I stopped TFSA contributions about 2yrs ago, and focused on doubling mortgage payments and maxing out annual lump sum payments. In about 38 weeks I expect to be mortgage free on my principle residence. I am 38.
I did the opposite and maxed my TFSA which gave me a decent return across a diverse portfolio. Looking back I think I should have followed your path and I would have been mortgage free today. I am down to two years on the mortgage but I’m aggressive when it comes to my finances and I took on extra work to make it happen. Almost time to start enjoying the fruits of my labour, almost😀
Don't forget tho....time is key. Your investments need time to gain momentum. Being mortgage free at your age is damn impressive. But don't screw yourself by not contributing at all for several years into your tfsa. I've doubled my mortgage payments as well but I'm also catching up on my unused tfsa contributing room.
@@angrybird9925 absolutely, once through the mortgage the next step is to catch up on the unused contribution room in the TFSA, and get most of that into an ETF within the account.
During covid when the markets went down the toilet I took the chance to max out my TSFA as much as I could. My contribution room now is $125 a week as it's $6,500 for the year. But my TFSA is now over $120K.
Great video. Just to mention that there is also a transaction report available on MyCRA, which can be handy if you have had multiple contributions and withdrawals, although there can be a significant delay in transactions showing up there.
do it TODAY!! love it. you are absolutely right. it should have been called TFIA. Lets hope that Canadians don't make the same mistake with FHSA. important message Adam.
This guy is great. He helped me really understand my TFSA by responding to my comment in a previous video. I now how have more comfortable risk for my goals. I have less risk in my TFSA so that I will never be taxed on the guaranteed returns. I have more risk in my RRSP, so that if it doesn't do well, at least I will owe less taxes. If my RRSP riskier stuff does well, I will owe some taxes, but it also did well, and that's great, and the govt was taking part of the risk with me, so I'm just paying them their cut of the profits.
Hi, Adam. I just checked my CRA and I didn't know it had that information there: As of September 4, 2023 As of January 1, 2023 2023 TFSA contribution room: $XX, XXX.XX THANK YOU!
I have a lot of contribution room that I'm working toward catching up on. I've stopped contributing to my RRSP and am focussed on the TFSA. The only good thing about the first two years of Covid is that I spent so little money on anything that I was able to pay off my HELOC a year or so ago (well before Prime skyrocketed) and have been aggressively putting funds into my TFSA.
US withholding taxes should be mentioned in this video, as well as the importance of a "Successor Holder" and not a "Beneficiary." I realize this is just a really basic video, but both of these are important for anyone who isn't working with an advisor to research.
Rrsp and tfsa maxed, mortgage free, retiring soon. I will be drawing down rrsp as evenly as possible over 30(?) years. Income shortfall filled with non-reg savings then with TFSA. Funneling non reg savings into tfsa each year to shelter from tax. That is my tax minimizing drawdown strategy.
@@Rob-ob3sh yes you are correct. You can also invest in split funds in the TFSA. Neither actually make growth until the dividends cover the original cost of investment.
I keep stocks outdide tfsa since gain is half taxable and deferred. You r right thst savings account should not be in tfsa. Put five yr gics in tfsa. I also put canadian stock etf in tfsa because of grossup of dividends.
I’m in my early 60’s so my portfolio leans somewhat towards the conservative side. If you look at my portfolio as a whole, the more aggressive holdings are in my tfsa and the more conservative ones are in my rrsp. I’m trying to make it so the stocks that make a higher return end up where they can be withdrawn later tax free.
Question: should I be prioritizing contributions to my TFSA over my RRSP? So, as far as asset mix in my TFSA vs RRSP vs non registered investments, I should look at them as a whole umbrella but my TSFA should have more risk (and greater potential gains) than my RRSP because RRSP withdrawals are 100% taxed? I know that there is a large benefit at the point of contribution to RRSP's especially if I am in the years when my income is at it's greatest.
The appropriate TFSA strategy depends on one’s age, investment horizon and purpose of TFSA proceeds. It may be that a savings approach may be entirely appropriate. The key message is to calibrate based on personal circumstances.
