Q: I never thought of the TFSA as an investment, because I use my RRSP to invest. I use my TFSA as a savings account but does that mean the money isn’t protected? Could I lose all that money?
—Maria Vasilescu, Kitchener, Ont.
A: If you hold cash or GICs in your Tax-Free Savings Account (TFSA), it is covered by the Canada Deposit Insurance Corporation for up to $100,000 in the event that your bank fails. If the money is invested in mutual funds, ETFs or stocks, it is not covered. But that isn’t the risk I would be worrying about. Instead, focus on what types of investments you hold, regardless of whether they are in your TFSA or your RRSP. If the purpose of the TFSA money is to save money, say for a new car or a house down payment, keep it in something really low-risk like GICs or cash. If the purpose is to invest long-term for your retirement, a diversified portfolio will move up and down over time, but it isn’t likely to go to zero. Unless, perhaps, a meteor hits planet earth and then we will all have bigger problems to worry about.