New poll shows only 12 per cent of Canadian tax refunds are being invested; many choose to
park refunds in cash for a rainy day
Where are Canadian tax refunds going?
- Holding as cash (39 per cent, up from 35 per cent last year)
- Paying down debt (24 per cent, up from 21 per cent last year)
- Spending on essentials (29 per cent, down from 32 per cent last year)
- Discretionary spending (12 per cent, down from 17 per cent last year)
- Investing (12 per cent, down from 14 per cent last year)
"There are more demands on money these days, but Canadians getting a lump sum this spring should consider the opportunity to put those funds to work for them as part of a broader investment plan—particularly given that higher inflation means the value of parked cash erodes more quickly," said
More than two-thirds (68 per cent) of Canadians claim to have received or expect to receive a tax refund, suggesting that many have or feel as though they have overpaid over the course of the year.
"While receiving a tax refund may feel like a bonus, it has also been likened to giving the government an interest-free loan from each of your paycheques—money that could have been fueling your investments and earning interest in previous months," added Marjanovic. "Each investor's tax planning should involve minimizing refunds to make best use of assets throughout the tax year, in addition to deploying any end-of-year refunds."
For those Canadians looking to invest some of their tax refund this season a few considerations from Investor's Edge include:
- Leveraging tax-advantaged accounts like TFSAs, RRSPs, RESPs and FHSAs to manage the tax implications of future earnings
- Comparing rates of return and weighing the opportunity costs and risks of investing vs. holding cash or paying off debt
- Learning how to diversify and build a resilient portfolio
- Reviewing strategies to reduce your taxes for the year ahead including updating TD1 and T1213 forms for 2024 to reduce the amount of tax withheld during the year
To learn more about investing please visit www.investorsedge.cibc.com.
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About the study
These are some of the findings of an Ipsos poll conducted between
SOURCE CIBC
© Canada Newswire, source