9
Typically mutual funds will report an annualized return. It's probably an average of 8% per year from the date of inception of the fund. That at least gives some basis of comparison if you're looking at funds of different ages (they will also often report annualized 1-, 3-, 5-, and 10- year returns, which are probably better basis of comparison since they ...
7
For an RRSP, you do not have to pay taxes on money or investments until you withdraw the money. If you do not reinvest the dividends but instead, take them out as cash, that would be withdrawing the money. For mutual funds, you would normally reinvest the dividends if holding the investment inside an RRSP. For stocks, I believe the dividends would end up ...
5
If you place your emergency fund in your TFSA, you can withdraw it at any time (e.g. in an emergency), and then replace the withdrawn money in the next calendar year. Be careful there; you pay a hefty fine if you replace it in the current calendar year if this leads to an overcontribution.
It's not an either-or thing, though. You could invest the money in a ...
5
Don't make it too complicated, the $500 bump is for inflation and it's not every year. Just ignore it and do all your calculations in real dollars. That will also give you the current value of what the future money is worth. Note that a million dollars in 40 years will buy much less than it will today.
For 2019 it's actually $6000 to start and the return ...
4
As a rule of thumb, no. Only in very rare circumstances will it prove better than a RRSP. The media has overplayed the usefulness of this account type for retirement savings. That's just a general rule. Your specific situation will make a difference but it's very easy to show that RRSPs will always outperform if the marginal rates are lower on withdrawal ...
4
How would the RRSP know where the money came from?
You have two separate financial operations going on:
You invest some money, within the limits set by the law, in a Tax Free Savings Account. Near the end of the year, you take the money, plus interest, out of the account. As you may guess by the name, you need not report the interest as income. There are ...
4
The reason why people sometimes recommend adding REIT to your portfolio is that REIT tends to be less correlated with company stocks. This gives you greater diversification and possibly even a greater overall long term return if you rebalance on a periodic basis. For a 3-5 year time frame it doesn't matter because you don't have near enough time for ...
3
No, you only lose the room for the remainder of the year if you withdraw funds. As long as there are no withdrawals, you're fine.
Note I said "remainder of the year", that's because you'll regain this room at the start of the next calendar year.
3
The US withholding tax applies to stocks/ETFs purchased on the NYSE and other US-based exchanges. If you buy Cenovus on the TSE then you will not be charged this tax.
Your last sentence seems like you might be misunderstanding this tax though. If the tax applied, it would not cost you 15% on all your profits, it only applies to dividend yields. So if it ...
3
You can hold a wide variety of investments in your TFSA account, including stocks such as SLF. But if the stocks are being purchased via a company stock purchase plan, they are typically deposited in a regular margin account with a brokerage firm (a few companies may issue physical stock certificates but that is very rare these days). That account would not ...
3
The advantages of the TFSA are
liquidity - you can take money out and put it back in quite simply and you even get your room back if you take it out
a place to tax shelter interest income when you've used all your RRSP room or want to save RRSP room for a time when your tax rate is higher than it is now
you don't pay tax when you withdraw and you're never ...
3
You do not have to pay tax on any earnings inside a TFSA. Quoting Wikipedia's article, "Investment income, including capital gains and dividends, earned in a TFSA is not taxed, even when withdrawn." This is backed up by the official TFSA government site, http://www.tfsa.gc.ca/, which states, "Investment income earned in a TFSA is tax-free."
This makes the ...
3
Paying yourself through a corporation requires an analysis of a variety of issues.
First, a salary paid to yourself creates RRSP contribution room as well as CPP contributions. Paying yourself a dividend achieves neither of those.
By having a corporation, you will have to file a corporate (T2) tax return. The corporation is considered a separate legal ...
3
TFSA only shelter investment or interest gains on money or investments inside the TFSA. So, there's no problem transferring adsense earnings into a TFSA but you'd still need to pay taxes on your earnings prior to the transfer.
For example, let's say you have earned $5000 with adsense. You transfer all $5000 into your TFSA. In the course of the year, you ...
3
From the government's perspective, you have one TFSA account, and the limit applies regardless of how the money gets into it.
So be careful that the employer's contribution doesn't cause you to exceed your limit.
