TFSA creator shares top saving and investing strategies, while promoting financial literacy for Canadians

Today I have the creator of the TFSA (Tax Free Savings Account) on the show who shares his best TFSA tips and strategies, while also discussing his initiative to enhance financial literacy in Canada.

His name is Kevin McCarthy, and while working in Ottawa, Kevin was responsible for the financial literacy file for Minister Flaherty and helped launch the federal government’s Financial Literacy Panel.

He played a key role in the development and naming of the Tax-Free Savings Account (TFSA), the single most important personal savings vehicle since the introduction of the Registered Retirement Savings Plan (RRSP).

Kevin has since joined a great organization called Enriched Academy which focuses on teaching financial literacy here in Canada.

Get Your Free 1-Year Subscription to Canadian MoneySaver Magazine

Lastly, don’t forget to claim your free 1-year digital subscription to Canadian MoneySaver Magazine (Canada’s largest personal finance and investing magazine).

The magazine features Canada’s top experts on personal finance and investing, and is a great place to learn best practices, and stay up to date on changes that will impact your investments and financial situation for years to come, specifically here in Canada.

To get that, all you have to do is open up a free savings account with my favourite bank (and the bank that I personally use, EQ bank).

The reason that I personally use EQ bank, is that they have one of the highest interest savings rates in Canada. In fact, over all the years that I’ve been with them, I’ve seen them consistently be almost double the interest rate compared to other online banks, and well over double the interest rate compared to the major brick and mortar banks that we have here in Canada.  

Plus it’s free to sign up and keep an account with them, so you’re not paying a monthly fee as you do with many of the other banks out there. As a bonus you also get unlimited free Interac e-transfers every month!

Because of those reasons, I’ve been with them ever since they launched in Canada years ago, and it’s where I keep my entire emergency fund and spending money.

To get the free account and a 1 year free subscription to Canadian MoneySaver magazine, just go to buildwealthcanada.ca/eq, open the free account, and once you’re done, forward any email that you get from EQ to bonus@buildwealthcanada.ca and I’ll send you a coupon code that gets you a free one year subscription to the magazine.

Enjoy, and thanks for supporting the show!

Links and Resources:

Financial Literacy Training at Enriched Academy

Kevin's LinkedIn Profile

EQ High Interest Savings Account with Bonus

Questions Covered:

To start things off, tell us a bit about yourself and your background in government, as well as your transition to promoting financial literacy by working with Enriched Academy.

Why did the government decide to introduce the TFSA and what was your involvement in that?

For anybody just getting started learning about RRSPs and TFSAs, can you explain what they are, and share your best practices on how to use them?

I find that definitely one of, if not the most common questions that Canadian investors have, is how to decide for any given year whether they should be putting their savings in their TFSA, RRSP, or a combination of the two. As someone who helped create the TFSA, what would you say to someone asking this question? 

What are the most common mistake you see Canadians making with their TFSA? 

What about the most common mistakes Canadians make with their RRSP? 

When it comes to financial literacy, what would you say are the biggest misconceptions, or things that Canadians just don't know about that are holding them back and limiting their net worth? 

I find we Canadians sometimes get worried about the changes that the government might do which can impact our financial futures. In particular, there definitely seems to be some worry about the large percentage of the Canadian population retiring, and about there not being enough young people to support them from a tax revenue perspective.

Should we be concerned?

Based on your extensive experience in the government sector, how do you see things playing out when it comes to this challenge?

What changes to our government benefits do you think may take place?

For anybody that won't be retiring for another 10+ years, how can we best prepare ourselves for this uncertainty of how much income from the government we'll actually end up receiving in the future?

I'd love to get your perspective on the Registered Disability Savings Plan (RDSP). It’s something that is relatively new, created by Minister Flaherty when you worked with him, and it helps families with disabled children but I find it isn’t that well known. 

Can you give a brief explanation of the RDSP, tell us know why it was created and what people should know about it? 

You recently joined Enriched Academy to help you with your mission of increasing financial literacy for Canadians. Can you tell us about Enriched Academy, and why you decided to join them?

It was great seeing Enriched Academy be so successful when it appeared on the show Dragon's Den. Can you tell us what it's been like having the Dragons as investors and advocates for Enriched Academy, and tell us a bit more about how Enriched Academy helps improve Financial Literacy here in Canada.

Where can we hear and learn more from you?

Bonus Question: Let's talk about using the RRSP vs TFSA when saving for a home. The RRSP has the Home Buyers Plan, but the TFSA is more flexible as there are less rules surrounding it. What is your preference and what should we be considering when choosing to use one vs the other.  

In Closing:

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If you have any tips, suggestions or comments, please be sure to leave a comment in the section below. I read all the responses and look forward to hearing from you.

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I looking forward to hearing from you.

Kornel