TFSA Interest Rate

With the TFSA Interest Rate, the minimum rate of return: 0%.Maximum rate of return: 12%. A TFSA offers flexibility for short- and long-term financial goals.

Why a Fixed Interest Rate Won’t Get You the Best Return

Investing, as most people realize, is a trade-off between risk and reward. As a general rule, if an investment has the potential for significant gains, it also probably comes with more risk. The reverse is also true. Lower-risk investments typically don’t offer the chance for higher returns.

Looking at the list of investment options above, there are some choices that are more conservative than others. For example, high-interest savings accounts and GICs come with little risk (other than inflation). However, they also don’t offer the potential for very high rewards given that interest rates are pretty low these days.

In contrast, equity investments (stocks, stock index funds, and stock ETFs) are riskier. Yet historically, they do tend to outperform more conservative products such as GICs and high-interest savings accounts. Whereas the best GIC rates these days are about 2%, Canadian equities have historically returned, on average, 6% per year. Of course, there’s no guarantee those returns will be replicated in the foreseeable future.

Offerings from Various Providers

Financial institutions in Canada, such as banks, credit unions, and trust companies offer TFSAs. If you want to put just cash in a TFSA, you have a number of options. Here are the interest rates being offered on TFSA high-interest savings from the major Canadian banks: