Adrian, I believe you didn't mention the rules on day trading in your TFSA account and I am not sure what is the window I can sell a stock I recently bought. Could you comment if selling a stock the next day is allowed, or how long should I wait to trade my stocks? My concern is if I create a Stop Loss order and the market crashes on the same day, or the next day, how that could cause me trouble. Thanks and keep up with these great videos!
@@Arthur-S I talk about day trading in your registered accounts in my RRSP videos but unfortunately, the rules that CRA publishes are intentionally vague.... they don't offer a threshold or limit since they don't want people taking advantage of that. But I would say that if you sell a stock after a few days, that's probably okay as a one-time thing but don't make a habit of it! If you're buying and selling stocks over the course of hours and you're doing this every week, then that's when you'll get taxed and penalized. I hope that helps! =)
@@jumbothompson Thanks Damian! Ya I hate people who try to show off how "smart" they are by using acronyms and terminology designed to intimidate and confuse people. I try to make my videos as accessible as possible for beginners =)
Biggest lesson of 2022 in the stock market: N.obody knows what is going to happen next, so practice some humility and follow a strategy with a long term edge.
Nobody knows anything; You need to create your own process, manage risk, and stick to the plan, through thick or thin, While also continuously learning from mistakes and improving.
@@yvonnejoordan ... it took me 5 years to stop trying to predict what bout to happen in market based on charts studying, cause you never know. not having a mentor cost me 5 years of pain I learn to go we’re the market is wanting to go and keep it simple with discipline.
I can't imagine how long it took you to learn all of this information you've jampacked into your videos. Your generosity is seriously appreciated dude, you would be an amazing professor
Thanks buddy! I really appreciate those kind words, you just made my day! 🙏 I actually create these videos in the style of how a professor would give a lecture so I'm glad that my style works! =)
Newcomers to Canada beware - your contribution room is calculated from the date you became a resident. Don't just consider your age. Verify your contribution room with CRA. Making a mistake on this can cost you a lot of money.
You are correct! You only start accumulating contribution room once you actually start living in Canada! I talk about this in greater detail in my TFSA Mistakes video here =) ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-s4cBibLATOU.html
OMG, jut found your channel and now going through all your content. As a big consumer of this kind of stuff, I wondered how I could possibly have missed your channel, then saw that you've only been around for, what, 8 months? It's soooo helpful! Thanks for all the great advice!
Thanks buddy! I've only been on RU-vid for almost 5 months so I'm still small but hopefully I'll keep growing at a good rate. There isn't too much Canadian focused financial content out there which is why I started this channel. I'm glad you stumbled onto my videos and welcome to the family! Please reach out if you ever have any questions or topics you'd like me to cover =)
What if it's a joint TFSA, do you get double that contribution room? Er... Can one have a joint TFSA with their spouse or is it individual? Just starting my TFSA with Questrade. I'm a dummy and had only started an individual margin account before... oops!
I have another question. Can you move investments in Questrade? I have investments in the individual margin, can they be moved to the TFSA in Questrade or would I have to sell those assets and buy new ones within the TFSA?
I haven't made that video yet but here is the short version: Requests -> Transfer Investments. Note that this will count as a TFSA contribution so make sure you have the room. Also if you're transferring stocks which have increased in value, it will treated as if you sold them at a profit and so you will be taxed on capital gains. I talk about this in greater detail in my Tax Savings video here =) ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-xLXup5L-S2Q.html
I am awarding you the highest honour that I am able to bestow... You’re now officially the only youtuber I have notifications on for. Keep up the good work man
Same here literally the the first and only one and I've been on RU-vid longer than they've had the notification bell. We need more people like you Canadian in a T
That's a good basic rule of thumb! You don't have to strictly follow those rules, for example I still hold Canadian dividend stocks in my RRSP as well and occasionally some growth stocks in my tax sheltered accounts but those general rules above are a good template to follow! =)
@@nauman9002 If the US stocks are just growth stocks, you have nothing to worry about! But if the US stocks pay dividends, you WILL be charged an immediate 15% US Withholding tax on those dividends in a TFSA. That's why you should hold US dividends in your RRSP instead! =)
@@CanadianTShirt Thanks for clearing this up. 1/ As per the info, day trading is not allowed in TFSA, but short term trading , like buying and selling in a week or a month shouldn't be a problem i guess? 2/Let's say i invested my 2020 contribution $6000 and make some profit every time i trade(in a week or two or in a month). Now, If i keep withdrawing my profits ONLY every 2 weeks or every month as long my $6000 contribution is intact, the withdrawals have no impact on my TFSA, right?
