The most common surprise
Many people open a TFSA at their bank, move money in, and assume it's "invested". Often it's sitting in cash. In a TD survey run by Léger in October 2025, 41% of Gen Z and millennial respondents said they aren't investing the money held in their TFSAs.
That isn't wrong. Cash has a job. But it helps to choose it on purpose instead of by accident.
Three things that can be inside
| What | How it behaves | The trade-off |
|---|---|---|
| Cash or a savings account | Stable. Earns interest. You can take it out any time. | Grows slowly. Over long periods it may not keep up with rising prices. |
| GIC | Pays a set interest rate for a set term. | Your money is usually locked in until the term ends. |
| Investments (stocks, bonds, ETFs, mutual funds) | Value goes up and down, sometimes sharply. | Higher growth potential over decades, with no guarantee and real drops along the way. |
The tax shelter works the same for all three. A "TFSA savings account" and a TFSA at a brokerage follow the same CRA rules. Only the contents differ.
Matching the contents to the timeline
A common way to think about it: the sooner you need the money, the more stability matters. The longer you can leave it, the more ups and downs you can afford to sit through.
- Needed within a few years (emergency cushion, a down payment soon): people usually favour cash or GICs.
- Not needed for 10 years or more: people usually hold more in investments, because there is time to recover from bad years.
Where you land depends on your own situation and how you handle a falling balance. That's a decision only you can make.
How to check what you hold
Open your banking or brokerage app and look for a tab called Holdings, Positions or Portfolio. You'll see one of these:
- "Cash" or a savings rate: it's in cash.
- A term and a rate (for example "1-year, 3%"): it's a GIC.
- Fund names or ticker symbols: it's invested.
Do this before the next lesson
- Open each account you have and write one line for it: "TFSA: cash" or "RRSP: two funds".
- Beside each line, write when you expect to need that money.
- Circle anything where the contents and the timeline don't match. That's your question to explore next.
Sam has $10,000 in a "TFSA savings account" at a bank. What is that money in?
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