One of the things that make tax-free savings accounts so popular is the promise of achieving massive investing success and paying no tax on the gains.
Twenty-nine people have TFSAs worth $5-million or more, according to Canada Revenue Agency numbers obtained this month through an access to information request by Matt Malone, Balsillie Scholar at the Balsillie School of International Affairs and the Founder of the Open by Default database. Another 323 or so had TFSAs with a fair market value of $1-million to $4,999,999.
The enthusiastic response to our TFSA Trouncers series shows how much interest there is in the idea of building wealth with these accounts. If you’d like to tell us about how you built a high-value TFSA, contact the Globe and Mail’s Darcy Keith at dakeith@globeandmail.com.
Don’t feel even a bit bad if your TFSA is not in this league. The CRA numbers obtained by Mr. Malone tell us that 16,817,278 of a total 17,774,335 TFSA holders had a fair market value under $100,000, or 94.6 per cent. Another 921,525, or 5.2 per cent, were valued at $100,000 to $199,999.
For context, total accumulated contribution room since TFSAs were introduced in 2009 is $95,000. Annual TFSA limits are set using a formula that accounts for the inflation rate. The expectation for 2025 is that this year’s $7,000 annual ceiling will carry over. If so, total accumulated contribution room would rise to $102,000.
How are people building high-value TFSAs? A survey of TFSA Trouncers shows that Nvidia and Tesla shares, energy stocks and Chinese stocks have played a role. A reminder of how challenging it is to achieve this kind of investing success can be found in the story of the guy whose TFSA peaked at $1.7-million thanks to an investment in Tesla. A pullback in the price of these shares brought him back to $1-million, still an impressive achievement.
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