New TFSA limit for 2019 - $6,000

[PeanutButter]

https://www.canada.ca/en/revenue-age...t-amounts.html

Old limit: $5,500
New limit: $6,000

I hope everyone is saving enough each year to put away this amount. It's such an amazing investment vehicle, I hope you're taking advantage of it.

There's a lot of debate on which is better, the TFSA or the RRSP, but from what have gathered, it works out to about the same, since you get a refund if you buy RRSP's.

Personally, I max out my TFSA first, then look into RRSP. As long as you're putting money away, that's the important part.

Pro tip: A lot of people and business start taking their investment losses in Nov/Dec, so they can claim that against their taxes, and then re-invest in Jan. Also, since the TFSA, a lot of people dump in their contribution in Jan as well, so look for a nice little bump at the start of the year for those who like to "time the market".

[Energy]

Great news!

[68style]

Extra... money?

[GS8]

Savings account?

What's that?

[MarkyMark]

We live in Vancouver, the extra money we put away is hoping real estate keeps going up.

[DragonChi]

Originally Posted by PeanutButter

[url]
Pro tip: A lot of people and business start taking their investment losses in Nov/Dec, so they can claim that against their taxes, and then re-invest in Jan. Also, since the TFSA, a lot of people dump in their contribution in Jan as well, so look for a nice little bump at the start of the year for those who like to "time the market".

Can you give an example of this?

Is it possible to claim losses for a deferral on taxes?

[PeanutButter]

Originally Posted by DragonChi

Can you give an example of this?

Is it possible to claim losses for a deferral on taxes?

Example on selling a position at a loss? What do you mean by deferral on taxes?

This only works in a non-registered account.

If you bought 10 shares of Apple at $200, your book value is $2,000.
If you sell your 10 shares of Apple today at ~$185, your market value is $1,850

You can claim a capital loss on your income tax of $185, then re-buy Apple or another position in 2019.

People like to realize their losses at the end of the year to claim it against their taxes.

[DragonChi]

I see, I thought it might be outside of a RRSP or TFSA.

Wouldn't the gains balance out your losses? Assuming you had something other than Apple.

I don't get how it's effective. Other than if market prices are usually lower in January and you can claim more capital losses than through out the rest of the year.

Edit: I also thought that gains or losses on income tax were only realized when you sell.

[PeanutButter]

Originally Posted by DragonChi

I see, I thought it might be outside of a RRSP or TFSA.

Wouldn't the gains balance out your losses? Assuming you had something other than Apple.

I don't get how it's effective. Other than if market prices are usually lower in January and you can claim more capital losses than through out the rest of the year.

Edit: I also thought that gains or losses on income tax were only realized when you sell.

Yes, if you have realized gains, that will be offset by your realized losses.

You would have to realize the loss to apply it against your taxes

Tax-loss selling is a strategy that investors employ to reduce their tax bill. If you own shares that have dropped in value since you bought them, you can sell the shares and use the capital loss to offset any capital gains you may have. You must first apply the loss against capital gains recorded in the current year. If you still have net losses left over, you can carry them back up to three years or forward indefinitely to offset capital gains in those years. Only losses incurred on non-registered assets qualify, so if a stock has dropped inside your registered retirement savings plan (RRSP), for example, you can't use it for a tax loss.

What should I sell?

Often, the best candidates for tax-loss selling are companies that have run into trouble and are unlikely to recover soon, if ever – stocks you would probably be selling anyway. If you believe a stock will rebound, you should think carefully before selling and potentially missing out on the recovery. Generally, it's best to consider investment fundamentals first, and tax consequences second. In other words, don't let the tax tail wag the investment dog.

Businesses will still weigh out their options, but some will still sell at a loss because of various reasons.

[!LittleDragon]

Lame that it got dropped from $10k... Thanks Trudy...

I like to take from my line of credit and max out my TFSA in early January. Then I pay it back in 2-3 months. The sooner the money starts working for you the better. I have to take from my line of credit because I keep no savings. Every pay cheque goes towards bills, the remainder goes into investments asap. Money does nothing in the bank but lose value.

lol, my TFSA hit $85k over the summer but after the last 2 months, I'm down to $77k .

