Basher Posted January 5, 2009 Report Share Posted January 5, 2009 Wondering if anyone is taking advantage of the new TFSA stuff.ING Direct has TFSA Mutual Funds, and Questrade has TFSA trading accounts.I figure going for a standard TFSA account, earning bank interest of 3.5% or so is pretty meaningless. You would earn $175 in interest on the full $5000, so the tax savings would be pretty nominal (~$60).I opted for the ING Direct Balanced Growth Mutual Fund. I only put $2k into it, just to see how it plays out. A nice risk factor when I feel the markets have come close to bottoming out.Thoughts? Link to comment Share on other sites More sharing options...
MoMack Posted January 5, 2009 Report Share Posted January 5, 2009 No thoughts here - but a question.We get $5,000/year to put in the TFSA. When we withdraw we get that space back and can redeposit (say if we withdraw for a downpayment on a house or something).My question is, do I have to deposit $5,000 this year to have $10,000 in room by next year? Or is it automatic?I don't have the cash to put anything in a TFSA right now, but i have the credit and would quicly deposit and withdraw if necessary to accumulate future deposit room. Link to comment Share on other sites More sharing options...
Basher Posted January 5, 2009 Author Report Share Posted January 5, 2009 It is automatic Morgan. You will have $10k in contribution room next year if you do not take advantage this year. Link to comment Share on other sites More sharing options...
questcequecest? Posted January 5, 2009 Report Share Posted January 5, 2009 what bank is giving you 3.5% interest? that's incredible! Link to comment Share on other sites More sharing options...
Basher Posted January 5, 2009 Author Report Share Posted January 5, 2009 ING, PC Financial, ICICI, etc... Link to comment Share on other sites More sharing options...
questcequecest? Posted January 5, 2009 Report Share Posted January 5, 2009 hmmm, a quick look at ING shows they are offering 2.7%... i won't bother with the etcetera. Link to comment Share on other sites More sharing options...
Freak By Night Posted January 5, 2009 Report Share Posted January 5, 2009 some TFSA info here For most people, it's probably better to maximize your RRSP contributions before putting money into a TFSA. Link to comment Share on other sites More sharing options...
Basher Posted January 5, 2009 Author Report Share Posted January 5, 2009 Sorry, yes, it has gone down in the last 6 months of 2008, as have the others.A bigger reason to avoid standard TFSAs and opt for Mutual Fund/Trading accounts. Link to comment Share on other sites More sharing options...
Basher Posted January 5, 2009 Author Report Share Posted January 5, 2009 For most people, it's probably better to maximize your RRSP contributions before putting money into a TFSA.I gave a lot of thought to that, but in the end if there is any possibility that you will need to withdraw from the RRSP, then the TFSA is a better option, no? Link to comment Share on other sites More sharing options...
questcequecest? Posted January 5, 2009 Report Share Posted January 5, 2009 no worries, the Bank of Canada recently slashed rates again... that's why i pointed it out.wrt to maximising RRSP before TFSA, i don't understand this strategy... wouldnt it be prudent to maximise your TFSA first? since the money can grow and be withdrawn, all without penalty? Link to comment Share on other sites More sharing options...
Basher Posted January 5, 2009 Author Report Share Posted January 5, 2009 Yeah that was what I was thinking QQC.I am thinking more and more about this and wondering about the Mutual Fund decision. I was thinking about going with Questrade and dumping the money into the top Canadian oil stocks (Encana, Suncor, CNR). I know it is risky, but oil prices just have to go back up eventually. Link to comment Share on other sites More sharing options...
bradm Posted January 5, 2009 Report Share Posted January 5, 2009 wrt to maximising RRSP before TFSA, i don't understand this strategy... wouldnt it be prudent to maximise your TFSA first? since the money can grow and be withdrawn, all without penalty?Maybe, but you get a tax deduction for RRSP contributions, which you don't get for TFSA contributions.Aloha,Brad Link to comment Share on other sites More sharing options...