One important thing I did not see in the video (I may have missed it admittedly) is that not ALL income generated from a TFSA is tax free. You can't use your TFSA for day trading as an example. Should you happen to get lucky at day trading and make a huge profit, the CRA will likely audit and you will have to pay tax on the income generated.
I’m using my TFSA slightly wrong, I’m 90% invested in good Canadian dividend paying stocks, slow growth but really enjoying the $7500 in tax free income.
@@alhumphreys5784 because dividends are taxed lightly compared with capital gains or interest which is taxed as pure income at your marginal tax rate. In my case my next dollar of income would be taxed at 30%, 7.7% for dividends and about 15% for capital gains.
Really enjoy your videos.! At 67 years of age and with my wife and mine TFSAs fully invested in the market I am considering moving the investments into a taxable account before year end and replacing the investment's with GIC's in 2024 that should net around 12K per year. My thoughts are that the interest earned in the TFSA is tax free and the investments, dividends etc are better off outside the TFSA and taxed more favorably than GIC's. Thoughts?
Touch older than you but I prefer low volatility etfs in both my RRSP and taxable accounts, rather than bonds or too much fixed income. Feel free to compare the low vol indexes with the S&P and TSX over the last 5 years, and you get the same results without the wild swings. ZLU in the RRSP, ZLB in the taxable account and BRK.B in the TFSA. ( There is no dividend withholding tax, because they don’t pay a dividend). I do keep 6 months emergency in CASH.T, and 3 months in a savings account
Hmm. Maybe wrong choice of words? TSFA is a investment growth and "savings" account. To say it's not even a savings account doesn't sound right to me. Maybe you should say it shouldn't be a cash account, unless of course some people are saving for a short-term goal or are retired.
Enjoy your videos. Many, including this one, align with my investment advisor’s advice so they are a nice confirmation that we are on the right track. Good financial advice and a good accountant are worth their weight in gold. Have some friends who will be getting a link to this one.
Tax Free INVESTMENT Account! Tax Free SAVING Account is a worse misnomer than “Global Warming” Better phrase than Climate Change would have been Climate Upheaval” Words matter. Overall excellent segment. Would really enjoy seeing a nice graphical demonstration of the incredible power of the compounding effect of early contributions. Cheers L
So i have considerable room left in my TFSA account i also have the cash to maximize it.. the issue is my TFSA is only paying 1.5%.. thats terrible. Im making more money in my high interest savings account. Im thinkhard about moving my money to another company.
iTrade would be a good start. Invest in common shares of good companies on the stock market. Keep in mind that a well-diversified account is a recipe for mediocre returns. My TFSA has been worth more than 75 times the maximum amount that could be invested since 2009, namely the $95 000 max contribution limit. There are few vectors that give that kind of return in just 15 years. And the whole $95 000 was not wholely invested since 2009. Only the maximum amounts were added each year. Was I lucky? Yes. Debt instruments will never provide any opportunity for good fortune. I never invest in bonds, GICs, or bank interest. I tend not to invest in dividend paying companies, either. Real estate is a headache. I shall be disappointed if the account does not top $25 000 000 in the next 5 to 7 years. And the gains are all tax-free. At 15% ROI, it should reach this goal in a little over 10 years, in any case. Also, if you are afraid of lose money, you'll never make a good stock market investor. You'll sell at the worst possible moment...when the market is down...just when one should be buying. Just in case some think that I am spreading BS, the story is good enough without embelishment!
Because people are using it,as what it's been called, a Tax Free SAVINGS Account! As promoted by the five big Banks in Canada! I said before it should have been named as a tax-free "investment" account. Obviously a lot of people are getting advice from the wrong sources. Wow, just 8.9% of Canadians max. out their TFSA each year. Just another example of the sad state of our financial situation in Canada. People working from paycheck to paycheck and no savings!
