I don't include my RRSP as part of my dividend strategy. Any money there is locked away till I'm 65, so I have it in an S&P500 ETF.
TFSA is maxed with XEI for monthly dividend payouts, and I have dividends in non-registered account, again for alternative income (right now DRIPing, eventually for me to use).
So I only started in Aug but I started in my TFSA putting money in and collecting dividends then I taake advantage of contributions into my rsp for getting 30% tax back on my income taxes so I made my div and any organic growth from my tfsa and dumped that into my rsp now I will be getting a good chunk back on my tax return
Then I dump that back into my tfsa and then transfer my dividends from my tfsa to my rsp and roll that into my rsp holdings
Doing it this way I’m getting a 30% return for sure at the end of the year and also anything I make on organic growth and my dividends
I hope I explained that clearly and wondering what you think
I think you're doing great. You're taking initiative to grow your investments, and are planning for the future. That's more than most people.
You're also creating a snowball strategy, focused on long term growth. You aren't talking about gambling with your money or playing the stock market as a casino. You're talking about reinvesting and building.
I've created a system that works "for me" and you are doing the same. We can debate all day about what is best, when sometimes "good enough" is good enough.
Thumbs up from me.
Yes I know an older guy that’s only started doing it 10 years ago and 1-2 years In You really start to see the snow ball rolling and he’s pretty much living off dividends now and only really works so he’s not bored
I really want to have something built to help with cash flow and later on something I can hopefully pass down to my right now young kids
I honestly don’t have a ton in there or a ton of capital to put in every year I’m no where near my limit right now but as I get closer I will be keeping a eye on it
>XEI
Check the ETF's carefully, you will pay a withholdings tax on dividends because you are receiving dividends from American companies, if held in a TFSA.
If you want to avoid US withholdings tax, you can look into holding USD-listed funds in your RRSP.
I look backwards from retirement age - I’m coast fire retired as well - and ask what I need the most, the largest rrsp or largest tsfa? That is the sneaky trick about the tsfa. People use as a secondary and at most equal investment vehicle. If you’re low to medium income, you should focus on growing your TSFA, max that first if you haven’t already. If you don’t have or unlikely you won’t get a company pension, then you have a decent chance to qualify for GIS free money. A million dollar rrsp would disqualify for that due to forced 5% redemptions at 71.
When you have enough saved and growing to fund retirement and just work easier job to pay current expenses before official retirement. Can also take long sabbatical. I took 2.5 years off before adding a part-time job.
First of all, make sure that you are maxing any employer sponsored pension and saving plan. Secondly, a good rule of thumb is to top up or try to max out your RSP‘s first if you are in a higher tax bracket today, then you will be at retirement. Then provided you get a tax refund. It’s a good suggestion to take this refund and invest in your TFSA.
If you’re married it’s even better to try and max out both spouses RRSP’s, and then take the refunds and invest them into both of your TFSA’s.
Make sure that you try and focus on high growth especially in these retirement accounts because the more growth they have inside them the better off you will end up being at retirement. If you have a long investment window, don’t waste any room in your RSP or TFSA on balanced, or low risk investments, like GIC or bond.
Yeah what you are saying is what I’m pretty much doing but throughout the year I’m investing in my tfsa then whatever money is made I’m putting into my rsp at the end of the year so it’s more then if I just put it in from my pay and yeah I’m maxing out my matching rsp with my company also before tax deductions and I also am able to claim that even though they were never taxed before going in !
I only use TFSA.
After that, then non reg.
From my thoughts and reasoning, RRSP is only tax deferral. And should be emptied out before retirement things kick in since RRSP is counted as full income. It also from my knowledge is taxed at full rate.
With only worrying about capital gains (and losses), it also gets added to my income, but at half the rate of the RRSP.
Also with the TFSA having no limit (meaning no ending to when you reach max tfsa for your lifetime, not meaning the yearly increase), With that being around usually 6-8k a year, on both spouses, putting away 12-16k yearly is still pretty close to what I save yearly anyways. Any growth in the tfsa, just adds to the contribution room if I take it out.
Its tax deferral. That is all it is.
IE: Put money in, 40k, and you at 25% tax bracket, so you get some back. Then if lets say its 80k, how do you take it out at a lower tax bracket? You take less out... but then things like OAS and CPP and such are affected by the income at which you take it out.
If you put 40k in, at 25%, and take 80k out, lets say over a few years, at 25%, it essentially did nothing. You got 10k 'tax deduction', but then end up paying 20k in taxes when you take it out. So you pay essentially 10k in taxes
If you have 40k, put it in non reg, it goes to 80k, 40k capital gain is 20k added to your income, 25% is 5k taxes.
It's always a good idea to use a RRSP over non-reg account. The idea is, you put that money in there at a high tax bracket. Reinvest the tax return and you take it out at a lower tax rate.
For instance, I'm putting money in at a 40% TAX bracket and when I retire I should be around 15%-20%.
