last 5 years unused contribution room has grown by $1,900 per person per year.

This begs the question….

Why aren’t we using the RRSP to its full advantage?

Out of all tax payers only 1 in 4 used an RRSP last year. While this might seem low it’s important to note that RRSPs aren’t for everyone. There are drawbacks to using an RRSP and it’s because of these drawbacks that some people choose a different tax shelter instead, like a TFSA.

Still, there is a huge potential for tax savings out there. Even at the lowest federal tax rate the potential tax rebate is about $150 million or roughly $6,000 per person. Who wouldn’t like to get a $6,000 tax refund?!?

In this post we’ll cover how RRSPs work. We’ll also cover both the benefits and drawbacks of an RRSP.

read more

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...

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