Thanks for all of the informative videos Adam. Currently, I hold all of my ETF investments that are listed on US stock exchanges in my RSP to avoid US withholding taxes. In my TFSA I hold all of my ETF investments that are listed on Canadian stock exchanges. Could you please advise if I were to put additional US-listed ETFs in my TFSA would those ETF gains/income be subject to US withholding tax? Thanks.
Due to Canada US tax treaty, dividends earned from US listed stock or ETF within RRSP is sheltered from withholding tax. Therefore, any dividends you earn within TFSA is subject to 15% withholding tax that you can’t recover. However, capital gains is 100% tax free. This is why you would want to hold any dividend paying US listed stock/ETF within RRSP and own non dividend paying US listed stock/ETF within TFSA. In my opinion owing growth stocks that pay little dividend like Apple (0.51%) within TFSA is just fine. You are not losing much to withholding tax and AAPL’s growth over long term will be significant. I personally own Apple in TFSA and don’t mind giving up tiny fraction of the dividend.
Hi Adam, Thank you for the video. In regards to all earnings from investing your TFSA being tax free, is it the same if the investment is in US or International funds?
Another great video, thanks! One question though, when does TSFA contribution open up each year for each individual? Is it after one files ones taxes and the amount is then calculated or before one files ones income tax returns, and can be done in the January of each year?
This certainly sounds good too, but I think its still worth considering more reliable options like traditional businesses such as cannafarm ltd, for example.
You can still only contribute up to 18% of your previous years income. Just because you have 40k contribution room, does not mean you can contribute 40k in one year. This was not explained in the video.
One thing to remember is that nothing is "tax free" in Canada. TSFA is an after-tax account, i.e. you pay tax first, then you can contribute the remainder. It's not tax free at all. Withdrawals are tax free though. RRSP is the reverse: You are contributing money that is before tax but will be paying taxes when you withdraw. The government always, always, always gets their cut.
Only 25% of Canadians are contributing to RRSPs and I would bet 90% of those are NOT maxing it out. People are living beyond their means I can't see TFSAs being good for anyone other than those with a low income early in life or for those who have maxed out their RRSPs and want to keep saving for retirement.
I think it's probably the best for young Canadians. TFSA money can be used for pretty much anything you may want or need in the future. It's best to max it out early on in life and continuing to contribute the start of every year to maximize gains with compound interest.
People doesn't know this that the Federal liberal party of Canada decrease the contribution space from $11k to $5.5k making those changes drastrically decrease your potentially higher passive income.
I think “using it wrong” is a bit of a stretch. There are many reasons why people have particular investment and savings strategies. Also, people putting savings in there is fine if they couldn’t otherwise use the TFSA for investment and have contribution room.
The first thing “government” would do in a pinch is reduce the contribution room, stay calm and keep investing. Nothing new about government debt we wouldn’t be able to build bridges or hospitals without it.
![Yeat & Summrs - GO2WORK [Official Music Video]](http://i.ytimg.com/vi/NEFEwfPcXRA/mqdefault.jpg)
I stopped TFSA contributions about 2yrs ago, and focused on doubling mortgage payments and maxing out annual lump sum payments. In about 38 weeks I expect to be mortgage free on my principle residence. I am 38.
I did the opposite and maxed my TFSA which gave me a decent return across a diverse portfolio. Looking back I think I should have followed your path and I would have been mortgage free today. I am down to two years on the mortgage but I’m aggressive when it comes to my finances and I took on extra work to make it happen. Almost time to start enjoying the fruits of my labour, almost😀
@@ThatcanadianguyHey either option makes sense, live within your means, not blowing extra funds on wants vs needs
Mortgage free for 8 years. So much freedom when you don't have a mortgage...
Don't forget tho....time is key. Your investments need time to gain momentum. Being mortgage free at your age is damn impressive. But don't screw yourself by not contributing at all for several years into your tfsa. I've doubled my mortgage payments as well but I'm also catching up on my unused tfsa contributing room.
@@angrybird9925 absolutely, once through the mortgage the next step is to catch up on the unused contribution room in the TFSA, and get most of that into an ETF within the account.
