I was very pleased to hear the announcement from Ottawa that they will be increasing the limit on the TFSA to $5500 starting January 1st, 2013. Why did it increase you ask? Well when the TFSA was first introduced back in 2009, the government said that the contribution limit will be indexed with inflation. The limit was supposed to be increased in 2012 but hey, when has the government ever been known for efficiency? I’m just glad they actual went through with the increase!
What does it mean?
Thanks to the new increase, the total amount that can be contributed to a TFSA is $25,500 in 2013. I was hoping that the $5,500 would be applied to previous years but alas, it is not.With every $500 increase, my TFSA will grow a lot faster then I originally planned. The more money I invest in dividend growth stocks, the more dividends that will be paid out tax-free in the future. Check out my post to maximize your TFSA and turn it into tax-free source of income.
TFSAs only for the rich
I’ve read recently that some people were complaining that TFSAs only benefited the rich. After paying the bills and saving for retirement, Canadians did not have enough money to contribute, let alone maximize their TFSA each year. Why not forget about the RRSP and focus on the TFSA? I’d rather grow a retirement nest egg without having to lock it away in a registered account.I understand that most Canadians may have a hard time to save $5500 each and every year, but it is important to try and save as much as you can in your TFSA when possible. Even if you can only afford $50 a month, at least it’s something going towards your savings.
The future of the TFSA
The conservatives made an election promise that once the federal deficit was eliminated, they would increase the yearly TFSA contribution limit to $10,000. Although that would be amazing, I highly doubt they would ever increase the yearly limit that much. We also know how often politicians live up to their election promises; I won’t be holding my breath waiting for it.This article was written by The Loonie Bin. If you enjoyed this article, please consider subscribing to his feed.