You are amazing. Stumbled upon one of your video on credit score and then saw them all in 2 days :) I have a question for you.. I am 32 and came to canada as a new immigrant in March. Am I eligible to contribute more than $6000 in 2020 without the penalty - considering I have never invested in a TFSA before. My logic says that because I am new to Canada, I will be treated as an 18 year old contributing to TFSS for the first time and therefore eligible for the $6000 only. Is my understanding correct? Thanks in advance.
Thank you for bingeing my videos and welcome to the channel! =) You are correct that if you just moved to Canada this year, you are treated as if you are an 18 year old Canadian resident. So you will only have $6000 of TFSA contribution room and next year in 2021, you will gain another $6000 of room
@@CanadianTShirt thanks Adrian. Makes sense :) More power to you. I am sure that your knowledge and sincerity will help you grow your channel really quickly!
Finally a clear and concise summary of foreign withholding taxes on investments and where to hold these types of investments. I’ve been trying to figure this out for years. Thank you!
Thank you and I'm really glad that I was able to help! I'll actually be making a whole video soon on where the best place your different kind of investments very soon so stay tuned for that! =)
So if I have RBC US EQUITY (based on s&p500) will be giving me dividends but they will be taxed 15% as well as 15% on the capital gains if I want to sell my ETF?
The dividends will be charged a 15% withholding tax since they come from US dividends but the capital gains will be 100% tax free! That withholding tax NEVER applies to capital gains, only to dividends =)
Once again Adrian, you explain things so clearly that there is no doubt as to what I need to to. The TFSA contribution as opposed to the capital gains inside it was my main issue. As you said, I can have profits well beyond the contribution room and I won't be taxed. Thank you so much!
Absolutely! That's one of the best benefits of the TFSA! You are limited by how much you can put in but if you let your investments grow inside, they can far exceed your contribution limits! =)
You are amazing - not only are you extremely knowledgeable, you're an excellent teacher. Your videos are to the point, clear, and make logical sense, especially in the order in which you have filmed them! I can't thank you enough! I hope that whatever you are doing with your career is capitalizing on your knowledge and skillset!
Thank you so much for those kind words! I really do appreciate that! I put a lot of effort into planning out these videos and making playlists in an order which will make sense to beginners so I'm happy that it's not going unnoticed! =)
Hi! Great video :) I am a mom and I only have the money my husband gives me and the CCB for my two kids, being said that I would like to know if I can open TFSA and deposit some money there and invest of course? (Remember I don’t have any type of job) thanks if you can respond ;)
Capital gains from U.S. stocks like Tesla are NOT taxed because they are non-dividend paying stocks. Yes, it's a growth stock but it's up 200% for the year and therefore it makes a world of sense to hold it in my TFSA instead of my RRSP, assuming I want access to it before I retire and even then - I would pay a boatload of tax on those gains eventually, which I don't by realizing those gains in the TFSA.
Thanks so much for doing this. We're taught to go to school, get a "career" and then like magic, everything just works out? The education provided here is probably going to be the most important lessons in my life!
Thanks Drew! I'm so glad that my videos are actually having an impact. I agree 100%, there is NO EXCUSE why financial education is NOT covered in high school... That's why I started this channel!
That is a fact! schools will never teach these stuff. Because thats what the governments want, for you to only learn how to become an employee and be in the rat race.
If everyone knew finance and economics, they would lose votes and thus their power. It's a no-brainer why this stuff isn't taught at schools. If it was, it'd literally be a political suicide
I wish they would teach kids at school about TFSA, they would save up their first minimum wage job earnings up to their first contribution eligibility year of ~6k. They'd be so happy.
Hey! Hope all is well, love the videos.. I had a question regarding contribution room. If my limit per say is $10,000… and I invest this limit to a return of $20,000 and then withdraw to my bank, the next year, would my limit be $20,000 plus the newly added contribution room for the year? Hope that makes sense! Basically wondering if your contribution room stays permanently increased if investments surpass the limit. Thank you!
