Stats Canada releases all kinds of useful data that most people never look at, and one of the more insightful sets each year is the summary of Tax-Free Savings Account (TFSA) usage.
The report breaks down contribution patterns, withdrawals, and account values by age and gender. One number that stands out for the 40–44 age group is the average TFSA fair market value of just $17,604 for the 2022 contribution year (released in 2024).
Yikes. I know Gen X has been struggling financially for years, but seeing that number in black and white is jarring, especially considering the new TFSA room for 2025 alone is another $7,000.
Despite competing priorities like the First Home Savings Account (FHSA), Registered Retirement Savings Plan (RRSP), and the Registered Education Savings Plan (RESP) for parents, I think the TFSA should be one of the first accounts Canadians try to max out. Here’s why.
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Why a TFSA?
The TFSA is simple. Every year you turn 18 and live in Canada, you receive new contribution room. The 2025 limit is $7,000, and limits tend to rise over time with inflation. Your investments grow tax-free, and all withdrawals are also tax-free, with no age restrictions, income requirements, or repayment rules. Compared with other accounts:
-Versus the FHSA: The FHSA is great if you’re buying your first home, but once you buy, the account loses its ongoing usefulness. The TFSA works for every stage of life.
-Versus the RRSP: RRSP withdrawals are taxable and structured around retirement. The TFSA lets you pull out money anytime for any reason, tax-free.
-Versus the RESP: RESPs are excellent for kids, but they’re locked in for education. The TFSA is a blank cheque with no conditions attached.
The only meaningful limitation is the 15% withholding tax on U.S. dividends, which applies even inside a TFSA. Other than that, there’s no registered account in Canada that matches its combination of tax treatment, flexibility, and simplicity.
What to buy in your TFSA
At age 44, most Canadians still have a long investing runway of 20 years or more until retirement. That supports a growth-oriented risk profile, but with some bond exposure to smooth out volatility. One option that fits this well is the BMO Growth ETF (TSX: ZGRO).
This is an all-in-one portfolio ETF that holds 80% global equities (Canada, U.S., and international stocks) and 20% bonds. The stock portion drives long-term growth, while the bonds help stabilize returns during market swings.
The fee is just 0.2%, meaning every $10,000 invested costs only $20 per year. For investors who want simplicity, diversification, and tax-free compounding, this kind of diversified ETF is hard to beat inside a TFSA.
