Lisa MacColl is a writer, investor and former compliance consultant in the group retirement and individual wealth management fields. Lisa has written about personal finance for 14 years and currently writes about investing and investment providers for Wealthsimple. Lisa's past work has been published in Canadian Money Saver, Advisor’s Edge, CBC, and CreditCards.ca. She was a nominee for the 2015 Oktoberfest Women of the Year, Professional Category. Lisa holds an M.A. and B.A. from the Wilfrid Laurier University.
Since 2009, Canadian residents have had the opportunity to save money while taking advantage of tax-sheltered investment earnings. The Tax-Free Savings Account (TFSA) allows investors to maximize the power of compunding, without a nasty tax surprise that pulling money out of an Registered Retirement Savings Plan (RRSP) can have. TFSAs have contribution limits, but unused contribution room gets rolled over into the next year. You can find out what your TFSA contribution room is by checking your Notice of Assessment, the document the Canada Revenue Agency (CRA) sends you after you file your income tax every year. You can also check the balance on “My Account” if you have set up a CRA online account.
Generally, the same kind of investments that are allowed in a RRSP are allowed in a TFSA, and investment earnings are tax-sheltered. Best of all, because your contributions are made with after-tax dollars, you don’t have to pay tax on the funds when you withdraw them.
Your trust is important to us. That’s why we always do our best to be fair and provide complete, up-to-date and accurate information. You should know that CIBC may change their product features or fees at any time. To complete your homework, we recommend visiting their site to continue your research.
An Overview of CIBC’s TFSA
CIBC has been around since 1867, and is considered the 5th largest bank in Canada and has assets under management of approximately $587 million as of 2018. It offers the usual range of financial products, including savings accounts, credit cards, investments and in-house financial advice. CIBC offers three types of TFSA. You have the option of making regular deposits to your investment account TFSA, starting at a minimum of $25. CIBC offers human support in person and by telephone.
CIBC TFSA Tax Advantage Savings Account
The CIBC TFSA Tax Advantage Savings Account works like a regular bank account, with the benefits of tax-sheltered income. There is a minimum deposit of $25. Because it is considered a savings account rather than an investment account, it has the advantage of being very stable and safe. It’s insured for up to $100,000 by the Canada Deposit Insurance Corporation (CDIC). You can access your funds at any time, but if you choose to transfer any or all of your TFSA to another financial institution, there will be a $100 transfer fee. It is currently paying 0.55% interest as of March 16, 2020.
|Interest rate on savings account TFSA (as of March 16, 2020)||0.55% APR|
|Human telephone support at no extra cost||Yes|
CIBC TFSA GICs
CIBC offers a number of Guaranteed Interest Certificates (GICs) that offer short, medium and long-term options for savings if you aren’t comfortable with mutual funds. As long as the term is 5 years or less, GICs are covered by the CDIC. Here’s a handy comparison chart for you.
CIBC TFSA GIC Rates and Fees
|GIC Name||CIBC Bonus Rate TFSA GIC||CIBC Flexible TFSA GIC||CIBC Escalating Rate TFSA GIC||CIBC Redeemable TFSA GIC||CIBC Non-Redeemable TFSA GIC||CIBC Cashable Escalating Rate TFSA GIC|
|Terms available||1-5 years||1 year||3 and 5 year||9-36 months||2-60 months||3 and 5 year|
|Rates as of March 9, 2020||1.20%-1.6% depending on the term.||1.15%||Three Year: 1.0% escalating yearly to 1.65% in year 3. Five Year: 1.0% escalating yearly to 3.0% in year 5.||0.15%- 0.60% depending on the term||0.25%- 1.25% depending on the term.||Three Year: 0.75% escalating yearly to 1.0% in year 3. Five Year: 0.75%-escalating yearly to 2.0% in year 5.|
|Access to Funds||Non-redeemable until term maturity. If funds are withdrawn prior to maturity, no interest will be paid.||Full or partial redemption (minimum $500 withdrawal.) allowed at any time. If remaining balance less than $500, full redemption will occur.||Non-redeemable until term maturity. If funds are withdrawn prior to maturity, no interest will be paid.||Some or all the funds are redeemable on any business day.||Non-redeemable for length of term . If funds are withdrawn prior to maturity, no interest will be paid.||Full or partial redemption allowed on each anniversary date/ +7 days. Minimum $500. I remaining balance is account is less than $500, full redemption will occur.|
|Interest Paid||Terms 1 year or less: simple interest paid at maturity. Terms over 1 year: interest compounded annually and paid at maturity.||Simple interest paid at maturity for redemptions over 30 days or to the date of withdrawal. No interest paid for redemptions less than 30 days.||Interest compounded annually and paid at maturity||Terms 1 year or less: simple interest at maturity. Terms over 1 year: interest compounded annually and paid at maturity.||Terms 1 year or less: simple interest at maturity. Terms over 1 year: interest compounded annually and paid at maturity.||Interest compounded annually and paid at maturity. Anniversary withdrawal has interest calculated to redemption date. Withdrawals at other times receive no interest.|
|Fees||$100 transfer fee||$100 transfer fee||$100 transfer fee||$100 transfer fee||$100 transfer fee||$100 transfer fee|
CIBC Tax-Free Investment Account:
CIBC also offers a TFSA with investment options. CIBC allows you to “build your own” portfolio from among the CIBC funds, or they also offer passive portfolios (with a minimum balance of $5000) that are a suite of index and exchange traded funds, and managed portfolios (with a minimum balance of $500) that are created and managed by CIBC to meet an investor’s profile. Investors need a $500 minimum account balance or $25 per month auto-deposit to begin investing. All CIBC investment accounts have human support available at no extra charge.
