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Our latest confusion when it comes to Tax Free Savings Accounts? Which investments we should have inside these savings vehicles. A recent survey by ING Direct claims 47 per cent of us are unsure about which investments to use. Considering that it's what we put inside our TFSA that determines if it's an effective tax-sheltered investment or not, we should consider finding the answers we need and making some decisions, today.

Investments that you can place in your TFSA portfolio are generally the same as those permitted in an RRSP. Mutual funds, cash, guaranteed investment certificates (GICs), bonds, etc. According to the poll, the majority of us (87 per cent) who have opened a TFSA since its launch in 2009 used it for an emergency fund or left it in a short-term investment such as a savings account. But with contribution room now at $15,000, and only continuing to grow, TFSAs can play a greater role in overall investment strategy - if we make the right choices.

Making the right choice also means doing some homework when it comes to associated costs and fees for transferring TFSA funds to another institution. According to Peter Aceto, president & CEO of ING Direct Canada, this penalty can wipe out any interest gains and often deters people from moving TFSA funds from one institution to another where they could receive considerably better returns. Mr. Aceto also says that as long as you use them properly and don't incur fees for moving your funds, TFSAs can be a good way to save for shorter-term goals: Good news for the majority of people who are using theirs for emergency funds or short-term investments. But what about long-term goals? According to Mr. Aceto, many of us are not tapping the true strength of TFSAs.

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If you're in the camp questioning whether you're making the most of your TFSA, then it's time to maximize the hard-earned funds you have allotted for your TFSA to avoid missing out on any opportunities you could be taking advantage of. For more information on the Tax-Free Savings Account, contact your adviser, financial institution or your TFSA issuer. General information and questions to ask before or after opening a TFSA can be found on the TFSA website or by calling Canada Revenue Agency (CRA) at 1-800-959-8281.

Whether your main purpose is for emergency funds and short-term savings or retirement purposes and long-term goals, putting your money to work with a well-thought-out plan is the only way to accomplish your intended goals.

Angela Self is one of the founders of the Smart Cookies money group.

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About the Author
Angela Self

Angela Self is one of the founders of the Smart Cookies, a group of five women who specialize in personal finance. They are hosts of a self-titled show on the W Network and the authors of The Smart Cookies' Guide to Making More Dough. More

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