Reddit reviews Tax-Free Savings Accounts: A Guide To Tfa's And How They Make You Rich

Be sure to keep in mind that TFSAs are limited in the sense that you can only contribute a fixed amount in a given year, I believe the limit today is $5,600/yr, originally it was $5,000. So if you've never contributed to your TFSAs you've got $57,500 in accumulated contribution room as of today. Also, keep in mind that your losses do not "free up" additional contribution room. Eg, let say you've never contributed to any TFSA before and you invest $57.7k (the max) in an ETF and 2 days later its market value drops by $10k leaving you with $47.5k as the accumulated value. You can't top up your TFSA with an extra $10k. Also, remember with RRSPs even though they help you to reduce taxes for your current tax year, it is not truly reduced. Instead, it is "differed" until you retire and, at that time, when you make withdrawals from your RRSP account you will then be taxed at whatever your taxable rate was before retirement.

For this reason, some people prefer to invest in their TFSAs first by "maxing out their contribution room" before contributing to their RRSPs. If you'd like more knowledge I'd recommend reading this book on TFSAs and how they can make you rich by Gordon Pape. It's very informative and will help you to optimize/prioritize between the two.

Now in relation to investing in ETFs in either of these accounts. If you go the DIY route, I'd recommend that you review the following resources this article, this guide, these 10 videos and the PFC Wiki.

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