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
TORONTO, April 26,
2024 /CNW/ - A new poll from Investor's Edge
reveals that only one in ten (12 per cent) Canadians plan to invest
their tax refund this year, as other financial demands are putting
pressure on family finances and many Canadians choose to simply
hold cash given economic uncertainty.
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)
New poll from Investor's Edge reveals only
one in ten (12 per cent) Canadians plan to invest their tax refund
this 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 Luka
Marjanovic, Managing Director and Head, CIBC Investor's
Edge. "While many Canadians are planning to hold on to their refund
as cash, it may not be a good long term strategy. Self-directed
investing is a low-cost option for putting the cash to work in a
way that can earn more over time."
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.
About CIBC Investor's Edge
CIBC Investor's Edge is a leader in self-directed investing.
Investor's Edge provides an intuitive mobile trading platform, easy
to use tools, extensive research, and a growing library of
educational materials to help investors chart their own course.
Backed by one of Canada's largest
banks and the forerunner in Canadian equity trading with CIBC
Capital Markets, Investor's Edge helps clients bring clients'
ambitions to life.
About the study
These are some of the findings of an Ipsos poll conducted
between April 3 to 4, 2024 on behalf
of CIBC Investor's Edge. For this survey, a sample of 1,001
Canadians aged 18+ were interviewed online. Weighting was employed
to balance demographics to ensure that the sample's composition
reflects that of the adult population according to Census data and
to provide results intended to approximate the sample universe. The
precision of Ipsos online polls is measured using a credibility
interval. In this case, the poll is accurate to within ±3.8
percentage points, 19 times out of 20, had all Canadians aged 18+
been polled. The credibility interval will be wider among subsets
of the population. All sample surveys and polls may be subject to
other sources of error, including, but not limited to coverage
error, and measurement error.
SOURCE CIBC