Using AI Legalese Decoder to Understand the Differences Between TFSA and FHSA: A Student’s Guide
- November 19, 2023
- Posted by: legaleseblogger
- Category: Related News
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AI Legal Decoder Can Assist with Financial Decision Making
Question: Should I Keep Maxing Out My TFSA or Switch to an FSHA?
Age: 19
Employment Status: Part-Time Student
Living Situation: With Parents
Annual Investment: 6-8k
As a 19-year-old student working part-time and living with my parents, I have been consistently investing 6-8k annually over the past two years. I have been maxing out my Tax-Free Savings Account (TFSA), but I am now contemplating whether I should continue with this strategy or switch to a First-Time Home Buyer Savings Account (FHSAA). Given my minimalist lifestyle and financial situation, I am seeking advice on which option would be more beneficial for me in the long run.
AI Legalese Decoder can assist with this financial decision by analyzing the specific terms and conditions of both accounts, providing a comprehensive comparison of their benefits and drawbacks, and offering personalized recommendations based on my individual circumstances. With AI Legalese Decoder, I can gain a deeper understanding of the implications of each investment option and make an informed decision that aligns with my financial goals and aspirations.
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use tfsa, much more flexible. when you get a full time job with higher tax bracket you can use fhsa more effectively
there is also the limit of FHSA can only be opened for 15 years. if you open one now and do not buy by34 then it will have to be transferred to RRSP
Probably TFSA. How much do you make per year?
It depends on when you realistically expect to buy a home. A FHSA can only be open from 15 years and then you either need to convert it to an RRSP or pay tax. Personally I would open a FHSA when you’re in fourth year and contribute at least 1$ so that you get the additional contribution room.
If you’re just working part time and your wage is low, I’d fill the TFSA first. If you fill that up, then I’d focus on the FHSA but wouldn’t necessarily use the tax credits right away. I’d save them for when I’m working full time. If you do this, you should expect some pretty big tax refunds once you complete school, as you can use both tuition credits and FHSA credits to reduce your income taxes considerably. Save all that for subsequent TFSA/FHSA/RRSP contributions.
ETA: if you think you are going to buy a home in the next 15 years, I’d open up the FHSA immediately and contribute a small amount as you can take advantage of carrying forward $8000 in contributions each year. If you think you’ll be buying a home in a shorter time frame, you’d want to to prioritize contributing to the FHSA so that you can get to $40,000 faster (if you contribute nothing for a couple years, you carry-forward will stall at $8,000). You can always delay deducting your contributions from your taxes until you make more income.