You're right! Let's break it down. Your limit is $10K and you contribute this full amount. Now you have maxed out your TFSA. But your investments grow to $20K now if you withdraw this amount, you regain whatever amount you withdrew so on January 1, you will regain this $20K of room PLUS the regular $6K that everyone gets in the new year so you will have $26K worth of room =)
Good day man, I like your video. I started to invest in stock since the covid crash without knowing all the detail.I made a Rockies mistake, I only have a TFSA for the stock market and I have US stock in it. My question is, can I transfere those stock in RRSP without selling them and buy them again in my rrsp? Thanks
That sound excellent about TFSA. But when you go to the bank to open a TFSA account, what they really do or offer to you is a simple saving account called TFSA. Nothing about dividend stocks or ETF or REITS, so where should I go to do that?
Ya the banks will just try to sell you their products so a TFSA savings account which is a waste since you will barely earn any income with that or a TFSA Mutual Fund which will cost you a ton of money in annual fees. To invest in stocks, ETFs or REITs you would need to open an account with an online brokerage. Each of the big bangs have their own version of online brokers but they are expensive, I recommend Questrade as the best Canadian online broker for beginners since they charge half the commission compared to banks when you buy a stock and they charge ZERO commission when you buy ETFs. Check out my Questrade video to see how it works =) ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-_V2yBWwOZX4.html
Wow - I'm not even half way through this video and I feel like all my questions and concerns are being lifted. Super helpful and encouraging now that it doesn't seem so complicated!
Make sure you check out my RRSP videos to learn how to invest with the RRSP: ru-vid.com/group/PLj8bU3AuW2qHOikk4VRpSDXCZTuH7eUhz Generally, I would suggest that any US dividend stocks and ETFs should be held in the RRSP to avoid the 15% US Withholding tax on those dividends. In the case of the S&P500, an ETF which tracks it like VOO doesn't pay too much in dividends, only with a yield of about 1.5%. Most of the profits you're looking at with the S&P500 is capital gains, not dividends and capital gains are totally tax free in a TFSA. That being said, it still sucks to lose that 15% tax on those dividends so I would still suggest that you hold it in your RRSP. I hope my playlist above helps! =)
Hey Sean! Unfortunately, if the ETF pays out dividends from US companies, yes you will be charged the 15% withholding tax even if the ETF is in Canadian dollars. For example, the ETF VFV trades on the TSX but it tracks the S&P 500 so it's dividends WILL be taxed 15% withholding taxes in a TFSA. Instead, if you held the corresponding US ETF (like VOO) in your RRSP, then you will NOT be charged the 15% withholding tax. Check out my RRSP video for more details on how to waive this withholding tax =) ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-gcYlQl6hF6w.html
Thanks for explaining. I moved back to Canada after absence for 13 years and this is all new to me. People talking about TFSA and I never heard of it or any benefits. Unfortunately I’m not eligible to have the acct because of not living here in the last 13 yrs
Nope! Capital gains are 100% tax free in a TFSA, whether they come from US or Canadian stocks! So if your US stock doesn't pay dividends, you don't have to worry about any taxes at all in a TFSA =)
So how do you pay tax on these dividends? You send payment to IRS??? Again, just to confirm, you can buy and sell US and Canadian stocks as often as you wish in a TSFA even if you have capital gains, correct? Only US stocks dividends are taxed?
So much information - Thank You. What is the recommended balance of contributing to TFSA and RRSP? The end goal would be to max out and top up both every year, but I am nowhere near that. Would it be a good idea to take the tax-free profits and balance of the TFSA, withdrawal, put into the RRSP to get the deferred tax and then reinvest the tax refund into the TFSA?
I'll be making several videos comparing the TFSA and the RRSP, you're right, the ideal case is to maximize both but if you have to choose between them, it really depends on the circumstance. I'll go over detailed scenarios in my upcoming video but a general rule of thumb is: if you currently have low income and thus a low tax bracket, then TFSA is the best choice. If you have a high income and are in a higher tax bracket (above $70K per year), then RRSP is likely the best option. There are definitely more factors to consider which I will discuss in my video but I hope that helps for now =)
if i make american dividends in my non registered account then move that dividends to my tfsa is that better than having that American dividend stock in my tfsa and taking that 15 percent withholding fee?
