Andrew Goldman has been writing for over 20 years and investing for the past 10 years. He currently writes about personal finance and investing for Wealthsimple. Andrew's past work has been published in The New York Times Magazine, Bloomberg Businessweek, New York Magazine and Wired. Television appearances include NBC's Today show as well as Fox News. Andrew holds a Bachelor of Arts (English) from the University of Texas. He and his wife Robin live in Westport, Connecticut with their two boys and a Bedlington terrier. In his spare time, he hosts “The Originals" podcast.
Wherever they happen to be located, Tax-Free Savings Accounts (TFSAs) happen to be an incredibly valuable account for anyone looking to save money for a big future purchase, be it a house, car, or, for the well heeled cartography fan, the $13,000 “world’s most detailed globe”.
TFSAs are incredibly versatile in how their balances are invested and funds can easily be withdrawn and replaced. They are particularly attractive because of the tax advantages they offer; all investment gains in TFSA accounts are tax-exempt. The Canadian government introduced TFSAs in 2009 as a way to encourage people to save money.
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 Tangerine 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 Tangerine's TFSA
Tangerine, also known as Tangerine Bank, launched in Canada in 2014, however it’s actually been around since 1997 doing business under another name, ING Direct. The concept of ING Direct Canada, which was headquartered in the Netherlands, was to be an internet-only bank, and because it wouldn’t be opening any branches, it would be able to offer higher interest rates to Canadians than the major banks, however several competitors eventually introduced interest rates higher than theirs. ING Direct did, however, open a small number of cafes in Canada as “a new platform for showing people how simple and pleasant managing their money can be.” In 2012, Canada’s third largest bank, Scotiabank, acquired ING Direct Canada for $3.1 billion CAD. Scotiabank relaunched it two years later as Tangerine and continues to operate five café locations as well as many ABMs across Canada.
Tangerine Tax-Free Savings Account:
Though TFSA stands for tax free savings account, this is a bit of a misnomer. By the government's definition, TFSAs are more like an investment basket in which you can toss any of a number of financial instruments—exchange traded funds, guaranteed investment certificates, stocks, bonds and yes, actual savings accounts. However Tangerine offers a TFSA that is just a cash savings account. This type of TFSA is guaranteed by the Canada Deposit Insurance Corporation (CDIC) for up to $100,000 in case of bank default. Unlike the Tangerine GIC you'll be able to access your funds whenever you like with no penalty.
Tangerine Tax-Free GIC:
Tangerine also offers a Guaranteed Income Certificate (GIC) TFSA. Like the Tax-Free Savings Account, Tax-free GICs are insured by the CDIC up to $100,000 in case of bank default. They also offer higher interest rates—currently up to 2.45% annually. The main drawback of GICs is that in order to receive the higher interest rate, you'll need to commit to not touch your money for a period between 90 days and five years. The longer you commit, the higher the interest rate Tangerine offers.
Tangerine Tax-Free Investment Account:
Tangerine also provides what they call “tax-free investment funds” which are TFSAs comprised of stock and bond ETFs. They offer customers five different portfolio options that range from conservative (“Balanced Income,” made up of mostly Canadian bond ETFs) to aggressive (“Equity Growth,” two thirds of which is made up of Canadian and US stock ETFs). These TFSAs come with the risk inherent to all stock and bond investments—possibly losing money.
Tangerine TFSA Rates & Fees
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. Here are the details of what Tangerine currently offers with its TFSAs.
Tangerine Tax-Free Savings Account:
Currently, Tangerine offers 1.2% annual interest rate in their saving account TFSAs, though they may also offer higher introductory TFSA interest rates for new clients.
Tangerine assesses no fees to open or keep a savings account TFSA with them, and their TFSAs require no minimum deposit. Tangerine will, however, assess a $45 transfer fee if you move your registered account to another company (the fee is waived if moving from one Tangerine account to another or to a Scotiabank account.)
|Fee/Rate Type||Fee/Rate Amount|
|Interest rate on savings account TFSA||1.2% APR|
|Human telephone support at no extra cost||Yes|
Tangerine Tax-Free GIC:
Currently, Tangerine offers between 0.5% and 2.45% for their GIC TFSA; the longer you commit to leave your money invested, the higher the interest rate will be. There is no minimum investment required to open a tax-free GIC, though should you move your money to a different institution, you'll be assessed a $45 fee.
|Length of GIC commitment||Current interest rate as of May 29, 2019|
Tangerine Investment Account:
Tangerine's investment accounts offer various portfolios, all of which contain a mix of ETFs containing the following: Canadian stocks, US stocks, international stocks, Canadian bonds and US bonds. The more aggressive the portfolio is, the higher the percentage of stock ETFs relative to bond ETFs it will contain. Tangerine also offers its relatively new Dividend Portfolio comprised of US, Canadian and international equity ETFs containing only stocks that pay annual dividends. Dividend portfolios tend to be a favourite of investors who seek regular income from their investments, either in retirement or before.
|Portfolio performance as of April 30, 2019||1 year||3 years||5 years||10 years||Inception|
|Balanced Income Portfolio||6.61%||4.63%||4.59%||5.52%||4.48%|
|Balanced Growth Portfolio||8.57%||8.93%||7.38%||8.82%||5.71%|
|Equity Growth Portfolio||9.36%||11.12%||8.28%||N/A||10.95%|
All Tangerine investment account portfolios feature the same Management Expense Ratio (MER) of 1.07%. This means that regardless of the performance of the portfolio, you will pay 1.07% of your entire investment annually as a fee for Tangerine's management of it.
|Fund performance since inception (as of April 30 2019)||4.48%|
|Management fee on tax-free investment funds||1.07% MER|
|Human telephone support at no extra cost||Yes|
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 balance 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. We reckon it's the perfect home for a TFSA or any other type of registered account.
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 and commmission-free trading. Plus features — like automatically investing your spare change—that makes 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 May 2019. In order to uncover this information, we looked at the Tangerine 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.
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https://www.ing.com/Newsroom/All-news/Features/Features-old/ING-Direct-Cafe-Lyon-opens-its-doors.htm (retrieved May 20, 2019)
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https://www.tangerine.ca/en/products/saving/guaranteed-investments/tax-free-guaranteed-investment/ (retrieved May 20, 2019)
https://www.tangerine.ca/en/products/investing/investment-funds/investment-fund/ (retrieved May 20, 2019)
https://www.tangerine.ca/en/products/saving/savings-accounts/tax-free-savings-account/ (retrieved May 20, 2019)
https://www.tangerine.ca/file_source/fberoot/pdf/en/en_fair_fees_schedule.pdf (retrieved May 20, 2019)
https://www.tangerine.ca/en/products/investing/performance/ (retrieved May 20, 2019)
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