New Year, New TFSA Limit, and How You Can Use CoPower Green Bonds for Tax-Free Income
The Government of Canada recently announced that the amount individuals are allowed to put towards their TFSA is going up by $500 for 2019, bringing the total contribution limit to $6000. An extra $500 is a significant increase and only the second of its kind in the 10 years since it was introduced.
Why you definitely want to take advantage of the increase
Contrary to what the name TFSA would suggest, they’re not just a savings account.
TFSAs can be opened at any major financial institution, and compared to a typical savings account, can hold eligible investment products. That makes them a great way to grow your investments from capital gains, dividends or interest income without the income tax haircut applied to investments made in non-registered accounts.
Holding investments in your TFSA can go a long way to helping you save for shorter term goals like purchasing a car or even making a down payment on a house.
One more great thing about TFSAs is that if you don’t contribute in one year, you can carry your contribution over to the next. This chart outlines how those cumulative contributions can really add up!
So what type of investments are eligible to be added to your TFSA? Lots and the good news is Canadians have more “green” options to add to their TFSAs than before. One such option is CoPower Green Bonds.
Green Bonds for a greener TFSA and tax-free fixed income
CoPower Green Bonds are a private, fixed-income option for Canadian investors looking to diversify their portfolios while doing good for the planet. When you invest in a 6-year, 5% CoPower Green Bond, you’re essentially investing in a diversified portfolio of loans to more than 1100 clean energy and energy efficiency projects like rooftop solar projects, LED retrofits and geothermal installations across the country.
Those projects either sell clean energy or save energy (and money) in addition to cutting carbon. As clean energy developers repay their loans, that money flows through to investors in CoPower Green Bonds as interest payments. Supported by the solid economics of clean energy, this model allows investors to earn attractive returns while participating in the growth of Canada’s clean energy economy.
How can Green Bonds + your TFSA work together?
Anyone can turn their current carbon-intensive TFSA (or RRSP) into a clean energy powerhouse with the help of Questrade, one of Canada’s leading online investment brokerages that allows you to manage your own investments while avoiding the sometimes prohibitively expensive management fees you may find elsewhere. We’ve outlined the full process here.
To hold CoPower Green Bonds in a registered account, Questrade charges a one-time purchase fee of $75 (+tax) and a quarterly holding fee of $25 (+tax). Though CoPower Green Bonds are not public securities themselves, Questrade will waive the quarterly fee for investors who maintain more than $15,000 in public securities (eg. stocks or bonds listed on a public exchange) in their Questrade account.*
We’ve done the math, and with Questrade’s fee structure, many of our investors end up earning more by investing through a TFSA than a non-registered account. We’ve created a simple calculator to help you figure out if that will be the case for you (it depends on your province, income tax bracket and the amount you plan to invest). If that’s not the case, and you’re looking to invest outside of a registered account you can always purchase your CoPower Green Bonds directly through our online platform at CoPower.me.
*Fees charged by Questrade are subject to change without notice.