Investing has always been a means for people to grow their wealth and make their money work for them. Investors know that protecting investment earnings is important and can be achieved through tax-advantaged investments.
Tax-advantaged investing, also called tax-efficient investing, allows investors to maximize the profits they can keep after taxes are filed. Investment selection and asset allocation are important factors affecting returns, but minimizing taxes and other costs is also crucial. There are some ways for investors to keep more of their assets. A qualified financial advisor can help navigate the waters of the best tax-advantaged options. When investing on an annual basis, people can use some general accounts to their advantage.
Tax-Free Savings Account (TFSA): Investors can explore TFSAs. These accounts do not tax any contributions, interest earned, dividends, or capital gains and can be withdrawn tax-free. It is available to individuals ages 18 and older and can be used for any purpose.
Education Savings Account (RESP): Investing in RESPs can be wise for parents. While money is invested after-tax, it is tax-free when withdrawn for qualified higher education purposes.
Working with a financial planner can help investors maximize their investments to be as tax-efficient as possible. Financial experts understand funding limits and the timeline for investing for tax advantages.