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How do you use your TFSA


cwericb
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In Canada we can contribute a cumulative $5,000 per year into a Tax Free Savings Account. The name "Savings" is a little misleading as it can be used for most types of investments.

 

So with the maximum now up to $15,000, how do board members use their TFSA - agressive of conservative? Since neither losses nor gains effect taxes, do you use it for your riskier investments or do you put in investments that are reasonably sure to produce a gain? Being optimistic, there is unlimited upside and limited downside ($15,000), but a tax loss takes some of the sting out of a bad decision. 

 

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It's invested the same way as everything else.  There is always some cash in all my accounts...personal, RRSP, corporate, TFSA, partnership...you name it.  The rest is generally invested the same way, although my personal accounts are extremely concentrated, whereas the partnership and corporate accounts are JUST concentrated!  ;D  Cheers!

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Aggressive for me, so I can maximize the tax-free benefit.  Of course the underlying assumption is that I can produce positive returns.  On the other hand, if I can't produce positive returns, it doesn't matter whether the account is tax-free or taxable.

 

By "aggressive", I mean using leverage in the TFSA account.  For example, I would use ITM LEAPs to leverage up, say by 3x.  Then I use keep the equivalent "borrowed amount" (i.e. notional value - option premium) in a (taxable) cash savings account as to maintain zero overall leverage.

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