TFSA (Tax-Free Savings Account) Calculator
This calculator helps Canadians estimate the growth of their Tax-Free Savings Account over time, considering contributions, withdrawals, and investment growth rates.
Interactive TFSA Calculator
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Data Source and Methodology
All calculations are strictly based on the formulas and data provided by the CRA's official guidelines on TFSA calculations. See official CRA resources for more information.
The Formula Explained
The future value of your TFSA is calculated using the formula:
FV = P × (1 + r)^n + PMT × [((1 + r)^n - 1) / r]
Glossary of Variables
- P: Initial Contribution
- PMT: Annual Contribution
- r: Annual Interest Rate
- n: Number of Years
- FV: Future Value of the TFSA
How It Works: A Step-By-Step Example
Suppose you start with an initial contribution of $10,000, contribute $5,000 annually, and anticipate an annual return rate of 5% over 20 years. The calculator will apply the formula to estimate your TFSA's future value.
Frequently Asked Questions (FAQ)
What is a TFSA?
A Tax-Free Savings Account (TFSA) is an account that provides tax benefits for saving in Canada.
How does the TFSA calculator work?
The calculator estimates your savings growth by compounding your contributions and applying an annual interest rate.
Can I exceed my TFSA contribution limit?
No, exceeding the TFSA limit results in penalties. It is important to adhere to your contribution limits.
What happens if the interest rate changes?
If the interest rate changes, the actual growth of your TFSA may differ from the estimate provided by this calculator.
How often should I review my TFSA contributions?
Review your TFSA contributions annually to ensure you are within your limit and optimize your savings strategy.