And be aware that whatever the employer contributes on your behalf counts as a taxable benefit, so you'll have to pay income tax on that. Your ...
2
It is my understanding that there are no penalties for withdrawals and you can withdraw as much as you want as often as you want, including more than once in the same calendar year. Of course, the money must be in cash in the TFSA, which may require you to sell something. That sale may have fees associated with it and possibly penalties for early ...
2
I heard some financial institution ask for $25 withdrawal fees on TFSA. Watch out for it. TD told me. I will doublecheck. RBC do not charge withdrawal fees. I will check that too.
2
As the first step and initiation, you ought to read Tangerine Bank's PDF, which also explains the similarity between RSP vs RRSP (on p 3 of 12)
This Globe and Mail article dated 2012 Feb 22 pithily compares RSP with TFSA:
The take-home point here is that, outside of an RRSP, the government does tax you on income and capital gains earned on your own money....
2
I did a little research and found the eligible investments for TFSAs. In this document under heading "Shares of private and other corporations", sub heading "Shares of small business corporations" there is clause about owning less than 10% share and less than $25000 total value of the corporation.
Generally, a connected shareholder of a corporation (as ...
2
You are not required to contribute to a TFSA or an RRSP. Nobody contributes to OAS, it's a program to provide benefits to old people for them to be "secure". The only fund you MAY contribute to is CPP. If you're being paid a salary by a Canadian employer they will deduct some money from your salary (and add more money of their own) as CPP contributions.
...
2
Given you other question and your resulting marginal tax rate, you may want to optimize where you hold each type of security. If you still plan to have a regular investment account, it's hard to beat the low tax rate of Canadian dividends.
In a TFSA, you won't pay tax on the dividend income, and you won't get a dividend tax credit either. For some people ...
2
No, it is not the nefarious government preventing Registered Account traders from making money. They get their taxes eventually.
A registered account has legal limits to the amount in a year a person can contribute to their account. How much money they earn within the account has no limit.
If you trade naked options, there exists a condition (a bad trade) ...
2
US domiciled stocks/etfs are better held in a RRSP as there is no withholding tax on dividends.
Your bank probably won't allow this. They might make you withdraw from the TFSA and then make a cash contribution to the RRSP. There's no tax implications and makes it easier for the bank to follow the rules. Plus they get extra commissions. If so, better ...
2
As far as I read in many articles, all earnings (capital gains and
dividends) from Canadian stocks will be always tax-free. Right?
There's no withholding tax, ie. a $100 dividend means you get $100. There's no withholding for capital gains in shares for anybody.
You will still have to pay taxes on the amounts, but that's only due at tax time and it ...
2
This page from the CRA website details the types of investments you can hold in a TFSA.
You can hold individual shares, including ETFs, traded on any "designated stock exchange" in addition to the other types of investment you have listed. Here is a list of designated stock exchanges provided by the Department of Finance. As you can see, it includes ...
2
You are not limited in these 3 choices.
You can also invest in ETFs, which are similar to mutual funds, but traded like stocks. Usually (at least in Canada), MERs for ETFs are smaller than for mutual funds.
2
The CRA's website has pretty good information on this type of thing. The search function is not great, however, so I recommend going to Google and typing:
Site:canada.ca [search term]
If you search
Site:canada.ca TFSA Transfer
It brings you here: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/transfers/...
2
As I'm sure you know if you withdraw from a TFSA you can only reinvest it the next Calendar year (unless you have sufficient additional contribution space available).
You can split your TFSA between multiple institutions, and that makes no difference. The limits are on the total, but any withdrawal counts as a withdrawal and any contribution counts as a ...
2
Can anyone kindly tell me if they are right or not?
Their math seems fine, the important thing to note is that the annual contribution limit increases with inflation. If you take the default values from your first link and enter 40 years, you'll see in the annual breakdown that year 1 you contribute $5,500, and that increases every 2-3 years until you ...
2
You are correct that as of 2019, the total room for contributions, for someone who has never contributed, is $63,500. If someone contributed right from the beginning and invested cautiously, you'd expect them to have considerably more than $63,500 in their TFSA. The gains are sheltered from taxes.
So, for example, someone carefully invested the full amount ...
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