Why is there so much cash in TFSAs?

Consider more aggressive investments.

Michael Ryval 30 January, 2014 | 7:00PM

Tax-free savings accounts have become very popular investment vehicles since their introduction in 2008. Indeed, 48% of Canadians, or almost one out of every two adults, have a TFSA, according to a recent survey completed for Bank of Montreal (BMO) by market research firm Pollara.

And yet not only are Canadians unfamiliar with the range of investment vehicles that can go into a TFSA -- only 11% correctly identified the six types of investments that are eligible for inclusion -- the vast majority prefer to be in cash or guaranteed investment certificates. The survey found that cash is the most common instrument held in TFSAs, at 57%, followed by 23% in GICs, 25% mutual funds, 14% stocks and 5% exchange-traded funds. (The figures add up to more than 100%, since some Canadians hold several asset classes).

Isn't it time to be a little more aggressive with your TFSA? Unfortunately, a wide-spread misperception about the vehicle continues to prevail.

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Michael Ryval

Michael Ryval