During covid when the markets went down the toilet I took the chance to max out my TSFA as much as I could. My contribution room now is $125 a week as it's $6,500 for the year. But my TFSA is now over $120K.
Wow, that’s impressive. What did you focus on?
Great video. Just to mention that there is also a transaction report available on MyCRA, which can be handy if you have had multiple contributions and withdrawals, although there can be a significant delay in transactions showing up there.
Just watched it thank you, Adam now I’m going to watch it for the second time!
do it TODAY!! love it. you are absolutely right. it should have been called TFIA. Lets hope that Canadians don't make the same mistake with FHSA. important message Adam.
Can't do it today. It's a holiday :)
Bahaha. Well played Gordon!
This guy is great.
He helped me really understand my TFSA by responding to my comment in a previous video.
I now how have more comfortable risk for my goals.
I have less risk in my TFSA so that I will never be taxed on the guaranteed returns.
I have more risk in my RRSP, so that if it doesn't do well, at least I will owe less taxes.
If my RRSP riskier stuff does well, I will owe some taxes, but it also did well, and that's great, and the govt was taking part of the risk with me, so I'm just paying them their cut of the profits.
Hi, Adam. I just checked my CRA and I didn't know it had that information there:
As of September 4, 2023
As of January 1, 2023
2023 TFSA contribution room: $XX, XXX.XX
THANK YOU!
Awesome!
I have a lot of contribution room that I'm working toward catching up on. I've stopped contributing to my RRSP and am focussed on the TFSA. The only good thing about the first two years of Covid is that I spent so little money on anything that I was able to pay off my HELOC a year or so ago (well before Prime skyrocketed) and have been aggressively putting funds into my TFSA.
Make sure you check how much taxes you will pay/owe come tax season. You may need some RRSP contributions to balance it out. Just food for thought
@@ImVeryBrad I'm good. I'm well-versed on my finances and if I really needed to make an RSP contribution at tax time I could.
US withholding taxes should be mentioned in this video, as well as the importance of a "Successor Holder" and not a "Beneficiary." I realize this is just a really basic video, but both of these are important for anyone who isn't working with an advisor to research.
We have a few videos on both of these items.
Rrsp and tfsa maxed, mortgage free, retiring soon. I will be drawing down rrsp as evenly as possible over 30(?) years. Income shortfall filled with non-reg savings then with TFSA. Funneling non reg savings into tfsa each year to shelter from tax. That is my tax minimizing drawdown strategy.
Depending on how you invest the TFSA cannot hold All kinds of investment strategies. For example you cannot sell covered calls for extra income.
You can invest in covered call ETF’s though which generates the high tax free yields
@@Rob-ob3sh yes you are correct. You can also invest in split funds in the TFSA. Neither actually make growth until the dividends cover the original cost of investment.
I keep stocks outdide tfsa since gain is half taxable and deferred. You r right thst savings account should not be in tfsa. Put five yr gics in tfsa.
I also put canadian stock etf in tfsa because of grossup of dividends.
I’m in my early 60’s so my portfolio leans somewhat towards the conservative side. If you look at my portfolio as a whole, the more aggressive holdings are in my tfsa and the more conservative ones are in my rrsp. I’m trying to make it so the stocks that make a higher return end up where they can be withdrawn later tax free.
Question: should I be prioritizing contributions to my TFSA over my RRSP?
So, as far as asset mix in my TFSA vs RRSP vs non registered investments, I should look at them as a whole umbrella but my TSFA should have more risk (and greater potential gains) than my RRSP because RRSP withdrawals are 100% taxed? I know that there is a large benefit at the point of contribution to RRSP's especially if I am in the years when my income is at it's greatest.
The appropriate TFSA strategy depends on one’s age, investment horizon and purpose of TFSA proceeds. It may be that a savings approach may be entirely appropriate. The key message is to calibrate based on personal circumstances.
100%
One important thing I did not see in the video (I may have missed it admittedly) is that not ALL income generated from a TFSA is tax free. You can't use your TFSA for day trading as an example. Should you happen to get lucky at day trading and make a huge profit, the CRA will likely audit and you will have to pay tax on the income generated.
