A TFSA is a type of account that you can open at any bank. Like other accounts, what you have inside is up to you. Could be stocks, cash, mutual funds - you pick.

Normally, when you invest money or earn some interest on your savings, the government will take some of those earnings as tax.

But if you make money inside a TFSA, you're not taxed at all. So how does it work?

Every year, starting from when you turned 18, you get more and more room to add money into your TFSA.

If you add to your TFSA, you use up some of that room.

You can take money out at any time, but you don't get that room back until Jan 1st of the next year.

The great part about the TFSA is that any money you make inside of it is tax-free. Whether that's money from selling stocks or earning interest.

Any money you make inside your TFSA doesn't affect your TFSA room either. Let's say you had $20k room in your TFSA and $10k in stocks. It doesn't matter if your money grows or even doubles, you still have that $20k room left.

Maxed out your TFSA already? Nice!

The room you have increases at the start of every year, see the Govt of Canada site for the latest amount.