[danned]

ohohoh.
free money by just saving waohwao

[Nlkko]

There is no cap gain/loss tax/writeoff for TFSA.

$500 whoopdiedoo.

[PeanutButter]

Originally Posted by !LittleDragon

Lame that it got dropped from $10k... Thanks Trudy...

I like to take from my line of credit and max out my TFSA in early January. Then I pay it back in 2-3 months. The sooner the money starts working for you the better. I have to take from my line of credit because I keep no savings. Every pay cheque goes towards bills, the remainder goes into investments asap. Money does nothing in the bank but lose value.

lol, my TFSA hit $85k over the summer but after the last 2 months, I'm down to $77k .

I know that feel man. I'm pretty heavy into WEED and my portfolio swings have been just insane...

[PeanutButter]

Originally Posted by !LittleDragon

Lame that it got dropped from $10k... Thanks Trudy...

I like to take from my line of credit and max out my TFSA in early January. Then I pay it back in 2-3 months. The sooner the money starts working for you the better. I have to take from my line of credit because I keep no savings. Every pay cheque goes towards bills, the remainder goes into investments asap. Money does nothing in the bank but lose value.

lol, my TFSA hit $85k over the summer but after the last 2 months, I'm down to $77k .

This is probably better for the country as a whole and the public... Less money in TFSA, means more money in non-registered accounts = more tax dollars.
It's the whole rich get richer argument. I get it, but it would be nice to have $10k limit instead.

[!LittleDragon]

Originally Posted by PeanutButter

I know that feel man. I'm pretty heavy into WEED and my portfolio swings have been just insane...

I'm not too worried, my TFSA is basically all high yield dividend like IEP, PHK, PGP, etc... price goes up, down, left, right... doesn't matter, I get paid every month. I never touch my TFSA, pretty much do my one buy for the year and setup a DRIP and let it do its thing.

[!LittleDragon]

Originally Posted by PeanutButter

This is probably better for the country as a whole and the public... Less money in TFSA, means more money in non-registered accounts = more tax dollars.
It's the whole rich get richer argument. I get it, but it would be nice to have $10k limit instead.

That's true but most people don't even max it out at $5500. They think it's just another savings account and only have money in there instead of assets. If you can max it out every year, you're doing pretty well already. I dunno, I think the more I invest now, the more money I have to spend later in life and the more money I spend, the more taxes I pay. Oh well...

[DragonChi]

^There's a blog, Mr. Money Mustache that has the same kind of thinking. The dude and his wife saved 50-60% of his earnings and retired in his 30s.

[ssjGoku69]

50-60% of my $13.00/hr won't let me retire in my 30's

[Nlkko]

Lol saving 50-60% of earnings. Unsustainable, non-replicable process for most people.
Another guy selling snake-oil hopium for the hoi polloi.

A "better process" you can't follow isn't a better process.

[Ferra]

Originally Posted by PeanutButter

This is probably better for the country as a whole and the public... Less money in TFSA, means more money in non-registered accounts = more tax dollars.
It's the whole rich get richer argument. I get it, but it would be nice to have $10k limit instead.

I actually think TFSA helps the middle class the most.

The rich doesn't give a shit about $6K/year of tax exempt investment. Their portfolios are in 7+ figures.


Btw most people should max out their TFSA before any other saving accounts.
I know many people who have investment in RRSP or other regular investment account while there is still rooms (or even nothing) in their TFSA.

Cumulative TFSA limit in 2018 is $57,500. ($63,500 in 2019)
Basically, if you never contributed to TFSA, that's how much you can put in your TFSA.
If you have any investments in funds and stocks, they should be be in your TFSA account before any others.

[Gerbs]

Originally Posted by PeanutButter

Example on selling a position at a loss? What do you mean by deferral on taxes?

This only works in a non-registered account.

If you bought 10 shares of Apple at $200, your book value is $2,000.
If you sell your 10 shares of Apple today at ~$185, your market value is $1,850

You can claim a capital loss on your income tax of $185, then re-buy Apple or another position in 2019.

People like to realize their losses at the end of the year to claim it against their taxes.

^
Adding on to this, if you buy back the stock within 30 days of selling it. Thus no tax benefit. So wait 30 days before buying back to not trigger a superficial loss.


