### Let's improve the hypothesis:

If you continued adding \$5,500 to your TFSA for another 10 years, i.e., until you turn 65:

• You would have a massive \$2,434,259 in your TFSA.

• You only contributed an extra \$55,000 (i.e., \$5,500 x 10 extra years), but you now have a staggering \$1,529,542 more!!!

Time and returns did the heavy lifting.

Now, if you don’t add one more cent to your TFSA once you turn 65, and you live until you are 95 and don’t need to leave money to anyone else when you die:

• You will be able to extract \$140,773 per year, tax free out of your TFSA.

\$140,773 after tax is the same as having a job that pays you a salary before tax of about \$225,000 per year.

### Sensitivity Analysis

Given the current relatively expensive state of the equity markets, it is quite arguable that a return of 10% per year is too aggressive an expectation. This may very well be true today, but that can also change quickly and dramatically if the equity markets were to have a 2008 type of sell off.

Since no one can accurately predict the direction of the equity market, waiting on the sidelines for an “opportune time” to invest is rarely a good strategy. No one is going to put up a big sign that says it is now ok to invest in equites.

If you only earn a long term average of 7% per year on your all equity portfolio, instead of 10%, your 40 years of \$5,500 contributions per year will still grow to \$1.1 million by the time you turn 65.

If at that time, you were to live until you were 95 and you did not need to leave money to your dependents, (because they also benefited from the information on this website and could look after themselves), then this \$1.1 million would provide you with a tax free income of \$63,613 per year, which is the same as having a job that pays you a salary of about \$81,000 per year.

Your TFSA is a great way for you achieve your financial liberty by generating a significant tax free income.