Rob Carrick: What are the costs and benefits of using two different TFSAs for investing?


The average number of tax-free savings accounts per account holder is 1.38, which tells us that a bunch of people are juggling multiple TFSAs. A query from a reader highlights a possible reason for this.

This fellow has one TFSA with an online broker holding exchange-traded funds. Using money now held in a savings account, he’s thinking of opening a second TFSA with another broker to explore some riskier investments. “What are the merits or disadvantages of opening and using two different TFSAs for investing?” he wrote. “Is this a worthwhile endeavour, or am I needlessly spreading myself thin?”

My take is that, for four reasons, one account is better:


It’s far easier to maintain a steady mix of stocks and bonds when all your assets are in one account. Even with a single account, investors can let their mind wander in a way that allows their asset mix to get out of whack over time. Two accounts means two times the effort required to monitor holdings and rebalance from time to time.


Sure, you could divide the $6,000 maximum contribution to a TFSA this year into two even chunks. But what if you’re making contributions on an ad hoc basis, and what if you withdraw money now and then and want to replace it later? A higher level of record-keeping is required in these situations. Sloppiness could result in an overcontribution penalty.


Having a “fun” account for more aggressive investing can sound appealing in that you have the comfort of knowing your “serious” account is there as well. But I wonder whether there’s something maybe a bit too freeing about having that fun account. Having a consolidated portfolio where everything is connected may make investors more accountable to themselves and less willing to take an ill-considered flyer on a stock or fund.


Smaller accounts may be subject to fees at some brokers of $25 to $30 per quarter unless a certain threshold of trading is reached or certain other requirements are met. Having one account instead of two means you have more assets and are thus less likely to incur these costs.

By the way, that 1.38 TFSAs per person figure comes from federal government data that you can access online. It’s kind of fun to browse the numbers to see how people are using their TFSAs.

Rob Carrick
Personal Finance Columnist
The Globe and Mail, September 29, 2020

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