Also can't wait till TFSA hits over $200k+, switch the holdings to a high dividend / REIT portfolio and enjoy $10,000ish(4-6%) tax-free income every year.

[radioman]

Originally Posted by Ferra

I actually think TFSA helps the middle class the most.

The rich doesn't give a shit about $6K/year of tax exempt investment. Their portfolios are in 7+ figures.


Btw most people should max out their TFSA before any other saving accounts.
I know many people who have investment in RRSP or other regular investment account while there is still rooms (or even nothing) in their TFSA.

Cumulative TFSA limit in 2018 is $57,500. ($63,500 in 2019)
Basically, if you never contributed to TFSA, that's how much you can put in your TFSA.
If you have any investments in funds and stocks, they should be be in your TFSA account before any others.

Just to be clear this max would be if you were 18 years old in 2008. Check your CRA site for your TFSA contribution room maximum.

Was a topic of discussion at work the other day but when will the TFSA, in theory, be capped? Would it even be capped ever? Perhaps a re-work of the formula for increase down the road after it hits XXXXX amount. Like Gerbs mentioned above I cannot see CRA allowing situations like that to unfold.

[Gerbs]

@Radioman. When I worked at the bank. I've seen tons of TFSA's with $150k+ likely from the Bull Run we had in the last 10 years. Some people had like $500k+ most likely from picking individual tech/weed stocks.

I also had the same discussion at work on whether TFSA will be capped one day. Cause once you hit about $500k - $1MM in TFSA. You'll have a solid passive income for the rest of your lift + future generations. So that sparked the talk about if the CRA will ever remove the TFSA account or limit it to a maximum tax savings.

One of the portfolio managers mentioned that less than 2/3rd of Canadians save more than $10,000. Let alone max out a TFSA. Of those who max a TFSA probably less than 20 - 30% of them actually invest in something other than a GIC or just a regular savings account. So not many people actually have a lot of money saved thus he doesn't see the government changing the TFSA anytime soon.

https://yourfinanciallife.bmo.com/ar.../#.W_RKsuhKiUk

[Gerbs]

Originally Posted by DragonChi

^There's a blog, Mr. Money Mustache that has the same kind of thinking. The dude and his wife saved 50-60% of his earnings and retired in his 30s.

It's actually really popular idea. However, it's super hard in Vancouver. Unless your fortunate enough to live at home starting off and work in an industry that pays really well. You savings rate % won't be high enough to retire in your 30's. I calculated that I need to save roughly $2300/month to retire at 40 with a 4% withdrawal rate which gives me $50k/year .

You can check out the subreddit: https://www.reddit.com/r/financialindependence/

[radioman]

Originally Posted by Gerbs

@Radioman. When I worked at the bank. I've seen tons of TFSA's with $150k+ likely from the Bull Run we had in the last 10 years. Some people had like $500k+ most likely from picking individual tech/weed stocks.

I also had the same discussion at work on whether TFSA will be capped one day. Cause once you hit about $500k - $1MM in TFSA. You'll have a solid passive income for the rest of your lift + future generations. So that sparked the talk about if the CRA will ever remove the TFSA account or limit it to a maximum tax savings.

One of the portfolio managers mentioned that less than 2/3rd of Canadians save more than $10,000. Let alone max out a TFSA. Of those who max a TFSA probably less than 20 - 30% of them actually invest in something other than a GIC or just a regular savings account. So not many people actually have a lot of money saved thus he doesn't see the government changing the TFSA anytime soon.

https://yourfinanciallife.bmo.com/ar.../#.W_RKsuhKiUk

Ya mine is no where near 500k haha that would be fantastic.

I'm familiar with those stats. That I think is where the problem starts. I always thought the spirit of the TFSA was to help most Canadians get introduced to investing. If we have a majority of Canadians only managing to save say 10k then a 100k TFSA means nothing to them. The benefits would be for the 29% that have more than 100k etc. This is where it turns from helping most Canadians, albeit still helping them as they can put their 10k in, and starts benefiting Canadians with a lot more than 10k etc.

With that being said, trust me I'm happy the TFSA keeps increasing. I will be writing a cheque for 6k Jan 1st and would contribute more if I could.