Ok, there is one case of this. So realistically for 99.999999999% you are ok.
I’m using my TFSA slightly wrong, I’m 90% invested in good Canadian dividend paying stocks, slow growth but really enjoying the $7500 in tax free income.
Until the fraud ponzi U.S. stock market imploes and they slash all dividends
Why is that wrong?
@@alhumphreys5784 because dividends are taxed lightly compared with capital gains or interest which is taxed as pure income at your marginal tax rate. In my case my next dollar of income would be taxed at 30%, 7.7% for dividends and about 15% for capital gains.
Really enjoy your videos.! At 67 years of age and with my wife and mine TFSAs fully invested in the market I am considering moving the investments into a taxable account before year end and replacing the investment's with GIC's in 2024 that should net around 12K per year. My thoughts are that the interest earned in the TFSA is tax free and the investments, dividends etc are better off outside the TFSA and taxed more favorably than GIC's. Thoughts?
Touch older than you but I prefer low volatility etfs in both my RRSP and taxable accounts, rather than bonds or too much fixed income. Feel free to compare the low vol indexes with the S&P and TSX over the last 5 years, and you get the same results without the wild swings. ZLU in the RRSP, ZLB in the taxable account and BRK.B in the TFSA. ( There is no dividend withholding tax, because they don’t pay a dividend). I do keep 6 months emergency in CASH.T, and 3 months in a savings account
Doesn’t the contribution limit get updated January 1st each year? I don’t think your tax refund matters at all for this.
Hmm. Maybe wrong choice of words? TSFA is a investment growth and "savings" account. To say it's not even a savings account doesn't sound right to me. Maybe you should say it shouldn't be a cash account, unless of course some people are saving for a short-term goal or are retired.
Of course it can be used for savings, but not the ideal use of it.
Can you buy a GIC in your TFSA . Is there a tax free GIC Oct 15 2024
Enjoy your videos. Many, including this one, align with my investment advisor’s advice so they are a nice confirmation that we are on the right track. Good financial advice and a good accountant are worth their weight in gold. Have some friends who will be getting a link to this one.
Can you have more than one TFSA account? Keeping in mind your contribution level.
Absolutely
Tax Free INVESTMENT Account!
Tax Free SAVING Account is a worse misnomer than “Global Warming” Better phrase than Climate Change would have been Climate Upheaval”
Words matter. Overall excellent segment.
Would really enjoy seeing a nice graphical demonstration of the incredible power of the compounding effect of early contributions.
Cheers
L
So i have considerable room left in my TFSA account i also have the cash to maximize it.. the issue is my TFSA is only paying 1.5%.. thats terrible. Im making more money in my high interest savings account.
Im thinkhard about moving my money to another company.
iTrade would be a good start. Invest in common shares of good companies on the stock market. Keep in mind that a well-diversified account is a recipe for mediocre returns. My TFSA has been worth more than 75 times the maximum amount that could be invested since 2009, namely the $95 000 max contribution limit. There are few vectors that give that kind of return in just 15 years. And the whole $95 000 was not wholely invested since 2009. Only the maximum amounts were added each year.
Was I lucky? Yes. Debt instruments will never provide any opportunity for good fortune. I never invest in bonds, GICs, or bank interest. I tend not to invest in dividend paying companies, either. Real estate is a headache. I shall be disappointed if the account does not top $25 000 000 in the next 5 to 7 years. And the gains are all tax-free. At 15% ROI, it should reach this goal in a little over 10 years, in any case.
Also, if you are afraid of lose money, you'll never make a good stock market investor. You'll sell at the worst possible moment...when the market is down...just when one should be buying.
Just in case some think that I am spreading BS, the story is good enough without embelishment!
Because people are using it,as what it's been called, a Tax Free SAVINGS Account! As promoted by the five big Banks in Canada!
I said before it should have been named as a tax-free "investment" account.
Obviously a lot of people are getting advice from the wrong sources.
Wow, just 8.9% of Canadians max. out their TFSA each year. Just another example of the sad state of our financial situation in Canada. People working from paycheck to paycheck and no savings!