I'll be making a whole video on US dividends and how they are taxed but unfortunately, US dividends are FULLY taxed in a non-registered account. They do NOT get preferential tax treatment like Canadian dividends do, so there is no tax credit. So I NEVER hold US dividends in my non-registered, they'll be taxed a minimum of 20% (lowest tax bracket in Ontario) so already, the 15% withholding tax you pay in a TFSA is better. But even better, hold US dividends in an RRSP to avoid this withholding tax entirely! I hold my US dividends in my RRSP to be entirely tax sheltered, whereas I hold Canadian dividends in my TFSA. Check out my video on How to Transfer Stocks BETWEEN accounts, like non-registered to TFSA or TFSA to RRSP in this video here =) ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-WBqJaAFYcRQ.html
Thanks Adrian for a great explanation of TFSA. I have a question needing your input. Say a person is a new Canadian PR moving to Canada for the first time in 2021. Is the total contribution amount eligibility to the TFSA only the $6000 for 2021 when the Permanent Residency was active or is it a much larger amount that considers the unpaid yearly contributions since 2009 when TFSA came into law making the TFSA contribution eligibility more like $70,000 CAD (years 2009 to 2021 in total) ?
Hey Jikku! Unfortunately you only start building contribution room when you actually start living in Canada. So if you just moved to Canada in 2021, you will only have $6000 worth of TFSA contribution room. But you don't have to be a PR to gain this room, you just have to be living in Canada! So let's say you moved to Canada in 2020 but you only became a PR in 2021, you will have $12K worth of TFSA room ($6K from 2020 and $6K from 2021) I hope that helps! =)
Unfortunately no! You only start gaining TFSA room once you actually live in Canada! Watch this video here on the 2024 Tax Changes to see a table of your total TFSA room based on the year you moved to Canada =) ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-bC-8kZXceZU.html
Canadian in a T-Shirt someone once told be that had I started investing 200$/month for 40 years, I would likely have close to 1 million dollar for my retirement in addition to whatever pension I’m getting (assuming I’m getting one). That’s amazing! My students need to know this!
@@MrMcQuade this is true.... time is your greatest asset in growth. It doesn't take much. A little over a long period will by far out perform alot in a short period.
Investing is always better than not investing. However there’s one other thing that has to be factored in and that’s inflation. So one million dollars today will be worth a lot less in 40 years if we keep the same system of printing fiat money in place which has been around since 1913.
Nope! Capital gains are 100% tax-free in a TFSA, whether it's a Canadian or US stock. So a US growth stock like Amazon which doesn't pay a dividend is totally tax free =)
You are allowed to take the dividend payments you get from your TFSA and reinvest them into those same REITS/dividend stocks in your TFSA without affecting your contribution room? Did I understand that correctly ?
Absolutely! Any profits you make INSIDE the TFSA (capital gains, dividends or DRIPs) do NOT count as contributions and thus do NOT affect your contribution room! =)
This is amazing content! As a fellow Canadian I'm glad I found another Canadian who could explain the TFSA to me in such a clear manner (and wearing a t-shirt at that aha!). I only wish I found your channel before I bought some blue-chip AMERICAN dividend stocks in my TFSA - I was not at all pleased with that 15% withholding tax ugh! You have definitely inspired me to put REITs in my TFSA account and I will be following through with this strategy. What really blew my mind however was your example with the withdrawals and the resulting contributions. Are you certain that if I contributed $10,000 into my TFSA which eventually grew to $30,000 within my TFSA and then I withdraw that $30,000, I will be allowed to contribute $30,000 into my TFSA next year (as opposed to just $10,000 which was what I originally contributed)? I want to verify this because I feel like I came across an amazing revelation that was not explained to me. Thank you for your time good sir!
Thank you for those kind words! It's really unfortunate that the government and schools don't teach people enough about how investing works. I'm glad that people are actually using their TFSA's but SO many people don't know about the 15% US Withholding tax and that can really add up! I promise you, the CRA doesn't care about what happens inside your TFSA (as long as you aren't day trading... you WILL get fined if you day trade in your TFSA). All the CRA cares about is what goes in and what comes out. Whatever amount you withdraw this year, can be recontributed next year. Whether that's $5000 or $50,000: the same rules apply =)
Shobith Raju Agreed this is incredible content. Simple language and easy to understand for someone new to investing like myself. Like you, I too have just invested in US dividend stock via my TFSA, and was surprised to hear I should have done so through my RRSP. Ugh. That said, i was thinking more of a long-term strategy, which it seems is not the best my to utilize my TFSA anyway.(I purchased AAPL stock, which does pay a dividend but was thinking more long term with it anyway.). After seeing this video, Ill definitely need to rethink my strategy. Moreover, the increased contribution room from growth was also something I hadn’t heard before, but would be incredible incentive for continued investing. I’d also want this confirmed by my financial advisor just to be sure. Looking forward to more on this channel.
