You can reach your retirement goals a lot faster as a result of the fantastic new savings vehicle for Canadians called the Tax Free Savings Account (TFSA).  But how can the TFSA be this truly great opportunity and how does investing in penny stocks fit into this type of account?

What is a Tax Free Savings Account?

A Tax Free Savings Account is a general purpose savings account that every Canadian over the age of 18 is entitled to open.  Any income generated from within this account is not taxable.  There is a $5000 contribution limit annually per person.

Why is this Account So Powerful?

Because you retire sooner.  If all your income can be generated from within a tax-free savings account then you’re able to retire sooner because you don’t have to pay the income tax on the money you withdraw from the account.  That is huge.

The Killer Combination

Clearly saving $5000 a year even for 30 years will not be able to generate enough money to retire on.  So, in general, the TFSA is a good savings vehicle but only as a part of a retirement planning strategy.  The opportunity (or killer combination) is the significant returns possible from investing in Canadian penny stocks.

With 100% returns possible from these small cap or micro cap stocks, the TFSA portfolio could grow much more than simply through annual contributions.  In ten years time it might some like something crazy like:

Now granted, each year won’t likely see 100% returns on your full investment, but when taking money out of the account without any income tax you’re not likely to need a $10 million portfolio.  This is why investing within the Tax Free Savings Account is a great idea with investments with large return possbilities.

Happy Tax Free Savings Trading!

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