“Saving” for taxes

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Hi Dan, I recently watched your EQ bank video and heard you mention putting money into a GIC for the sake of saving for tax season (I’m paraphrasing, of course). I’m currently self employed, putting away ~30% of every pay check into a TFSA with the thought of growing my earnings and withdrawing them at the end of December.
In your experience, would it be more tax advantageous to hold those monthly earnings in a EQ 5% interest account (or similar) vs the TFSA?
Thanks for your input!

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Asked on July 4, 2024 6:53 pm
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Hey there. I'd need a bit more commentary on this at first.

Are you buying some sort of money market fund or HISA ETF in order to earn interest on the money in a TFSA?

The only reason I take my expected taxes from my pay and put them into the notice savings account (prior would be GICs) is due to the opportunity cost lost when doing so in a TFSA. Sure, I get tax-free interest income on that money but I also don't expose that money to equities long term. All the money I have in my TFSA is invested for the long-term and I really don't want to sacrifice the historical 8-9% returns the market has provided just to tax-shelter taxable income earning 4.7%~ in a HISA ETF or money market ETF.

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Posted by Dan Kent
Answered on July 5, 2024 8:51 am
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