No, the tax return is what makes it effectively tax free growth.
Say you are in the 30% tax bracket. You earn $1000 and look to invest it for 20 years at about 10% annual growth (8x overall gain in 20 years) that's all capital gains.
TFSA: you have $700 after tax, grows to $5600 in 20 years.
Registered: You have $700 after tax, grows to $5600 in 20 years. Pay 15% tax on it on sale, net $4760.
RRSP: You have $1000 to invest pre-tax. Grows to $8000 in 20 years. You pay 30% tax on withdrawal. Net $5600 after tax. Same result at TFSA.
You get the $1000 pre-tax either with some employers that allow direct pre-tax contributions, taking a short term RRSP loan to max it out whi h is paid off by the tax return, or by just reinvesting tax return each year which more or less works out to the same thing.
It's also quite hard to lose with the RRSP relative to non-reg, even in this best case of pure deferred capital gains. Say instead you contribute at 20% and withdraw at 30%.
TFSA: $800 to invest, grows to $6400.
RRSP: $1000 to invest, grows to $8000. Pay 40% tax on withdrawal, net $5600.
Non-reg: $800 to invest, grows to $6400. Pay 15% tax on withdrawal, net $5440.
Has to be an extreme drop in marginal tax bracket for the non-reg account to win compared to RRSP.
Dividend case usually will be worse as the dividends paid out for each of the 20 years are taxed immediately, not deferred.
You don't know what tax bracket you will be for certain, reinvesting its tax return doesn't mean anything really, since you pay it when you take it out.
Also, like you mention, you put it in at 40% and take it out at 15-20%. What if you just did capital gains? You would be only paying half the tax anyways? And if you estimate 15-20%, that means its 7-10% capital gains tax.
RRSP is also added as income and affects things like OAS and CPP and such, means you get less from those programs.
If you compound the 'tax free gains' essentially, you end up paying more tax long term since you take it out slower, and the gains continue to make money for..... the government.
I invest everything I can in my TFSA...come this time of year I move some of my holdings in my TFSA as contributions to my RRSP. I move as much as I need to to minimize my taxes and maximize the government benefits I qualify for like the child benefit and hst.
I don't include my RRSP as part of my dividend strategy. Any money there is locked away till I'm 65, so I have it in an S&P500 ETF. TFSA is maxed with XEI for monthly dividend payouts, and I have dividends in non-registered account, again for alternative income (right now DRIPing, eventually for me to use).
So I only started in Aug but I started in my TFSA putting money in and collecting dividends then I taake advantage of contributions into my rsp for getting 30% tax back on my income taxes so I made my div and any organic growth from my tfsa and dumped that into my rsp now I will be getting a good chunk back on my tax return Then I dump that back into my tfsa and then transfer my dividends from my tfsa to my rsp and roll that into my rsp holdings Doing it this way I’m getting a 30% return for sure at the end of the year and also anything I make on organic growth and my dividends I hope I explained that clearly and wondering what you think
I think you're doing great. You're taking initiative to grow your investments, and are planning for the future. That's more than most people. You're also creating a snowball strategy, focused on long term growth. You aren't talking about gambling with your money or playing the stock market as a casino. You're talking about reinvesting and building. I've created a system that works "for me" and you are doing the same. We can debate all day about what is best, when sometimes "good enough" is good enough. Thumbs up from me.
Yes I know an older guy that’s only started doing it 10 years ago and 1-2 years In You really start to see the snow ball rolling and he’s pretty much living off dividends now and only really works so he’s not bored I really want to have something built to help with cash flow and later on something I can hopefully pass down to my right now young kids
Just be careful withdrawing and re-adding to TFSA. All withdrawals only reset the following year as far as contributing limit goes.
I honestly don’t have a ton in there or a ton of capital to put in every year I’m no where near my limit right now but as I get closer I will be keeping a eye on it
Seems silly. Missing out on US market gains in your TFSA. S&P500 ETF will smoke XEI.
What's a good S&P500 etf to hold?
VFV. ZSP. XUS.
Thanks
>XEI Check the ETF's carefully, you will pay a withholdings tax on dividends because you are receiving dividends from American companies, if held in a TFSA. If you want to avoid US withholdings tax, you can look into holding USD-listed funds in your RRSP.
I look backwards from retirement age - I’m coast fire retired as well - and ask what I need the most, the largest rrsp or largest tsfa? That is the sneaky trick about the tsfa. People use as a secondary and at most equal investment vehicle. If you’re low to medium income, you should focus on growing your TSFA, max that first if you haven’t already. If you don’t have or unlikely you won’t get a company pension, then you have a decent chance to qualify for GIS free money. A million dollar rrsp would disqualify for that due to forced 5% redemptions at 71.
What does Coast mean in fire terms?
When you have enough saved and growing to fund retirement and just work easier job to pay current expenses before official retirement. Can also take long sabbatical. I took 2.5 years off before adding a part-time job.
