Small white piggy bank sitting on a layer of Canadian twenties bills with a dollar coin (loonie) dropping inside.
© Sorin Alb / 123RF Stock Photo

Fewer Canadians were able to contribute to TFSAs this year as planned, but those who did tended to place more money in their accounts, according to the Bank of Montreal’s (BMO) annual TFSA study.

According to the survey, 53% of Canadians said they contributed to their TFSAs as planned this year, compared to 58% who said the same in 2019.

Yet contributions on the whole are up 9.5% year over year, the bank noted, indicating that those who did contribute were able to put aside a little extra.

BMO Economics estimated that excess savings reached $150 billion this year while disposable income was up 10.6% year over year in the third quarter.

“Despite such a challenging year, it’s encouraging to see that Canadians are resilient when it comes to savings,” said Nicole Ow, BMO’s head of term investments, in a release. “If anything, 2020 has highlighted the importance of maintaining a savings plan to build rainy day funds or invest for longer-term goals and a TFSA is the right vehicle for these various scenarios.”

More than two-thirds of Canadians said they now have a TFSA, up from less than one-quarter five years ago.

These accounts hold an average of $30,921, up more than 9% from last year.

Yet while most Canadians have a TFSA they remain unsure as to what they can do with this type of account. For example, nearly one-quarter of Canadians said they aren’t aware of what investments can be held in a TFSA; 12% said they believe TFSAs are only for cash savings.

This knowledge gap is made even clearer by the fact that the largest holding in these accounts tends to be cash, at 38% of the average TFSA, according to BMO. This is followed by 23% for mutual funds and 18% for stocks.

The BMO TFSA survey was conducted by Pollara Strategic Insights via an online survey of 1,500 adult Canadians conducted between Nov. 17 and Nov. 23.