Although tax-free savings accounts (TFSAs) have been on the market since 2009, the majority of Canadians aren’t using them, and general knowledge about the savings vehicle is lacking.
A new survey by ING DIRECT reveals that 44% of Canadians have a vague idea of how the TFSA works, while 19% say they don’t understand it at all.
However, lack of cash plays a bigger role in why Canadians aren’t using them than the lack of knowledge about the product. Fifty-three percent of those surveyed said they didn’t have the money to contribute to a TFSA.
Close to one-third (31%) of those surveyed who don’t have a TFSA said they have no intention of opening one this year or next, while 52% remain undecided.
“The TFSA has been around for nearly four years, and it’s unfortunate that so many Canadians aren’t taking full advantage of this savings opportunity,” says Peter Aceto, president and CEO of ING DIRECT. “Since its launch, the TFSA has been a great way to reach short-term and long-term savings goals and provide flexibility that other investment options, like RSPs, don’t.”
The TFSA numbers
• 74% view TFSAs as a long-term savings tool;
• RRSPs top the list as preferred investments, with 52% of those surveyed ranking RRSPs ahead of TFSAs, which came in second (29%);
• 47% of Canadians hold their savings in a savings account, 17% in mutual funds and 10% in a GIC; and
• 25% of respondents have used less than half of the contribution room available for 2012 (between $1 and $9,000).
Get more information about TFSAs here.