TFSA limit increased to $10k/year

[Liberty]

Rejoice!

[Guest notorious546]

http://www.cbc.ca/news/business/budget-2015-tfsa-limit-hiked-to-10-000-as-election-budget-delivers-few-goodies-1.3040853

 

[augustabound]

Rejoice!

 

I agree.

"Politicking" or not I'll take it. They hike it knowing few can or will take advantage of it. I will!  ;D

[Liberty]

Rejoice!

 

I agree.

"Politicking" or not I'll take it. They hike it knowing few can or will take advantage of it. I will!  ;D

 

Most people would rather have houses they can't afford and financed SUVs to commute in the city in or whatever. Life's about choices.

[FFHWatcher]

How do you choose just to put your winners in your TFSA?  The dollar amounts are small so I don't over-diversify and I seem to put my losers in there...which leaves me with losses that I can't deduct against my gains. I wonder if the gov't is really foregoing that much lost revenue in taxes from interest and cap gains, if investors have losses in their TFSA? 

 

[Liberty]

How do you choose just to put your winners in your TFSA?  The dollar amounts are small so I don't over-diversify and I seem to put my losers in there...which leaves me with losses that I can't deduct against my gains. I wonder if the gov't is really foregoing that much lost revenue in taxes from interest and cap gains, if investors have losses in their TFSA?

 

That I would like to know. I've had mistakes in my RSP and TFSA in the past, and it sucks.

 

The only thing that gives me comfort is that I've learned a lot since and now own much higher-quality businesses, so the chances of permanent losses over the long-term should be reduced.

 

But it's still a trade-off; do you put things that are super safe and boring, but might not result in huge gains, to avoid losses. Or do you put potential big winners to have more gains to shield from taxes, but they might be more uncertain and could result in losses..?

[Jurgis]

I am not Canadian, so my thoughts are based on USA IRAs/401(k)s. Forgive me if they are not applicable due to differences.

 

That being said, majority of my money is in tax deferred accounts. I pretty much put everything there. After some time and if you outperform market, the account is so big that the mix of gains/losses is similar to non-taxable accounts and is skewed towards gains. So you win on taxes.

 

That being said  8), I tend to put more "trading" stocks into tax deferred accounts and super-long-hold-forever stocks into taxable accounts. Bonds/preferreds all go into tax deferred. Cash theoretically goes into taxable. I.e. if you keep cash, don't keep a lot of it in tax deferred - no point. Other than that, I can't guess if a position is going to be a winner or loser. If I could, I wouldn't buy losers. So I don't try to guess that when deciding where to buy.

 

Edit: short term lottery tickets all go into tax deferred. E.g. Fannie/Freddie zero-or-10x would go into tax deferred.

Edit2: US investors also have to decide if to buy something in Roth or in traditional tax deferred. This is another tough question. I don't have a good answer for that yet.

 

Hope this helps. :)

[bizaro86]

How do you choose just to put your winners in your TFSA?  The dollar amounts are small so I don't over-diversify and I seem to put my losers in there...which leaves me with losses that I can't deduct against my gains. I wonder if the gov't is really foregoing that much lost revenue in taxes from interest and cap gains, if investors have losses in their TFSA?

 

That I would like to know. I've had mistakes in my RSP and TFSA in the past, and it sucks.

 

TFSA I get being disappointed about, but if you have to have a loser RRSP is better than non-registered, imo. You've already taken a full deduction against the invested capital against income, which is better than a capital loss that you would get non registered.

 

Or look at it backwards. If you have a big gainer in your RRSP, you pay tax at the regular rate when you withdraw. Not ideal, but nobody complains about gains. However, if you have a big gainer in a non-registered account, you pay at the capital gains tax rate, which is 50% less.

[Liberty]

How do you choose just to put your winners in your TFSA?  The dollar amounts are small so I don't over-diversify and I seem to put my losers in there...which leaves me with losses that I can't deduct against my gains. I wonder if the gov't is really foregoing that much lost revenue in taxes from interest and cap gains, if investors have losses in their TFSA?

 

That I would like to know. I've had mistakes in my RSP and TFSA in the past, and it sucks.

 

TFSA I get being disappointed about, but if you have to have a loser RRSP is better than non-registered, imo. You've already taken a full deduction against the invested capital against income, which is better than a capital loss that you would get non registered.

 

Or look at it backwards. If you have a big gainer in your RRSP, you pay tax at the regular rate when you withdraw. Not ideal, but nobody complains about gains. However, if you have a big gainer in a non-registered account, you pay at the capital gains tax rate, which is 50% less.

 

That's a mitigating factor for sure, but it's still a bad outcome, especially if you take the long-view, compounding multi-decades inside the RSP. Even if I don't buy & sell too often, the absence of capital gains every time there's a transaction still adds up over the years to probably more than whatever I saved with the deduction vs 50%-capital-gains.