Q&A: Investing in a TFSA

A reader can’t afford a one-shot TFSA contribution and wonders if she can do it by “installment”.

Q – As a low-income person, I cannot afford to plunk down $5,500 all in one shot so I would like to buy a TFSA by installment. Is it possible to do this? – Katie K.

A – Actually, you don’t “buy” a TFSA. You open a TFSA account, in the same way as you would open a bank account. You can then deposit any amount you wish, whenever it is convenient. Some people use automatic contribution plans, instructing their bank to transfer a certain amount each month into the TFSA. Be sure you choose the right type of plan for your needs. There are savings plans, GIC plans, mutual fund plans, multi-purpose plans, and self-directed plans. For more details, read my book titled Tax-Free Savings Accounts. – G.P.