Invest smarter Investing TFSAs

Why it pays to invest in a TFSA

TL;DR: If you were to invest consistently for 40 years within a TFSA, you’d end up with 49% more money than if you’d invested the same amount with a non-registered account.*
*Assuming a 5% annual interest rate and marginal tax rate of 32.17%

In 2009, something wonderful was born: The Tax-Free Savings Account (TFSA). Unlike non-registered accounts, you don’t pay any tax on the investment return, even after you withdraw the funds held in your TFSA. 

These tax benefits make TFSAs the smartest way for Canadians to invest, which is why we were thrilled to offer them to our users. We were even more thrilled to see that 9 out of 10 new Advantage users immediately open a TFSA for their goals.

Save & invest in a TFSA

Moka lets you automatically invest in a diversified, tax-free investment portfolio.

Unfortunately, only around 40% of Canadian millennials have a TFSA. That’s more than half of Canadian millennials who are missing out on the opportunity to see a much higher net return on their investments.

We crunched the numbers to demonstrate that a Canadian who invests consistently from the ages of 25 to 65 could end up with nearly 50% more money by investing within a TFSA than with a non-registered account.

What does this mean? Let’s break it down.

Say you begin investing $5,000 a year with a TFSA when you’re 25, and continue putting in the same amount every year until you’re 65. 

After 40 years, your net total TFSA return would be $435,959 (assuming an annual interest rate of 5%*).

However, if you were to have made the exact same investment over the same period of time in a non-registered account, your net total return after 40 years would only be $227,023 (assuming a marginal tax rate of 32.17%*).

You’d end up with 48.36% more money (that’s over $200K more!) with a TFSA than with a non-registered account. 

*Marginal tax rate calculated using the average income of Canadians in this age range, and the average marginal tax rate of all provinces.
*Model assumes that the TFSA program will continue to be offered during the entire period.

You can see the full spreadsheet for the graph here. As the data shows, the valuable tax benefits of a TFSA, plus time and compound interest, make for a lucrative combination. So if you’ve been thinking about opening a TFSA, make today the day. 

Luckily, Moka makes it easy to get started. Just create an account, choose a TFSA for your goal and start saving and investing towards it in the smartest way possible.

For more information on TFSAs, click here.

If you have any questions or would like to talk with a human, simply email one of our dedicated portfolio managers at

Invest smarter Investing

Why did I lose money on my investments?

October was rough for the financial markets in general. If you noticed a decrease in the value of your investment account, please know that there’s no reason to panic.

Dips are normal. The markets often go up like an escalator and down like an elevator, but if you stick with the plan, you’ll do better over time, even if you do take a few elevator rides once in a while.

Take the Toronto Stock Exchange, for example. In October, the TSX decreased by 6.5%. However, over the last 30 years, it has increased 6.8% on average every year. 

Downturns are not only a normal part of investing, they can actually be an opportunity for investors to buy into the market at a discount (take, for example, dollar-cost averaging*). If you can look past the temporary loss and invest more when the market is down, you’ll be better placed to earn higher returns when the market is up again.

Why do stock prices go down?

When we talk about a downturn in the market, we generally mean that stock* prices are declining. To understand why this happens, let’s look at the difference between price and value. The price of a stock is first determined at the company’s initial public offering*, but will rise or fall depending on supply and demand. Supply of a stock at a point in time is determined by the number of sellers, and demand determined by the number of buyers. If supply decreases or demand increases, then prices tend to rise. But if supply increases or demand decreases, then prices tend to fall.

Value, on the other hand, is a subjective concept and varies by investor. You decide how much value to give stock depending on how you feel about the company it represents. It’s the price that you think it should be trading for on the market.

A rational investor will buy when stock price is below value and sell when price is above value. In fact, investors like Warren Buffett have made a living from doing exactly that.

What causes steep market declines?

Prices can fall quickly when the collective mindset of the market shifts from positive to negative sentiment about the future of investments available in that market. At a macro level, world events (like wars or natural disasters), political news (such as elections or tariffs), and the release of economic data or monetary policy decisions are some of the major forces that lead to a decline in prices. Sometimes there are a variety of factors weighing on markets and sometimes there’s no clear reason at all.

What we can say is that markets (like people) always have their ups and downs, which is why looking at the bigger picture matters.

