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What Investments Can I Hold in My TFSA?

Written by The Content Team | Published on May 29, 2018

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Q. What Investments Can I Hold in My TFSA?

A. In short, largely the same ones you can hold in a Registered Retirement Savings Plan (RRSP). Despite their name, Tax-Free Savings Accounts (TFSAs) are more of an investment account than a traditional savings account. TFSAs allow for a range of investments, such as cash, guaranteed investment certificates (GICs), bonds, stocks, exchange-traded funds (ETFs), mutual funds and options. There are two key points to keep in mind when choosing your TFSA investments:

1. The Canada Revenue Agency only allows qualified investments in a TFSA. Generally, if a security trades on at least one exchange that's considered a Designated Stock Exchange by Canada's Finance Department, it will be recognized as a qualified investment. Among those exchanges – of which there are around 46 -- are the NASDAQ, NYSE, LSE, TSX and more. Holding non-qualified investments can have tax consequences and may result in penalties levied by the CRA.

2. If you choose to include investments in your TFSA that pay foreign dividends, many governments — including the U.S. — apply a non-resident withholding tax to dividends and interest. That means the tax may reduce an investor's return.

For more on TFSAs, check out:

TFSAs: Frequently Asked Questions

How Do You Use Your TFSA? 3 Personal Stories

 *The video was updated in November, 2019.

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