# TFSA and have \$1M dollar after 40 years at 5.5% interest with \$500 year bump 2% annual inflation rate : Is it an efficient way to be a millionaire?

Is it true that if I fix 5500 dollars at a TFSA (Tax-Free Savings Account) at 5.5% interest and 500 dollars yearly bump then after 40 years someone will retire with a million dollar? Is it an efficient way to retire as a millionaire?

TFSA Savings and Million dollar within 40 years

Here is another link from the daily newspaper Globe and Mail in Canada:

Can anyone kindly tell me if they are right or not?

More elaborative

• No, it's not true. Initial contribution of \$5,000 with \$500 added at the end of the year, compounded for 40 years at 5.5% is about \$115k+ Apr 13 '19 at 17:04
• But if you fill out the number of the years text field to 40 years and press enter it will show you that the money will be invested. And investment return is \$788,249.64 and total contribution \$399,500.00 Can you tell me what these numbers represent? So the money is not just sitting there in TFSA but invested in diverse sectors. Am I right?
– user76016
Apr 13 '19 at 17:46
• I can't tell you what the numbers represent since I think that there's something wrong or missing in your link. From your description, an initial contribution of \$5,000 with \$500 added at the end of the year, compounded for 40 years at 5.5% is \$115,126. I just verified that here: mdm.ca/tools/compound-growth Apr 13 '19 at 17:50
• Make life (calculations) easier. \$5,500 initial deposit with \$5,500 contributed at the end of each year compounded for 40 years at 5.50% would yield \$794k. Apr 13 '19 at 19:48
• No, it's not efficient (even if you actually do wind up with a million), since it takes 40 years of saving. The efficient way is to arramge to be born to wealthy and indulgent parents, who'll just give you the money :-) Apr 14 '19 at 4:07