Tax Free Savings Accounts (TFSA) are a new type of savings account – they came into existence in 2008.  They basically allow you to earn interest tax free.

The Good:  Aside from earning interest tax free, you can also withdraw money at any time without paying tax.  You can open more than one TFSA (although your total contributions to all of the TSFAs can’t be more than the annual limit).  If you live in a single-income family, you can give money to your spouse or common-law partner to invest – giving your family a total of $10 000 to invest each year.

The Bad: your contributions are not tax deductible.  You must be 18 years or older with a valid Social Insurance number can contribute – which is unfortunate for those eager youngsters who want to start saving early.  Since I’m not a fan of capping contributions, I will put the limit of contributing $5000 annually as a con (although I will admit that $5000 is quite a large limit)

A Penny Saved…
…could be hundreds of dollars earned.  Your child’s education, your retirement, or longterm savings in general are worthwhile ventures.  If you have the financial leeway, you can and you should look into your options.  The cushier your mattress, the softer your fall should things go badly down the road.

Sources:
www.milliondollarjourney.com
http://shorelinefinancial.com
http://money.ca.msn.com