@@CanadianTShirt Like Shobith Raju, I was unaware of the whole holding US Stocks within my TFSA. Is there a way to remedy this situation such as transferring these holdings to an RSP account within Questrade and not suffer the wrath of the CRA etc?
@@divadivad9164 you can definitely transfer stocks between your TFSA and RRSP accounts! Just click on the top right panel Requests and then select Transfer Investments. Note that this will be considered a TFSA withdrawal and an RRSP contribution so make sure you have available room! =)
@@CanadianTShirt Wow thanks for the quick response! Sorry to bug you as I'm very new to this but after transferring the stocks to an RRSP account, will I still be affected when filing taxes since I initially bought the US Stocks within my TFSA?
So in a non-registered account, when you sell a stock you will have to pay capital gains tax on the profits you made but you don't pay that tax right away! You pay it when you file your taxes! But in an TFSA, you don't have to worry about capital gains tax. It's tax free! =)
One question: Do I loose permanent room from my TFSA if I just sell the stocks that went down in value???? Or is it if I sell the stocks AND withdrawal the money from my TFSA??
Another question, please.Suppose I have invested 6k this year in my TFSA in jan. Now stocks prices went down and I hold 3k in my TFSA. Im not allowed no add 3k back to my TFSA due to the stock loss, right?? What matters is the first 6k contribution that already set up my limit. Is my logic right? Thanks for you videos by the way. They are really helping me a lot. Congratulations for your great work!
You only lose the contribution room when you WITHDRAW. But even if you sell without withdrawing.... it will be very difficult to recover from that loss since you might not be able to add more money in if your TFSA is maxed out. For example, let's say your TFSA is maxed out and your stocks dropped 30% in value. If you decided to sell, your stock is now worth only 70% of what it once was. To return to the point you started at, you would have to obtain a return of 43%.... that is very difficult and it will probably take multiple years so in a way, it's almost like you have lost contribution room
Yes your example is correct. The CRA does NOT care what happens inside your TFSA. If you lose money or gain money inside the TFSA, it doesn't affect your contribution room. The ONLY thing that affects your room is contributions going into your TFSA and withdrawals coming out
Really informative video, thanks! I had no idea that american stocks where still paying taxes inside a tfsa. So.. if I already have a mix of canadian and american stocks on my tfsa, do you recomend selling this stocks to buy instead canadian ones, and rebuy the american on the rrsp? Thanks!
Quick question! Are you 100% sure that your TFSA contribution limit can grow, or shrink, based on the activity on investments within the account, granted that the investment is sold either at a loss or a gain?
Absolutely! The contribution limits ONLY applies to the money that you can put into the TFSA, your contributions! Once the money is inside a TFSA, there is no limit to how much it can grow, depending on your investments! It can grow to over a million dollars and you get to enjoy that profit tax free, you didn't break any rules! The government can't enforce how your investments perform inside a TFSA, they can only control how much money you put into it. Make sure you watch my TFSA MISTAKES video for more details =) ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-s4cBibLATOU.html
This was so incredibly useful! Wish we were taught this in school or at least had resources like this to learn everything you mentioned. Would you be able to make a video on a large list of Canadian Dividends to invest in beyond the 3 you made a video? I’d watch the whole video even if you covered top 20😂
Thank you Ryan! I'm glad that my videos are helpful and I agree. There is NO excuse why the fundamentals of taxes and finances are not taught in high school..... I've actually made many videos of my favourite dividend stocks to invest in, I actually have a WHOLE PLAYLIST, check it out! =) ru-vid.com/group/PLj8bU3AuW2qFD4sCsCxXdaAADlyiP8bqB
I would actually love to teach teenagers and college kids about finances! It's mind boggling how the education system doesn't value basic finances and understanding of taxes as part of their curriculum.... =(
@@CanadianTShirt Absolutely agree with you. Your enthusiasm towards the topics discussed are a blessing. Will spread your channel among friends & family. Very valuable information, keep up the great work & stay healthy. Cheers
Can somebody please answer this... if I'm born in 1998 but I open my tfsa account in 2021. What is my limit 6000 of that one year cause my account open for a year or all the years in total since I'm 18
I answered your question in another video but here's the answer again... You start gaining TFSA room as soon as you turn 18, even if you never opened a TFSA account. Since you were born in 1998, you will have $34,500 ($28,500 until 2020 + $6000 for 2021) =)
Do I have pay tax on tfsa if I buy us stock? You said rrsp not paying tax but if you take out money still you have pay tax so what different? If I invest us stock in rrsp? Also what is form w8bn ?
