Many young Canadians are missing out on one of the easiest ways to grow their money, according to a new survey from TD.
While 65% of Canadians hold a Tax-Free Savings Account (TFSA), four in 10 (41%) Gen Z and Millennial account-holders admit they aren’t investing the funds inside — a habit that could diminish the benefits of long-term returns.
TD found the top reasons younger Canadians aren’t investing include wanting quick access to their money (27%), feeling they haven’t saved enough to invest (22%) and lacking confidence or knowledge about investment products (22% and 19%, respectively).
“Many Canadians understand the value of saving, but fewer seem to recognize the importance of investing those savings within their TFSA,” Pat Giles, Vice-President, Saving and Investing Journey at TD, said in a statement. “Even small, consistent investments can help Canadians maximize the full tax-free potential of their TFSAs.”
The survey, conducted by Léger with a representative sample of 1,500 Canadian adults, shows that younger Canadians are eager to invest, but uncertain about how or where to start.
Among Gen Z respondents with a TFSA, 40% said they opened it because it seemed like a simple first step, and 25% intend to begin investing within the next year. Yet two in five don’t feel confident knowing when to use a TFSA versus a Registered Retirement Savings Plan (RRSP), and one in three aren’t sure whether they’ve chosen the right account type for their financial goals.
Those who don’t yet have a TFSA cited lack of understanding as the biggest barrier — nearly three-quarters (74%) said limited knowledge was holding them back, which is well above the national average of 52%. Many also said they weren’t sure where or how to begin (35%) or found investing too complicated (16%).
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The findings in this TD survey echo a broader trend in financial literacy across Canada.
According to a recent survey from CIBC, only about 55% of Canadians aged 18-34 say they feel confident investing, compared with 64% of those aged 55 and over. Analysts say that learning the difference between saving and investing — and understanding how tools like TFSAs can compound growth over time — is key to bridging that gap.