REPEAT-BMO Annual TFSA Report Shows Majority Plan to Maximize

REPEAT-BMO Annual TFSA Report Shows Majority Plan to Maximize
Contributions Within Five Years 
- However, 2012 contribution levels remain flat year over year 
- Report reveals gaps remain in TFSA knowledge - even among those
with an account 
- One-in-five TFSA holders have made withdrawals in 2012 
TORONTO, ONTARIO -- (Marketwire) -- 11/26/12 -- While fewer than half
(44 per cent) of Canadians are making the maximum contribution of
$5,000 per year to their Tax-Free Savings Account (TFSA), a new poll
released today from BMO Bank of Montreal reveals the majority (57 per
cent) plan to contribute the maximum allowable amount within the next
five years. For 2012, the report shows Canadians plan to contribute
an average of $3,778 to their TFSA. 
Additionally, the report revealed:  


 
--  One-in-five (21 per cent) TFSA holders has made an account withdrawal
    this year, with 39 per cent withdrawing less than $1,000 
--  Since its introduction in 2009, 39 per cent of Canadians have opened a
    TFSA 
--  Intentions to open a TFSA have increased in the last year; 29 per cent
    of Canadians who do not have a TFSA plan to open one, compared with 22
    per cent in 2011 
--  The most common TFSA investment is cash, with the majority (60 per cent)
    including cash in their TFSA; mutual funds and Guaranteed Investment
    Certificates (GICs) are the second most popular TFSA investments, with
    one quarter (26 per cent and 25 per cent respectively) including them 
--  The least common are stocks (18 per cent), bonds (12 per cent) and
    Exchange Traded Funds (ETFs) (three per cent)

 
"Anyone who earns taxable interest can turn it into tax-free interest
with a TFSA, making it a suitable and sensible option for just about
any type of investor," said David Heatherly, Vice President, BMO Bank
of Montreal. "Furthermore, the flexibility of this product allows
Canadians to use a TFSA to its full advantage for any financial goal,
be it short or long term." 
Gaps Remain in TFSA Knowledge 
However, since the TFSA's introduction in 2009 by the Federal
Government, a lack of knowledge about it persists. While 60 per cent
of Canadians say they are knowledgeable about this savings and
investing vehicle, only 44 per cent of Canadians correctly identified
t
he annual maximum contribution limit of $5,000. Furthermore, 37 per
cent of Canadians say they do not know what investments can be held
within a TFSA, and the majority of TFSA holders are unaware that
bonds, stocks, and ETFs can be included in their account. 
"Federal Finance Minister Jim Flaherty introduced the TFSA four years
ago and it is a fantastic savings vehicle. However, the findings
suggest it's still a fairly new concept for some," added Mr.
Heatherly. "With Financial Literacy Month upon us, now is an ideal
time for Canadians to learn more about how TFSAs can help to grow
savings tax-free and offset the taxes they pay on their overall
investment profits." 
TFSA Basics: 


 
--  Canadians aged 18 and older can contribute up to $5,000 per year into a
    TFSA. Any unused contribution room from the previous year can be added
    to the contribution room for the following year. In addition, any
    withdrawals can be re-contributed the following year without affecting
    the annual contribution limits. 
--  You can hold the same investments in a TFSA as you could in a Registered
    Retirement Savings Plan (RRSP), including GICs, bonds, cash, mutual
    funds and stocks. 
--  Contributions to TFSAs are not deductible for tax purposes, and
    withdrawals of contributions and earnings from the account are not
    taxable.

 
To learn more about BMO's TFSA offering, please visit
www.bmo.com/home/personal/banking/investments/tax-free/tfsa. 
The Pollara online survey was completed between October 11 and
October 16, 2012, with a sample of 1,000 Canadians. A probability
sample of this size would yield results accurate to +/- 3.1 per cent,
19 times out of 20. 
About BMO Financial Group  
Established in 1817 as Bank of Montreal, BMO Financial Group is a
highly diversified North American financial services organization.
With total assets of $542 billion as at July 31, 2012, and more than
46,000 employees, BMO Financial Group provides a broad range of
retail banking, wealth management and investment banking products and
solutions.
Contacts:
Media Contacts:
Matt Duffin, Toronto
(416) 867-3996
matthew.duffin@bmo.com 
Valerie Doucet, Montreal
(514) 877-8224
valerie.doucet@bmo.com 
Laurie Grant, Vancouver
(604) 665-7596
laurie.grant@bmo.com 
Internet: www.bmo.com
Twitter: @BMOmedia
 
 
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