In a TFSA, all capital gains are tax free (US and Canadian) but ONLY Canadian dividends are totally tax free. Dividends you receive from US stocks WILL be charged an upfront 15% withholding tax, even in a TFSA. In an RRSP, they do NOT charge you this withholding tax that's why I suggest that US dividend stocks and ETFs should be held in an RRSP and leave your TFSA for Canadian investments. If you currently have US dividend stocks in your TFSA, the IRS will send you a W8BN form that you need to fill out. You have to fill it out and send it back. If you don't fill out that form, they might charge you 30% Withholding tax on those dividends instead (the 15% is a reduced tax due to a tax treaty between Canada and USA) I hope that helps!
I'm so glad i watched this i just set up an i-trade account with a TFSA this year , I bought dividend stocks so far averaging 7% dividends it was a great year to get into established businesses lol I didnt know about growing or losing contribution room , very interesting the government allows such an opportunity
Unfortunately, not a lot of people are aware of these government provided tax-sheltered accounts and even fewer people are using them to their full potential! Make sure you check out my videos on other tax-sheltered accounts like the RRSP and RESP in this playlist =) ru-vid.com/group/PLj8bU3AuW2qEA_ik7NOAIkBY02nt7KAPj
Is that the number you are seeing on your CRA website? That means that you can CONTRIBUTE $17,995 into your TFSA in 2022. You don't have to contribute that full amount but that's the MAX you can put in this year. You will earn new room next year =)
I bought Suncor shares for my TFSA five years ago. They are now worth half their value and I am $10000.00 in the red. How do I fix this problem? Thank you.
That's tough to say.... if you believe in the long term future of Suncor and you believe they can recover, then hold onto them. You haven't actually lost anything UNLESS you decide to sell! But if you don't think they will recover, then you might want to cash out and invest in other stocks or ETFs and hopefully, in a couple of years you will recover that $10K that you lost. I personally don't invest in Suncor, I prefer investing in energy distributers instead of producers but if I had to guess, I would be fairly confident that they will recover to their pre-crash values =)
Stupid question here. What’s considered as a Canadian investment? For example, is the Canadian company Toronto Dominion bank that trades on NYSE considered a Canadian investment? Or does it have to be traded in a Canadian stock market like the TSX? Would like to know the rules of what’s considered a Canadian investment….
That's not a stupid question at all! It can definitely be confusing! Generally speaking if the company is headquartered in Canada, it's Canadian. TD trades on both the NYSE and TSX but in both cases it's still considered Canadian. So if you hold TD on the NYSE, the dividends will NOT be charged the 15% withholding tax. That being said, you should still hold TD in the TSX to avoid the unnecessary currency conversion to USD =)
That's why you should NOT play with risky investments in a TFSA. You do NOT want to permanently lose that precious room! Leave the risky plays for your non-registered account, your TFSA should be secure and well established stocks =)
@@CanadianTShirt Definetly it is very helpfull. Adrian I would like to know your opinion about these ETFs such as VFV, HXQ,XIT, XIU, VAB, QQQ, VOO and SPY. Much appreciated.
