Investments that have some safety of principal and a potential for capital gains that typically account for 15% to 70% of a balanced portfolio. Examples include bonds and GICs with maturities greater than one-year, strip bonds, mortgage-backed securities, private placements and other debt instruments, preferred shares (not including convertible securities) and income mutual funds.
Term of the Minute
The Tax-Free Savings Account (TFSA) is an account that provides tax benefits for saving in Canada. Investment income, including capital gains and dividends, earned in a TFSA is not taxed, even when withdrawn. Contributions to a TFSA are not deductible for income tax purposes, unlike contributions to a Registered Retirement Savings Plan (RRSP). Like an RRSP, a TFSA may contain cash and/or other investments such as mutual funds, certain stocks, bonds, or Guaranteed Investment Certificates (GICs).