Thanks for all of the informative videos Adam.
Currently, I hold all of my ETF investments that are listed on US stock exchanges in my RSP to avoid US withholding taxes. In my TFSA I hold all of my ETF investments that are listed on Canadian stock exchanges. Could you please advise if I were to put additional US-listed ETFs in my TFSA would those ETF gains/income be subject to US withholding tax? Thanks.
Yes us ETFs are taxable in tfsa
Due to Canada US tax treaty, dividends earned from US listed stock or ETF within RRSP is sheltered from withholding tax. Therefore, any dividends you earn within TFSA is subject to 15% withholding tax that you can’t recover. However, capital gains is 100% tax free. This is why you would want to hold any dividend paying US listed stock/ETF within RRSP and own non dividend paying US listed stock/ETF within TFSA. In my opinion owing growth stocks that pay little dividend like Apple (0.51%) within TFSA is just fine. You are not losing much to withholding tax and AAPL’s growth over long term will be significant. I personally own Apple in TFSA and don’t mind giving up tiny fraction of the dividend.
Hi Adam,
Thank you for the video. In regards to all earnings from investing your TFSA being tax free, is it the same if the investment is in US or International funds?
Yes, any investment within the tfsa is tax free.
Yes, although US dividends do have a small withholding tax. Not enough to avoid holding good quality US stocks IMO.
Another great video, thanks! One question though, when does TSFA contribution open up each year for each individual? Is it after one files ones taxes and the amount is then calculated or before one files ones income tax returns, and can be done in the January of each year?
Jan 1
First to comment? Don’t mind if I do. Awesome work there 🇨🇦
I like high risk high reward investments in my tfsa. Hit home runs
⚾️⚾️⚾️
This certainly sounds good too, but I think its still worth considering more reliable options like traditional businesses such as cannafarm ltd, for example.
Don’t put anything speculative in a TFSA.
I think we should give the poor people's TFSA room to people who already max out their room. because we want to pay CRA less.
The TFSA is great but if you’ve made an error 12% interest is criminal. Who lets you know if that has happened?
CRA will, but they have historically been gracious with warnings before fines
You can still only contribute up to 18% of your previous years income. Just because you have 40k contribution room, does not mean you can contribute 40k in one year. This was not explained in the video.
That doesn’t apply to TFSAs. If you have $50,000 room you can put it in a TFSA. Just don’t over contribute!
You are confusing RRSP (for which your comment relates) and TFSA (the subject of this video).
One thing to remember is that nothing is "tax free" in Canada. TSFA is an after-tax account, i.e. you pay tax first, then you can contribute the remainder. It's not tax free at all. Withdrawals are tax free though. RRSP is the reverse: You are contributing money that is before tax but will be paying taxes when you withdraw. The government always, always, always gets their cut.
But your money grows tax free and redeemed tax free...so its tax free growth. 🤷🏻♂️
Only 25% of Canadians are contributing to RRSPs and I would bet 90% of those are NOT maxing it out. People are living beyond their means
I can't see TFSAs being good for anyone other than those with a low income early in life or for those who have maxed out their RRSPs and want to keep saving for retirement.
Well said!
I think it's probably the best for young Canadians. TFSA money can be used for pretty much anything you may want or need in the future. It's best to max it out early on in life and continuing to contribute the start of every year to maximize gains with compound interest.
TFIA.
People doesn't know this that the Federal liberal party of Canada decrease the contribution space from $11k to $5.5k making those changes drastrically decrease your potentially higher passive income.
I think “using it wrong” is a bit of a stretch. There are many reasons why people have particular investment and savings strategies. Also, people putting savings in there is fine if they couldn’t otherwise use the TFSA for investment and have contribution room.
If we keep letting politicians to piss away our debt how long till the tax man comes for your TFSA?
The first thing “government” would do in a pinch is reduce the contribution room, stay calm and keep investing. Nothing new about government debt we wouldn’t be able to build bridges or hospitals without it.
Don't forget to vote!