A margin account is a non-registered account, it is not tax sheltered at all. So you WILL pay taxes on all dividends and capital gains you make. I'll be making a whole video soon on how these are taxed but they are always taxed less than your tax rate for employment income =)
what happens if you hold US ETFs in your TFSA? I watched another video online that suggested this method, but you don't suggest it, so now I am confused as a beginner :(
Hey Amanda! If those US ETFs don't pay a dividend, it's totally fine since capital gains are 100% tax free in a TFSA. BUT if your US ETFs pay out a dividend, those dividends will be charged a 15% US Wittholding tax, even in a TFSA. Instead, hold those US dividend ETFs in an RRSP to avoid all taxes! =)
@@CanadianTShirt is investing in vanguard canada ETF (VFV) considered a US or CAD stock? I'm assuming CAD since the currency is in CAD and it tracks the US stock market. In this case, would buying VFV in TFSA be ok? (thanks for replying and for all this amazing information btw...currently binging your videos :D)
@@amandamelaram1980 I'm glad to hear my videos are binge-worthy! 😁 Unfortunately, even though VFV is a CAD ETF it contains US stocks so the dividends would still be charged that 15% withholding tax in a TFSA. Instead, if you held the USD equivalent ETF (VOO) in an RRSP, you avoid this withholding tax =)
Capital gains are always 100% tax free inside a TFSA, even for US stocks! Only the US Dividends are subject to a 15% withholding tax in a TFSA, capital gains are not =)
Some concerns and discussion here Adrian? 13:40 "Any investment will benefit from the tax-sheltered nature of the TFSA." but 14:29 "Once you do sell your growth stock, you have now made a profit. And you do have to pay taxes on this profit." Contradiction? You are talking about TFSA in this video. Seems you are mixing in non-registered account here? Maybe it was just an editing faux pas? 13:50 "TFSA reserved for assets that will gain the most benefit." But there's many growth stocks out there that will outgrow dividend stocks and by a wide margin. Take BRK.B, 10% return expected and does not pay a dividend. Sven Carlin, Ph. D 2020 Berkshire Stock Valuation - 10% Returns Expected - Stock to Buy - BARGAIN PRICE NOW ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-MsoI3wDxOV8.html 13:57 "I wouldn't keep growth stocks in your TFSA because it doesn't pay you dividends." This is just purely preference right? 14:09 "Until you sell the growth stock, you haven't made any money." See Ben Felix's explanation here: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-f5j9v9dfinQ.html 14:18 "Holding a growth stock in your TFSA is wasting the tax-free benefit." I hold BRK.B and TSLA in my TFSA. Both are more likely to outperform CAD dividend paying stock over the short term and long run and by a wide margin. www.moneysense.ca/save/investing/investing-u-s-stocks-in-a-tfsa/ So does this mean you shouldn’t hold U.S. stocks in your TFSA, Stephen? Not necessarily. U.S. stocks have returned 11.4% historically versus 9.6% for Canadian stocks since 1935. And despite the tax efficiency of Canadian stocks, the diversity of the Toronto Stock Exchange is lackluster. Currently, 33.6% of the TSX is in financial stocks, 20.8% in energy and 12.9% in materials. That’s over two-third of the TSX in these three sectors, with only small allocations to important stock sectors like consumer (9.3%), information technology (2.8%) and healthcare (0.6%). www.lucierwealth.ca/Should-you-ever-hold-US-stocks-in-your-Tax-Free-Savings-Account-(TFSA).aspx
Hey Mike, most of these questions boil down to "should I hold growth stocks or dividend stocks in my TFSA" I will be making several videos about this topic and why I prefer to hold dividend stocks in my TFSA and growth stock in my non-registered account, although there are circumstances when this is not true. There is no right or wrong answer, but I will present various scenarios with numbers and show which option offers the greatest tax efficiency and long term growth. Stay tuned for that! =)
About TFSA Contribution room... Say I have a total Contribution of $17,000 (Based on the year one lands here on PR), and hypothetically my growth went up to $25,000, including the principal of $17K. I withdraw the whole $25K. and my next year's contribution is $6000. So would my contribution room would be $31K as room for the next year ( $25,000 + $6,000 )
You got it! You gain an additional $6K since it is a new year and then you REGAIN whatever amount you withdrew which was $25K. So on January 1, 2021 you will now have $31K of contribution room =)
Hi there! I answered your question in another video but please watch my video where I answer this very question in detail =) ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-IlSEg6Fux_A.html
So... IF I max out my Contribution Limit of $69,500... what happens to all my Capital Gains and Dividends? Do they spill over into the next year's Limit? Or do I have to Withdraw (shave off) all the Profits? I'm confused
No no ALL income from INSIDE a TFSA (capital gains and dividends) is tax free and does NOT count as a contribution! They do NOT affect your contribution room at all! Only external money that you put INTO your TFSA counts as a contribution. So let's say you maxed out your TFSA with $69,500 and by the end of the year, you make $5000 in dividends, that $5000 will NOT push you over the limit! You get to enjoy that $5000 worry-free! =)
if I never contributed to a TFSA until this 2021, am I eligible to deposit up to $75,500 within a single 2021 year? Assuming this is the lump sum contribution since 2009, IF i never contributed before the year 2021. Thank you :)
As long as you are old enough! Basically, if you were 18 or older in the year 2009, then you have the maximum TFSA contribution room built up so yes, you can deposit $75,500 all at once into your TFSA this year! =)
Hello! Quick question. I have $11,000 left this year to contribute in my TFSA. If I withdraw $5,000 (I need it for school) can I replace the $5,000 in a week since I have $11,000 in available contribution? Or since I withdrew, I cannot add anything else for the year and I would have to wait next year? Thank you for in advance. I learned a lot from your videos!
