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Choosing The Right TFSA

Since the inception of the TFSA in 2009, Canadians have had access to an amazing savings vehicle for retirement. The only problem is that 90% of the population is unaware of it’s true potential. With a name like “Tax Free Savings Account”, everyone assumes it’s just a plain old savings account.

I remember back in 2009 even I went to the bank and opened a regular  TFSA which had a interest rate of 2%. Throughout 2009 I started teaching myself about investing and learned there were actual TFSA trading accounts that allowed you to hold stocks as well. That’s when it hit me: instead of making a tiny amount of interest , I could make larger amounts of money with dividends each year and be able to withdraw it all tax-free!

Which TFSA is right for you?

Everyone is different when it comes to investing. Some people are ultra conservative with their money and want to take zero risks with it. Others simply can’t afford to take risks and may need the money in their TFSA account sooner then planned. For these people I suggest opening a normal TFSA with a bank and start contributing your money there. Once you have contributed enough, you can get marginally better rates by putting a GIC in your TFSA. If you need your money more readibly available, you can keep it in just the plain old account where it can be withdrawn at any time. Just make sure don’t over contribute or else you will have to pay penalties.

Self Directed TFSA

For people who want to invest with a TFSA, you can open a self directed TFSA with a discount broker. There will be commissions on any trades you make so be warned there could be a few extra costs then a regular TFSA. Also you may want to have a look at annual maintenance fees that some discount brokers may charge you.
It’s been a while since I opened my TFSA so I decided to get the low down from the top 5 discount brokers of the Canadian Banks and rate which ones are better. I emailed TD Waterhouse, Scotia iTRADE, BMO Investor line, RBC Direct Investing, and CIBC Investor Edge. I asked them if there were any annual fees with a TFSA if someone walked off the street and opened an account and they had no other holdings with the institution. What I didn’t tell them is that I was also grading them on how fast I got a response from them. (Sneaky Sneaky)

1. TD Waterhouse

Dear Steve:
Thank you for contacting TD Waterhouse with regards to the TFSA annual fees.
We can definitely clarify this for you.

Our TFSAs do not incur an annual administration fee. Withdrawal fees are
also not applied. You can find these details stated on page 7 of our
Commission Schedule and Statement of Disclosure of Rates and Fees available
online. For your convenience, you can click the following link to find this

If you have any questions, feel free to reply or speak with us directly at
anytime (1.800.465.5463). We are available 24 hours a day, 7 days a week for
your convenience. Kindly remember that we are unable to communicate account
information through email for security reasons.

I made TD Waterhouse number one because they don’t charge any fees and they have 24/7 service. Heck, I even got an email back within the hour!

 2. Scotia iTRADE

Hello Steve,

Thank you for your inquiry regarding TFSA account fee’s. 

I can confirm to you that there are no annual/quarterly/monthly fee’s that are charged within a TFSA account with Scotia iTRADE.

This will apply for new as well as existing client’s. Only commissions will apply on trading.
For further assistance, please contact us at 1-888-872-3388 from 8am to 9pm ET weekdays or 8am to 6pm ET weekends, or go to

No Fees and was the second discount broker to reply the next day.

3. CIBC Investor’s Edge

Good afternoon, Steve:

Thank you for your inquiry.

There is no annual administration fee for an Investor’s Edge Tax Free Savings Account (TFSA). For complete information on our fees, please visit our website at and click Fees and Commissions in the Benefits menu. I have also attached a copy of our Commission and Fees Schedule to this e-mail for your perusal.

Steve, I hope the above information will be helpful. If you need further assistance, please reply to this mailbox or call our Contact Centre at 1-800-567-3343 for additional support. Investment Representatives are available to assist you Monday to Friday, 8:00am to 8:00pm ET.

No fees either, third to respond to my email and only has customer service Monday to Friday.

4. RBC Direct Investing

 Dear Steve,

 I’ll be happy to help you with your inquiry about TFSA fees.

Effective July 1, 2012, if you have been a client of RBC Direct Investing for 6 months or less, you will not be charged the $25 quarterly fee. The six month waiver period will begin the day the account is approved.

With the simplified commissions and fee schedules, effective July 1, 2012, clients have a number of different ways to have the maintenance fee waived (even if assets are less than $15,000).  This applies to the TFSA as well as all of the other account under the RBC Direct Investing:

- If you have signed up for a Pre-Authorized Contribution (i.e. automatic regular savings transfers) for a combined total of $100/month ($300/quarter) or more across all RBC Direct Investing accounts, or

- If you have a combined total of three or more commission-paid trades during the quarter (across all RBC Direct Investing accounts, or

- If you an RBC Direct Investing client for less than six months (this allows new clients sufficient time to transfer assets into RBC Direct Investing), or

- If you have a group RRSP account with RBC Direct Investing, or

- If you have an RBC Student Banking package (current or within the last five years), or

- If you have RBC VIP Banking package

The quarterly maintenance fee is charged based on all client assets held with RBC Direct Investing and it will be split across all of your accounts.

For more details please view the complete Commissions and Fee schedule, visit our website at:

Should you have any question I would be more than happy to help you find a more appropriate option or help you with transferring more assets to your account to avoid this fee. Just respond to this e-mail or give us a call at 1-800-769-2560 and we’ll be happy to help.

Steve, thank you for contacting us. If you’d like more help with fees or anything else, just ask in a reply to this e-mail or call us at 1-800-769-2560 – Monday to Friday from 7:00 a.m. to 8:00 p.m. Eastern Time.

Well, if you’ve read all of that and didn’t have to hire a lawyer, RBC does charge fees but they can be waived by standing on one foot and singing the national anthem in the rain on September 2nd. Also service is available Monday to Friday Only

5. BMO Investorline

…… haven’t received a reply yet. I guess their customer service must be swamped with upset customers. I finally was able to find this on there website:

A $25 CDN fee will be charged each quarter on nonregistered accounts with an account balance of less than $10,000. Taxes may apply. This fee is waived for clients who hold a registered account with BMO InvestorLine and for clients that make 2 or more “commissionable trades”* in 6 months.

In Summary

If you’re looking to open a TFSA that you can invest in, I hope you find this information helpful. If you have to pay fees every year for your TFSA, it’s seriously going to cut into your dividend income.  Shop around and find the right discount broker that works best for you.

This article was written by The Loonie Bin. If you enjoyed this article, please consider subscribing to his feed.