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WATERLOO, ON, July 24, 2014 /CNW/ - According to the most recent Manulife Investor Sentiment Index, a Tax Free Savings Account (TFSA) is the favourite investment choice for Canadians. It has remained the favourite choice since the Index began tracking it in December 2010. Prior to the introduction of TFSAs, Registered Retirement Savings Plans (RRSPs) were the most popular investment choice for the 15 years that Manulife has been publishing the Index.
"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," said Marianne Harrison, Senior Executive Vice President and General Manager, 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."
According to the Department of Finance, only three years after its introduction, the TFSA has approached the RRSP in terms of contribution flow even though TFSAs are drawn from after-tax dollars.*TFSAs allow you to contribute up to $5,500 each year and enjoy tax-free growth as long as the money remains inside the account. Further, money can be withdrawn tax free. The federal government has also introduced the Pooled Registered Pension Plan (PRPP). The PRPP is designed to give 7.5 million Canadians who work in small and medium sized businesses better access to a workplace savings plan. Results from the Manulife Investor Sentiment Index show that Canadians' preferences in saving vehicles are in order of preference, TFSAs, RRSPs, Registered Educations Savings Plans (RESPs), Mutual Funds and Segregated Funds. The Index also notes that Canadians rank investing in their own home (58%) and paying down debt (29%) as their top financial priorities.