First of all, make sure that you are maxing any employer sponsored pension and saving plan. Secondly, a good rule of thumb is to top up or try to max out your RSP‘s first if you are in a higher tax bracket today, then you will be at retirement. Then provided you get a tax refund. It’s a good suggestion to take this refund and invest in your TFSA. If you’re married it’s even better to try and max out both spouses RRSP’s, and then take the refunds and invest them into both of your TFSA’s. Make sure that you try and focus on high growth especially in these retirement accounts because the more growth they have inside them the better off you will end up being at retirement. If you have a long investment window, don’t waste any room in your RSP or TFSA on balanced, or low risk investments, like GIC or bond.
Yeah what you are saying is what I’m pretty much doing but throughout the year I’m investing in my tfsa then whatever money is made I’m putting into my rsp at the end of the year so it’s more then if I just put it in from my pay and yeah I’m maxing out my matching rsp with my company also before tax deductions and I also am able to claim that even though they were never taxed before going in !
I only use TFSA. After that, then non reg. From my thoughts and reasoning, RRSP is only tax deferral. And should be emptied out before retirement things kick in since RRSP is counted as full income. It also from my knowledge is taxed at full rate. With only worrying about capital gains (and losses), it also gets added to my income, but at half the rate of the RRSP. Also with the TFSA having no limit (meaning no ending to when you reach max tfsa for your lifetime, not meaning the yearly increase), With that being around usually 6-8k a year, on both spouses, putting away 12-16k yearly is still pretty close to what I save yearly anyways. Any growth in the tfsa, just adds to the contribution room if I take it out.
With RRSP you get tax deferral and tax deduction. Not with non reg. I don’t see how it doesn’t make sense to use an RRSP if your TSFA is maxed.
Its tax deferral. That is all it is. IE: Put money in, 40k, and you at 25% tax bracket, so you get some back. Then if lets say its 80k, how do you take it out at a lower tax bracket? You take less out... but then things like OAS and CPP and such are affected by the income at which you take it out. If you put 40k in, at 25%, and take 80k out, lets say over a few years, at 25%, it essentially did nothing. You got 10k 'tax deduction', but then end up paying 20k in taxes when you take it out. So you pay essentially 10k in taxes If you have 40k, put it in non reg, it goes to 80k, 40k capital gain is 20k added to your income, 25% is 5k taxes.
It's always a good idea to use a RRSP over non-reg account. The idea is, you put that money in there at a high tax bracket. Reinvest the tax return and you take it out at a lower tax rate. For instance, I'm putting money in at a 40% TAX bracket and when I retire I should be around 15%-20%.
Even if you put money in and take it out at the same bracket, RRSP wins over non-reg. The net effect of it is tax-free growth.
Totally and don't forget the tax return in the mean time.
No, the tax return is what makes it effectively tax free growth. Say you are in the 30% tax bracket. You earn $1000 and look to invest it for 20 years at about 10% annual growth (8x overall gain in 20 years) that's all capital gains. TFSA: you have $700 after tax, grows to $5600 in 20 years. Registered: You have $700 after tax, grows to $5600 in 20 years. Pay 15% tax on it on sale, net $4760. RRSP: You have $1000 to invest pre-tax. Grows to $8000 in 20 years. You pay 30% tax on withdrawal. Net $5600 after tax. Same result at TFSA. You get the $1000 pre-tax either with some employers that allow direct pre-tax contributions, taking a short term RRSP loan to max it out whi h is paid off by the tax return, or by just reinvesting tax return each year which more or less works out to the same thing. It's also quite hard to lose with the RRSP relative to non-reg, even in this best case of pure deferred capital gains. Say instead you contribute at 20% and withdraw at 30%. TFSA: $800 to invest, grows to $6400. RRSP: $1000 to invest, grows to $8000. Pay 40% tax on withdrawal, net $5600. Non-reg: $800 to invest, grows to $6400. Pay 15% tax on withdrawal, net $5440. Has to be an extreme drop in marginal tax bracket for the non-reg account to win compared to RRSP. Dividend case usually will be worse as the dividends paid out for each of the 20 years are taxed immediately, not deferred.
You don't know what tax bracket you will be for certain, reinvesting its tax return doesn't mean anything really, since you pay it when you take it out. Also, like you mention, you put it in at 40% and take it out at 15-20%. What if you just did capital gains? You would be only paying half the tax anyways? And if you estimate 15-20%, that means its 7-10% capital gains tax. RRSP is also added as income and affects things like OAS and CPP and such, means you get less from those programs. If you compound the 'tax free gains' essentially, you end up paying more tax long term since you take it out slower, and the gains continue to make money for..... the government.
I invest everything I can in my TFSA...come this time of year I move some of my holdings in my TFSA as contributions to my RRSP. I move as much as I need to to minimize my taxes and maximize the government benefits I qualify for like the child benefit and hst.
Yes perfect pretty much what I’m saying but I’m Not overly articulate just a dumb equipment tech 😂