One of the things that make tax-free savings accounts so popular is the promise of achieving massive investing success and paying no tax on the gains.
Twenty-nine people have TFSAs worth $5-million or more, according to Canada Revenue Agency numbers obtained this month through an access to information request by Matt Malone, Balsillie Scholar at the Balsillie School of International Affairs and the Founder of the Open by Default database. Another 323 or so had TFSAs with a fair market value of $1-million to $4,999,999.
The enthusiastic response to our TFSA Trouncers series shows how much interest there is in the idea of building wealth with these accounts. If you’d like to tell us about how you built a high-value TFSA, contact the Globe and Mail’s Darcy Keith at dakeith@globeandmail.com.
Don’t feel even a bit bad if your TFSA is not in this league. The CRA numbers obtained by Mr. Malone tell us that 16,817,278 of a total 17,774,335 TFSA holders had a fair market value under $100,000, or 94.6 per cent. Another 921,525, or 5.2 per cent, were valued at $100,000 to $199,999.
For context, total accumulated contribution room since TFSAs were introduced in 2009 is $95,000. Annual TFSA limits are set using a formula that accounts for the inflation rate. The expectation for 2025 is that this year’s $7,000 annual ceiling will carry over. If so, total accumulated contribution room would rise to $102,000.
How are people building high-value TFSAs? A survey of TFSA Trouncers shows that Nvidia and Tesla shares, energy stocks and Chinese stocks have played a role. A reminder of how challenging it is to achieve this kind of investing success can be found in the story of the guy whose TFSA peaked at $1.7-million thanks to an investment in Tesla. A pullback in the price of these shares brought him back to $1-million, still an impressive achievement.
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Rob’s personal finance reading list
The smartest money move is to have affluent parents
All about how wealthy U.S. families are spending huge amounts to get their children tutoring help so they can get into elite universities. This story echoes Preet Banerjee’s Globe column on how family wealth rules the housing market in Canada.
I’ve always thought that the words tasty and frozen pizza can never be used together, but maybe you disagree on the basis that a frozen pie from the supermarket is cheaper than takeout and should be judged accordingly. If so, check out this ranking of supermarket frozen pizzas. Only one use of the word cardboard.
A really useful roundup of travel apps – find the cheapest flights, cheapest gas and more. Now a look at some ways to get the best value from Air Canada’s Aeroplan loyalty program. Lots to try here if you collect Aeroplan points.
A top rewards credit card takes a hit – again
American Express Cobalt is highly regarded for offering an exceptional five reward points for every $1 spent at supermarkets, restaurants and bars. The card has specified this reward level applies to purchases made in Canada, but I can confirm that restaurant meals outside the country have in the past qualified as well. No longer, the RewardsCanada website says. Amex Cobalt holders may still be annoyed about a recent move to offer just one point for travel spending, down from two.
Podcast fans
Subscribe to Stress Test on Apple podcasts or Spotify.
Ask Rob
Q: What happens if a person passes away and the beneficiary of a life insurance policy does not know about the existence of a policy that is payable to them? I assume it is the responsibility of the beneficiary to apply for the benefit but does the insurance company have a responsibility to search for and pay out the benefit?
A: I asked Lorne Marr of HUB Financial Inc. about this one – here’s his reply: “It is the responsibility of the beneficiary to reach out to the insurance company. I always tell the owner of a policy to let the beneficiary know about the policy. Give them a one-page summary or PDF with the issue date, policy number, insurance company, face amount and other pertinent details.”
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Tools and guides
A guide to debt consolidations loans, including their impact on credit scores
In the social sphere
Social Media: A smart X thread on the challenges faced by young adults in matching the lifestyle of their parents.
Watch: A financial planner talks about the pros and cons of reverse mortgages.
Money-Free Zone: Roots rocker Lucinda Williams tackles While My Guitar Gently Weeps and does a pretty nice job of it. If we’re talking covers of this song, we have to include the Jeff Healey version. Also, and I know I mentioned this previously, the live all-star band rendition where Prince’s guitar playing renders all others on the stage invisible.
More PF from The Globe
– Is the new Canadian home buyer more likely to be a solo buyer?
– Clothing prices are getting slashed – part of a long-term trend of discounting
– How siblings can avoid conflict – and hefty legal fees – while dealing with their parents’ estate
– A parent’s RESP investing guide: What to buy, and when
