Canadians Prefer Tax Free Savings Accounts

By Andrew Rickard | July 28 2014 02:19PM

According to research conducted by Manulife Financial, Tax Free Savings Accounts (TFSAs) are the investment vehicle of choice in Canada.

The most recent Manulife Investor Sentiment Index was released on July 24 and shows that TFSAs have remained Canadians favourite way to save since the Index began tracking them in 2010. For the fifteen years prior to that date, Registered Retirement Savings Plans (RRSPs) were the most popular investment choice.

"TFSAs were created to give Canadians more choice for long-term investments, and the index shows that they are clearly a hit and doing the job Jim Flaherty intended them to do," comments Marianne Harrison, senior executive vice president and general manager, of Manulife's Canadian division. In his last budget, Mr. Flaherty estimated that by 2030 the TFSA and other registered plans would permit more than 90 per cent of Canadians to hold all their financial assets in tax-efficient accounts. Our survey shows this prediction has traction."

Manulife also points to data from the federal Department of Finance indicating that, only three years after its introduction, the TFSA approached the RRSP in terms of contribution flow even though TFSAs are drawn from after-tax dollars.