Has it ever occurred to you that you may not be saving enough for your age? Everyone has a different start to their life. Some start earning early; some start late. Some are studying till age 30 while some take a career break. It may not be fair to compare the savings of someone who has been earning for 10 years with someone who has been earning for only five years, even though both are the same age.
However, you can compare your savings with the country’s average to have a fair idea of where you stand.
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The average savings rate of Canadians under 35
As per the 2023 data from Statistics Canada, an average single Canadian under 35 saved
- $33,157 in a private pension, including $16,220 in a Registered Retirement Savings Plan (RRSP); and
- $35,692 in non-pension assets, including $11,980 in a Tax-Free Savings Account (TFSA).
The average is way below the contribution rooms of both TFSA and RRSP. Your TFSA contribution room is $14,000 if you are 20 years old. The TFSA limit has nothing to do with your salary. It is the same for a millionaire and a fresher. The fact that the average TFSA amount is $11,980 considers the various scenarios we discussed above.
Now, you can determine whether your savings are ahead or behind average Canadians. If you are ahead, keep up the pace and try to max out on TFSA, as its withdrawals are tax-free, and you can add last year’s withdrawals to your contribution room.
If you are behind, it is still not too late to up your savings game. You can play catch-up as you are still growing in your career.
Keeping pace with the average savings rate?
The Canada Revenue Agency (CRA) has set the 2025 TFSA contribution room at $7,000. If you are not maxing out on the contribution because you don’t have that kind of income, you can consider investing small amounts on a fortnightly or monthly basis.
You could consider investing $100 every fortnight, which converts into $200 a month and $2,400 a year. Remember, every penny counts as long as you spend time in the market. Even though $2,400 is not even half of the $7,000 savings room, it can add value to your portfolio in the long run. A $200 monthly investment earning a 10% annual return can generate a portfolio value of $81,000 in 15 years. It always pays to start early. You can start investing $100 in the below assets and get more than 10% in annual returns.
TD Global Technology Leaders Index ETF
TD Global Technology Leaders Index ETF (TSX: TEC) invests in U.S. technology stocks, including Apple, Nvidia, and Microsoft. You can buy one unit of this exchange-traded fund (ETF) for less than $50 and get exposure to Nasdaq’s rally. Its top holdings are the beneficiaries of the artificial intelligence (AI) revolution and can generate strong double-digit returns in the long term.
The ETF has generated a 22% average annual return in five years, more than double your 10% return target. It trades on the TSX, so you can invest in it through your TFSA. It will charge a 0.35% management fee on your portfolio value every year, but that is a small expense for its high growth rate.
SmartCentres REIT
SmartCentres REIT (TSX: SRU.UN) is one of the largest retail real estate investment trusts (REITs) in Canada. It has a portfolio of retail and mixed-use properties and earns rental income from them. It also sells residential and commercial properties and earns from the sales proceeds. The funds are then used to reinvest in developing more properties and maintaining existing ones, and the remaining funds are distributed to unitholders.
The Canadian real estate market is recovering after two years of steep correction in the fair market value of the properties. This has helped SmartCentres increase its net income and reduce its payout ratio to 92% in the fourth quarter of 2024 from 107.5% a year ago.
You can buy a unit of SmartCentres REIT for around $25.25. A $200 monthly investment can earn you $14.8 in annual distribution. You can use this money to buy high-growth stocks like Bitfarms.
