Tax-Free Savings Account And Dividend Stocks?
- Thread starter Probyn
- Start date
It's a good idea to have a tax free savings account especially if you have money & not collecting interest on it. Right now the best deal is scotiabank they are offering 2% interest until march 31 then it goes to 1.15%. There are definitely better ways to invest your money in the meantime a tax free savings account is a great place to let it sit
Another choice is income trusts....anything that pays a decent monthly dividend and has a DRIP
option for self compounding is a no brainer.Although you are limited to the amount you can invest
in a TFSA that amount is cumulative year over year if you have not put anything in the TFSA.
SR
This is a terrible idea.
On penny stocks, you win some, you lose lots. There's more losers than winners. In a TFSA, you can't write off your losses to offset your gains.
I would maximize RRSP's first. Tax benefits to doing so. Additional money goes into a TFSA and invested in something 'safe', like dividend stocks.
As far as I'm concerned the best investments in a TFSA are blue chip equities, such as an index fund. Why?
Well with interest rates so low you aren't really sheltering anything with respect to fixed income and with penny stocks, you risk the chance they become worthless and you can't use the capital losses against other type of gains. With dividends you loss the dividend tax credit. REIT's are another good option.
Disagree with the above comment. Yes, it's personal choice but the issues you've identified shouldn't be glossed over, they should be dealt with so that an investment policy statement (IPS) can be created. (which is essentially a blue print of what you expect, your cash flow needs, your time horizen, risk tolerance etc). From that comes your asset mix.
Once you've decided on your asset mix you should then focus on ensuring your portfolio is constructed in a tax efficient manner.
I have kept my RRSP fairly conservative with Bank Stocks (which are riding a high now) and some gold stocks that I got into 8 years ago. It's served me well.
Cash account and TFSA have some solid performing mining and oil stocks along with some emerging market mutual funds. These accounts are meant to gain value without having to pay a lot of taxes on it and that's how I have them positioned.
I am above water on all my investments so that means I have out performed the exchange average which IIRC is down 13% over the past 12 months.
Some Index funds are good but if there is a large MER or other fee you probably won't realize much profit.
Cash account and TFSA have some solid performing mining and oil stocks along with some emerging market mutual funds. These accounts are meant to gain value without having to pay a lot of taxes on it and that's how I have them positioned.
I am above water on all my investments so that means I have out performed the exchange average which IIRC is down 13% over the past 12 months.
Some Index funds are good but if there is a large MER or other fee you probably won't realize much profit.
Investing in risky stuff should be done outside your registered accounts whether it's TFSA or RRSP. Here is why:
If your penny stocks go bust, which 99.9% of them do, all you are left with is penny stocks certificates to wipe your ass with. In an unregistered account, at least you get a capital loss to claim against past and future gains.
Max amount allowable is $20K in the TFSA. In this market it takes a lot of effort to make 6% with TSE stocks and I am not sure what you can do with the Venture Exchange.
L
Larry Storch
Hmmm, are you by any chance using tablets or smart phones to access Ebay and or Craigslist/Kijiji?
If I'm reading this correctly, the total is up to $25,500 now....providing you qualified from the beginning of the program (2009)...
http://www.taxtips.ca/tfsa/contributions.htm
