Half of Canadians missing out on TFSAs, Investors Group poll finds
Only 46% plan to take advantage of tax benefits, and only 17% will invest the $5000 limit
Winnipeg, MB – October 16, 2008: The most important new savings tool offered by government in over 50 years is facing a slow start unless more Canadians can be educated about it, according to a survey sponsored by Investors Group. Slightly less than half (46 per cent) of Canadian adults plan to open a Tax-Free Savings Account (TFSA) when it becomes available and only about one-in-six (17 per cent) plan to contribute the maximum amount of $5,000.00
Lack of knowledge a barrier
The majority of people who do not plan to invest in a TFSA seem to be held back by a lack of knowledge with 46 per cent saying either they were uncertain about how it worked, preferred to wait and see or did not know. By comparison, only 21 per cent cited a lack of money as the reason they do not plan to invest in a TFSA.
“The TFSA presents Canadians with an opportunity to reduce taxes and use their savings with greater flexibility,” said Debbie Ammeter, Vice President, Advanced Financial Planning Support at Investors Group. “It’s worth learning more about the TFSA and incorporating it into your overall investment strategy.”
Dedicated savers first on the bandwagon
Over three-quarters (78 per cent) of those who plan to open a TFSA believe it will save taxes for them, making that benefit a driving force in their decisions. However, it appears that those quick on the uptake are motivated savers in the first place: six in ten (58 per cent) plan to invest in a TFSA in addition to their RRSP.
Furthermore, about half (54 per cent) of those who have an RRSP or RRIF plan to open a TFSA, compared to only 31 per cent who do not already have one of these registered plans.
Retirement: the primary TFSA savings goal
Retirement savings proved to be the top priority for 65 per cent of TFSA early adopters, with other purposes including saving for a vacation, tuition and a down payment on a house. Notably, younger adults aged 18 to 25 were more likely to use a TFSA to help them save for a down payment on a house at 25 per cent compared to 6 per cent across all other age groups; or financing education at 22 per cent compared to 8 per cent.
New savings vehicle needs an advisor
Only a third (36 per cent) of Canadians planning to invest in a TFSA are confident they can do it alone when determining how best to use this new investment vehicle, while six-in-ten acknowledge they will seek professional financial advice when opening a TFSA.
“The TFSA is a tactic that needs a strategy, and using an investment professional to explain the options is a great approach,” added Ms. Ammeter.
Source of funds
Among people who plan to contribute to a TFSA, 30 per cent say they will increase the amount they invest but 21 per cent say the money will be diverted from RRSP contributions. Another 28 per cent say they will transfer money out of current investments into a TFSA and another 18 per cent say they will use money normally invested in non-registered accounts.
“An increased amount of investing by an increased number of people would be a tremendous success for this new program,” added Ms. Ammeter. “We should hope that a TFSA becomes fashionable for every Canadian.”
The Harris/Decima data were gathered from September 18th to September 24th, 2008, through the Harris/Decima teleVox. Results are based on a sample of 2,100 Canadians and the corresponding margin of error is 2.1 percentage points, 19 times out of 20.
Investors Group, founded in 1926, is a national leader in delivering personalized financial solutions to Canadians through a network of approximately 4,400 Consultants located throughout Canada. In addition to an exclusive family of mutual funds and other investment vehicles, Investors Group offers a wide range of insurance, securities, mortgage and other financial services. Investors Group is a member of the IGM Financial Inc. (TSX: IGM) group of companies. IGM Financial is one of Canada’s premier financial services companies with over $118 billion in total assets under management, as of September 30, 2008.
| For more information contact: | |
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| Ron Arnst Media Relations (204) 956-3364 ron.arnst@investorsgroup.com |
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| Teresa Pagnutti or Meredith Adolph Environics Communications 416-969-2721 / 416-969-2667 tpagnutti@environicspr.com / madolph@environicspr.com |
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