This option, consisting mainly of money market funds, has the lowest risk and is designed for steady income with preservation of capital. Trailing commissions vary from .1%-.5% annually. That might not sound like much, but it can eat into investment returns over the long term.
This option of low and medium risk funds offers long-term potential for capital growth and may generate higher income than the savings funds. There are a mix of mutual funds and index funds. Trailing commissions vary from .15%-1.0%.
Growth funds tend to have more volatility and higher risk, but also have more potential for higher returns than income funds over the long-term. Their trailing commissions range from .15%-1.0%. Some growth funds have higher account minimums, so you should always read the prospectus before investing.
Wherever you put your TFSA, the two important factors will be what sorts of returns you might expect from your investment as well as the fees the financial institution assesses every year to manage your money. In addition to the trailing commissions, CIBC also charges $20.00 if you close your account within 90 days of opening it, and a transfer fee of $100 if you transfer part or all of your TFSA to another financial institution.
A humble introduction to Wealthsimple
While we have your attention, we’d like to introduce you to Wealthsimple. We offer smart, simple investing, including TFSAs without the high fees associated with traditional banks and there’s no minimum amount needed to open any of our accounts.
Get started with Wealthsimple Invest and we’ll create a diversified portfolio of low-cost ETFs that perfectly match your risk tolerance and investment goals. Our cutting-edge technology and unparalleled customer support comes at a surprisingly low fee.
Our expert financial advisors are always available when you need them. They can help plan your financial milestones and answer questions you might have about potential risks or what sort of investment accounts you should have.
Investing is just one part of your financial picture. So, we’ve introduced more ways to reach your goals and manage your money. High interest savings, commmission-free trading. And features — like automatically investing your spare change— that make it easier to save for your future. That’s because we believe that everyone should have access to the tools they need to make smart financial choices.
What to look out for in a TFSA provider
Where you open your TFSA could mean a difference of thousands of dollars. Even tens or hundreds of them. That’s because different financial institutions charge different investments and fees. Not to mention different levels of smart technology and human advice.
Management fees can be a mortal enemy of investment growth. Because they often look so minuscule, they’re deceptively destructive. Small fees make a huge difference; one Toronto-based investment advisor showed that a fee of just 2% could decrease investment gains by half over the course of 25 years. And studies regularly demonstrate that fees are directly predictive of returns in a very simple way; the higher the fees, the lower the returns.
As we’ve explained, TFSAs are just accounts in which you might put various kinds of financial investments, including cash, stocks or bonds. A number of factors will dictate how you invest, including your risk tolerance and investment horizon, aka, when you need to access the money. You should research the investment options available to you before you open the account — since Tangerine, for example, will assess a $45 fee per account should you decide to move elsewhere.
If you think you may someday want someday to fill your TFSA with investments that yield a bit more than a savings account, you may want to find a place that offers low fees as well investment choices that allow you access to the stock and bond markets.
A lot of pizzas are pretty good, but some rise to the level of dude, this pizza is so good. Automated investing services of the same way. They employ different technologies and algorithms to optimize account performance. Some are smarter than others in that they’ll perform portfolio-supercharging tasks like automatic portfolio rebalancing and tax loss harvesting at no extra charge. Make sure that whichever investment provide you choose offers the most advanced technology available.
The information on this page was compiled by Wealthsimple in June 2019. In order to uncover this information, we looked at the CIBC website, press releases and third-party sites. The information collected is provided for educational purposes only, as at the time of publication and is intended for Canadian investors.
We are providing general information here so that you can consider all your options for meeting short, medium and long-term financial goals. Everyone’s situation is different, and what might work for one person would be an epic fail for someone else. You should always consult with a professional to determine if an option is right for your unique circumstances.