Wednesday, January 9, 2013

Tax Free Savings Accounts

I have done a spreadsheet for a TFSA. I am assuming inflation is running at 2% in order to determine the increases in the maximum amount for the TFSA. This would be that approximately every 5 years, the government will increase the maximum limit for TFSA by $500. This is what has occurred by 2013.

If you were 18 when the TFSA came out and put into a TFSA the maximum and you earn 8% a year, then by age 65 you could have $2.7M in your account.

If you were 30 when the TFSA came out and put into a TFSA the maximum and you earn 8% a year, then by age 65 you could have just over $1M in your account.

If you started depositing on January 1, 2009 at an 8% return you could have some $77,000 in 10 years. It would take almost 27 years to get a $0.5M. In year 35, you could have $1M.

See my spreadsheet at tfsaa.htm. If you want me to send you a copy of this spreadsheet, just email me. (Also a spreadsheet with first 5 years filled in at tfsab.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

4 comments:

  1. 8% maybe unrealistic over the next 10 years, but not over 27 or 35 years. We are in a secular bear market and at sometime we will come out of it and make better returns than at the present time.

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  2. How is 8% unrealistic? Wasn't the Dow Jones up like 8.9% last year plus dividends???

    -Tom

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  3. In my spreadsheet you can put in any value you want. I only used 8% as an illustration. On the second sample, the 8% is used to determine future rates based on an average 8% return over 5, 10 or 15 years. That can be changed also.

    Susan

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