Freak By Night Posted January 5, 2009 Report Share Posted January 5, 2009 For most people' date=' it's probably better to maximize your RRSP contributions before putting money into a TFSA.[/quote']I gave a lot of thought to that, but in the end if there is any possibility that you will need to withdraw from the RRSP, then the TFSA is a better option, no?Yeah, I guess the TFSA is a better option if you're using that account to save money for a big ticket purchase in the near future.The intention of RRSPs as I'm sure you know is that you withdraw that money when you have no other income (that is, when you're retired). The tax savings of RRSP contributions is beneficial right away.Ideally what I'd like to do is maximize my RRSP contributions and put the tax savings into an TFSA. Link to comment Share on other sites More sharing options...
questcequecest? Posted January 5, 2009 Report Share Posted January 5, 2009 wrt to maximising RRSP before TFSA' date=' i don't understand this strategy... wouldnt it be prudent to maximise your TFSA first? since the money can grow and be withdrawn, all without penalty?[/quote']Maybe, but you get a tax deduction for RRSP contributions, which you don't get for TFSA contributions.Aloha,Bradahhh... i was under the impression that the TFSA was also a tax shelter. this sheds new light, thanks bradm! Link to comment Share on other sites More sharing options...
Basher Posted January 5, 2009 Author Report Share Posted January 5, 2009 You pay taxes eventually on an RRSP. Link to comment Share on other sites More sharing options...
larry_llama Posted January 5, 2009 Report Share Posted January 5, 2009 yep, and you never pay tax on the interest of hthe tfsa whereas you pay tax on rrsp not only on te initial investment but on all interest earned. unless you need the credit now, i'd think the savingts account is smarter? Link to comment Share on other sites More sharing options...
MoMack Posted January 5, 2009 Report Share Posted January 5, 2009 For most people' date=' it's probably better to maximize your RRSP contributions before putting money into a TFSA.[/quote']I gave a lot of thought to that, but in the end if there is any possibility that you will need to withdraw from the RRSP, then the TFSA is a better option, no?You don't need Hampton tickets that bad Basher - they're going to tour. Hit something closer and cheaper. Link to comment Share on other sites More sharing options...
Basher Posted January 5, 2009 Author Report Share Posted January 5, 2009 lol, I am not talking about that kind of spending. I just want to be sure that if I need funds for an emergency I can access them without penalty, rather than leaving credit as the only option should the need arise. Link to comment Share on other sites More sharing options...
MoMack Posted January 5, 2009 Report Share Posted January 5, 2009 You don't pay taxes on initial RRSP investments (or alternatively it becomes a refund).The ideal strategy would likely be to max RRSPs and then use any potential tax refund (if not done up front) to deposit into the TFSA.As far as long term goes, it makes the most sense to go RRSP. The tax savings now are worth more then 25+ years from now. Plus, long term = retirement and the fact that its harder and there are more penalties to withdraw from an RRSP makes it more likely that the money gets used for what is was meant for.I think I read that the TFSA is a better vehicle for income-splitting if that is a benefit to you.Basically it all depends on where you're at in life. If you're thinking of buying a home in the next few years, you're probably best getting the RRSP account up over $20,000 and then concentrating on the TFSA so that you can use it all for the house.Really - I don't know what I"m talking about but I am extending my lunch hour. Link to comment Share on other sites More sharing options...
MoMack Posted January 5, 2009 Report Share Posted January 5, 2009 lol, I am not talking about that kind of spending. I just want to be sure that if I need funds for an emergency I can access them without penalty, rather than leaving credit as the only option should the need arise.I think that that is probably the ideal for people our age. Have the "6 months salary" or whatever they say you should have accessible stored in there. Link to comment Share on other sites More sharing options...
SaggyBalls Posted January 5, 2009 Report Share Posted January 5, 2009 this tour head website sure has grown up. Link to comment Share on other sites More sharing options...
tigger Posted January 6, 2009 Report Share Posted January 6, 2009 Who the hell has 6 months salary put aside? I'll show you someone who lives in there parents house or likes being a house boy. Link to comment Share on other sites More sharing options...
Basher Posted January 6, 2009 Author Report Share Posted January 6, 2009 Well, if $5k is six months salary you have other problems. Link to comment Share on other sites More sharing options...
bradm Posted January 6, 2009 Report Share Posted January 6, 2009 Who the hell has 6 months salary put aside?I do, in an at-least kind of way. But my monthly salary is zero dollars.Aloha,Brad Link to comment Share on other sites More sharing options...
MoMack Posted January 6, 2009 Report Share Posted January 6, 2009 Who the hell has 6 months salary put aside? I'll show you someone who lives in there parents house or likes being a house boy. I didn't mean today - I meant over time. Link to comment Share on other sites More sharing options...
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