Tax Free Savings Account -Go open one!!

[Reef_Geek]

Looks like the markets aren't reacting to the impending midnight fiscal cliff at all. There's a few articles out this morning, but at the peak of Fri vs low of Mon (so far)... it's only been a drop of 0.97% at the widest gap for the Dow Jones industrial average. Rest of the indices have gone up.

This is disappointing. I was hoping to take a contrarian tactic here...

[Reef Pilot]

Originally Posted by Reef_Geek

Looks like the markets aren't reacting to the impending midnight fiscal cliff at all. There's a few articles out this morning, but at the peak of Fri vs low of Mon (so far)... it's only been a drop of 0.97% at the widest gap for the Dow Jones industrial average. Rest of the indices have gone up.

This is disappointing. I was hoping to take a contrarian tactic here...

They are playing the pass the hot potato game right now. The Dem controlled Senate is waiting until the last minute to give the Repub House a deal they know won't pass. Then they can blame the Repubs for going over the cliff.

Any deal passed today will be meaningless. The big negotiation will happen in the new year with the debt ceiling coming up in a couple months. Then they will be forced to do something big, one way or the other.

[Reef_Geek]

Originally Posted by Reef Pilot

They are playing the pass the hot potato game right now. The Dem controlled Senate is waiting until the last minute to give the Repub House a deal they know won't pass. Then they can blame the Repubs for going over the cliff.

Any deal passed today will be meaningless. The big negotiation will happen in the new year with the debt ceiling coming up in a couple months. Then they will be forced to do something big, one way or the other.

Good call.

[foxfishfan]

If anyone is investing in a TFSA, don't do it as the interest rate is quite low. You can also buy a tax free gic which pays 1.6% for a 15 month term, for instance. Yes, the money is locked in for 15 months but the interest is 3x that earned leaving it in the account and is all tax-free.

[Reef_Geek]

Originally Posted by foxfishfan

If anyone is investing in a TFSA, don't do it as the interest rate is quite low. You can also buy a tax free gic which pays 1.6% for a 15 month term, for instance. Yes, the money is locked in for 15 months but the interest is 3x that earned leaving it in the account and is all tax-free.

TFSA is simply the status registered with the government. What you're describing is applying the TFSA status to GIC.

For example, my TFSA is a mutual funds account. I can choose to buy any mutual funds (offered by the financial institution where account is held) in this account so long as I do not exceed my contribution room. Additionally, you can have multiple TFSAs... for example, everyone has a cumulative contribution room of $25.5K ($5K/yr since 2009 and $5.5K for 2013), so you could have, say, $5K in a TFSA GIC, $5K in a TFSA mutual funds account with bank X, $5K in a TFSA mutual funds account with bank Y, $5K in a TFSA cash savings account, $5.5K in a stock trading account with another brokerage. You can withdraw at anytime and you will get your contribution room back (following year).

[Reef_Geek]

Originally Posted by Reef_Geek

... for example, everyone has a cumulative contribution room of $25.5K ($5K/yr since 2009 and $5.5K for 2013)

I should add... everyone who is a deemed Canadian resident for the entirety of each of those years will get their respective TFSA allowances.

I left Canada as a deemed non-resident, was working in the US as a biologist under NAFTA, and came back to Canada in 2008, and was a student... so I did not file a 2008 tax return. It seems (actually no surprise) that parts of our government do not talk to each other, so Canadian Customs and Border Patrol forms that declared my return at the border (with all my worldly belongings on file) never told Canada Revenue Agency... so I had to provide my landing documents, my bills, my bank statements, my driver's license and health card photocopies to CRA to show that I was indeed a resident in 2009, so that I have my TFSA allowance for 2009.

[Reef Pilot]

TFSA's are great for stock trading. All your profits are tax free, and makes it a lot easier to do your taxes in April if you are a frequent trader. And all capital gains expand your account, so you have more and more room to make some decent trades.