Mixed results show interest in the new savings program, but more education is needed
TORONTO, Feb. 17 /CNW/ - When it comes to the basics of Tax-Free Savings Accounts, Canadians aren't yet making the grade. A recent Mackenzie Investments Great Canadian TFSA Test conducted by Leger Marketing showed a continuing need for more education about the basics of the program. Of five questions asked on the test, 44 per cent of Canadians answered three or more correctly; 8 per cent answered all five questions correctly and 28 per cent did not get any of the questions correct.
"When the government gives you a tax break, you've got to take it. A number of Canadians have already taken advantage of the TFSA, but many still need to learn about this new vehicle for building wealth," says Wilmot George, Director, Tax and Estate Planning for Mackenzie Investments. "It's encouraging to see Canadians turning their attention to the TFSA, but when it comes to learning the basics, there's still some work to be done - for example, only 41 per cent know that a broad range of investment options are available for TFSAs."
How Canadians scored on The Mackenzie Investments Great Canadian TFSA Test:
The Mackenzie survey of 1,506 Canadians asked the following five True or False questions. The correct answers, and the percentage of those who answered correctly, are shown in brackets.
1. "Like an RRSP, contributions to a TFSA are tax-deductible." (False; 43% Correct)
2. "The TFSA contribution limit is currently $5,000 per year. If you don't contribute the full $5,000 in a year, the remaining contribution room is lost." (False; 36% Correct)
3. "TFSA contribution room does not depend on earned income. Regardless of income level, all Canadians age 18 or older will receive $5,000 of TFSA contribution room each year." (True; 63% Correct)
4. "A broad range of investment options are available within a TFSA including stocks, bonds and mutual funds." (True; 41% Correct)
5. "An individual can own multiple Tax-Free Savings Accounts." (True; 22% Correct)
The test also found that young people need the most education - only 3 per cent of 18-24 year olds answered all five questions correctly.
"What you don't know can mean a lost opportunity", George says. "Working with a financial advisor can help Canadians score a perfect grade on this test and capitalize on every opportunity to benefit from tax-free gains and compounding."
Along with the test, Mackenzie Investments asked general questions about Canadian attitudes towards the TFSA. The results showed that the majority (68 per cent) of Canadians haven't opened a TFSA. When asked why more Canadians haven't taken advantage of the new savings vehicle, 59 per cent of respondents said that people don't have enough money to invest followed by 42 per cent saying it's because Canadians don't know enough about them.
The survey also revealed that, given the change in economic climate, 39 per cent of TFSA holders are planning to adjust their TFSA investments to benefit from more favourable market conditions.
"Canadians have a great opportunity to grow their savings free of income tax through a variety of investments in a TFSA, not just lower interest savings accounts," George says. "Mutual funds can provide various levels of growth while managing risk through diversification. A financial advisor can help investors choose investments that are best suited to them."
The survey results are based on a Leger Marketing national online survey with a representative sample of 1,506 Canadians (18 years and older). A sample of this size will provide results that can be considered accurate for the population overall to within plus or minus 2.5 per cent, 19 times out of 20. The survey was conducted between December 21 and December 23, 2009.
NOTE: Regional results available upon request.
Mackenzie Investments: Mackenzie Investments was founded in 1967, and is a leading investment management firm providing investment advisory and related services. With $62.5 billion in assets under management as of January 31, 2010, Mackenzie Investments distributes its services through a diversified network of third-party financial advisors. Mackenzie Investments 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 January 31, 2010.
To learn more, please contact your financial advisor or visit www.mackenziefinancial.com/tfsa.
SOURCE Mackenzie Financial Corporation
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