So what does this mean for my Moka investment account?

If you noticed a dip, it’s likely that you are currently investing in a Moderate, Moderate-Aggressive, or Aggressive investment portfolio with Moka. These portfolios have greater exposure to stocks so your investments will have greater volatility (daily fluctuations) than a Conservative or Conservative-Moderate portfolio.  This additional volatility means that you can experience larger losses in certain periods, and larger gains in others.

The trade-off is that expected returns in the long term are higher for riskier investments like stocks than for safer investments such as bonds or savings accounts.

What should I do now?

We recommend that you stay the course with your investments. We selected your portfolio based on information you provided about your goal, financial situation, time horizon and risk aversion. If you are in one of our riskier investment portfolios, chances are that your profile indicates you have a higher ability to tolerate short-term loss, perhaps due to factors such as a strong, steady income, a relatively long time horizon on your goal, and a higher tolerance for risk.

Of course, your investments are your investments, so you should decide what you feel comfortable doing, and this can change as you gain more investment experience. If you have questions or concerns about your investments, your dedicated portfolio manager is always available to chat and can answer any questions you may have about your investment strategy.


Dollar-cost averaging is an investment strategy that involves buying a fixed dollar amount of a specific stock on a recurring schedule over a long period of time. Investors buy more shares when the price is low and fewer when the price is high, but they will gradually build wealth as the value of that stock goes up and down.

Stock means ownership in a company. If you have stock in a company, you own a part of the company. Sometimes people use the terms ‘stock’ and ‘share’ interchangeably, but they aren’t the same thing. Think of stock as the pie and shares as the slices.

An initial public offering is the launch of shares in a company on a stock exchange. The company pays an investment bank to calculate the value of the company, the number of shares in the company and the cost of an individual share.

Invest smarter Investing

Ask an expert: I’m young. Should I take a lot of risk with my investment?

We’re told it’s good to take risks early in life, but does this advice hold up when it comes to investing? There’s no short answer except: It depends. The truth is that it comes down to who you are and what you want. I’ll explain.

In the investing world, risk is the probability that you will experience financial losses. The benefit of taking risk, however, is that it can come hand in hand with higher returns, or profit on your investments, in the long run. If you’re trying to figure out how much risk to take, first consider these two questions:

1. What is your financial situation?

It is crucial to determine your risk tolerance before you start investing. How much risk you should take depends on both your 1) willingness and 2) ability to accept risk.

Your willingness to tolerate risk is your subjective attitude toward risk taking.  In other words: What qualitative emotions do you have around investing? At Moka for example, we ask questions like  “Imagine your stocks are down. How would you react?” Your answer gives us a good sense of how willing you are to take risk, and this knowledge helps us invest your money accordingly.

Your ability to take risk is equally important. Before deciding how much risk to take, you should also look at quantitative factors like your income and your net worth. If you have a high income and net worth, you can afford to ride out short term losses and emerge with healthy finances in the long run. Someone with a lower income or net worth simply can’t afford to lose so much.

2. What are your financial goals?

Identifying a goal before you start investing is important. Your goal helps determine how much risk you should take because it points to your investment time horizon, or the length of time you want to invest before reaching your goal.

Historically, stock markets have seen the best returns on investments over time when compared to investing in bonds or leaving your money in savings. However, the road to profit can be long and bumpy. Over a short time period, it’s possible that your investments may not perform well and you could even see a loss. Fluctuations in the market mean that you’re better off taking less risk if you have a short-term goal. However, if you’re saving for a long-term goal like retirement, you can afford to take more risk because you have time to recover from a hiccup in market performance. You’ll still see profit if your investments have a general upward trend over the long run.

For many millennials, saving for short-term goals is a bigger priority than long-term savings. If you’re looking to achieve a goal soon, taking a lot of risk may leave you disappointed. Imagine you’re trying to save a down payment so you can buy a house in the next few years. If you invest in a high risk portfolio and the stock market takes a major downturn, you could see your down payment shrink and end up further away from your goal. The same principle applies to other short-term goals, like buying a car, taking a vacation or repaying debt.

Bottom line: Consider your financial situation and your current goals before you make a risky decision, or enlist the help of a professional portfolio manager who can design a portfolio that works for you.