The best tax-free investment account — and why opening one in university pays off for decades.
A Tax-Free Savings Account (TFSA) is the most powerful financial tool available to young Canadians. Every dollar you earn inside a TFSA — whether from interest, dividends, or capital gains — is completely tax-free, forever. For students, opening a TFSA early means decades of tax-free compounding growth.
A TFSA is a registered Canadian account that lets you save and invest money without paying tax on the growth. Key features:
The annual TFSA contribution limit for 2025 is $7,000. If you turned 18 in 2009 (when TFSAs were introduced), your total cumulative room by 2025 is approximately $95,000. For students who just turned 18, your annual room accumulates from the year you turn 18.
| Year You Turn 18 | Cumulative TFSA Room by Jan 2025 |
|---|---|
| 2018 (now 24) | ~$54,500 |
| 2019 (now 23) | ~$47,500 |
| 2020 (now 22) | ~$41,500 |
| 2021 (now 21) | ~$35,000 |
| 2022 (now 20) | ~$28,500 |
| 2023 (now 19) | ~$21,000 |
| 2024 (now 18) | $7,000 |
You accumulate TFSA room every January 1 after you turn 18, regardless of whether you open a TFSA or not. The room just waits for you.
Even if you can only contribute $25–$50 per month, starting in university gives you a massive advantage over starting at 30:
Compound interest rewards patience and early starters above all else.
A TFSA isn't just a savings account — it can hold a wide range of investments:
For most students, a simple TFSA holding a broad market ETF (like XEQT or VEQT) is the best starting point — low cost, diversified, and historically strong returns over 20+ years.
| Provider | Type | Best For |
|---|---|---|
| Wealthsimple | App-based brokerage | Beginners; commission-free trading |
| Questrade | Self-directed brokerage | Active investors; free ETF purchases |
| EQ Bank TFSA | Savings account | High-interest savings only |
| TD/RBC/BMO Direct Investing | Bank brokerage | Students already banking there |
Wealthsimple is the most popular choice for first-time student investors — it's free, simple, and has a clean mobile app. ETF purchases are commission-free.
With federal Canada Student Loans now at 0% interest (since April 2023), it actually makes mathematical sense to invest in a TFSA rather than rush to pay off your Canada Student Loan:
Priority order: emergency fund → high-interest debt → TFSA contributions → extra loan repayment on 0% federal loan.
TFSA withdrawals are not considered income for tax purposes — which means they typically do not count as income when assessing your financial need for OSAP or provincial student loans. However, your TFSA savings balance might be considered an asset if you are assessed as an independent student. Check with your provincial student aid office if you have a significant TFSA balance.
KOHO is perfect for students: no monthly fees, no minimum balance, cash back on groceries and transit, and instant spending notifications to keep your budget on track. Use code 45ET55JSYA for a sign-up bonus.
Open KOHO Free — No Fees — Code 45ET55JSYAOpening a TFSA as a student is one of the best financial decisions you can make. Even small, consistent contributions during university compound significantly over decades. Start simple with a free account at Wealthsimple, invest in a low-cost ETF, and let time do the work. Your future self will thank you.