Ya that's totally fine! Just remember that you don't regain that $5000 withdrawal room until next year so I'll break it down: You currently have $11K left, then you withdraw $5K to pay tuition. This does NOT affect your available room for this year, you still have $11K of room so next week you can put in $5K and then you'll only have $6K of room left for 2020. Let's say you don't put anything in for the rest of the year, now on January 1, 2021 you will regain that $5K of withdrawal room plus another $6K since it's a new year so in 2021 you will have $17K of available TFSA room ($6K remaining from 2020 + $5K withdrawal + $6K for new year) I hope that helps! =)
I talk about that in my RESP video so check it out: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-U_R60zS62Vo.html But once all of your tax-sheltered investing accounts are maxed out (TFSA, RRSP and RESP) then you have to start paying taxes on your investment income using a non-registered or Margin account =)
Thank you Prajakta! You do NOT need to be a citizen or a permanent resident to open a TFSA. As long as you have a SIN (social insurance number) and you live in Canada, you can open a TFSA even if you only have a student visa or a work visa =)
Lets say i invested $6000 in Jan 2020 on US equities and in July 2020 i sold it for $7000. I didnt withdraw the money from the account and reinvested the $7K in US company Call options......are these transaction possible?
Because the limit is ONLY how much money you can put into your TFSA. Once it's inside, your investments can grow and that growth does NOT affect your contribution room! So if you're limit was $50K, you can only put in $50K into your TFSA. But now that it's inside your TFSA, your investment can grow to $100K and that's totally fine! You have NOT exceeded your limit since you only actually contributed $50K! The rest was earned through dividends or capital gains tax free =)
16:10 Would paying the withholding tax on US dividends in a TFSA be worth it given that the US market outperforms the Canadian market on average? That is, would the gains from exposure to US dividend stocks and paying the small withholding tax outweigh the gains of avoiding that withholding tax (especially inside such a beneficial tax-sheltered umbrella that is the TFSA?). Great channel, btw!
Diversification is the name of the game! So it is very important to invest in BOTH the Canadian and the US market! There are many times when the US market is down and the Canadian market is unaffected or vice versa! And if you're investing in both, at that point you might as well invest in the account which maximizes your tax efficiency! So keep your US investments in your RRSP and then hold Canadian investments in your TFSA or RRSP. Make sure you watch my RRSP Explained videos for more details! =) ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-bKMNgnMBSdE.html
Final comments on this video - man it's hard to comprehend all these rules and tips when you're new to investing! I had totally watched this video a while back, forgot most of the info, and now that I'm an active user on Questrade, a lot of this makes a LOT more sense! The USA investments not being held in the TFSA.. you're really good at explaining things ! I'm totally going to get my TFSA started tomorrow and drop only Canadian goodies into it :)
Thanks for this great video, quick question for example in one year if you put 6000 $ in TFSA, for instance you earn 50k a year , you will be taxed on 50k or 44$k? Many thanks or it's just free on the earnings
Nope! The TFSA does NOT reduce your tax bill, only the RRSP does that! The RRSP contributions will reduce your taxable income, with the TFSA the benefit is that it avoids FUTURE taxes that you normally would pay on those earnings =)
I am a new investor and I recently bought 130 of Tesla shares. I am concerned what if my TFSA grows crazy like 2x,5x or even 10x within a year or two! Will I be under CRA's radar? What will be a safe way to invest?
It's TOTALLY FINE!!! If you buy Tesla stock and it explodes and increases 10x in value, that's not a problem at all! You get to keep those capital gains 100% tax free! The ONLY way this would be a problem is if you were buying and selling stocks multiple times per day, everyday. This is considered day trading by the CRA and it will be taxed and penalized. But if you buy and hold a stock for years and it grows in value, that's the whole point of investing and that's what the CRA is encouraging! =)
Me watching 5 of your videos in a row and calling Scotiabank like. Hello I need to increase my monthly contribution to my daughter's educational fund. Andddd I'd like to invest my current balance in high yeild dividends stock please asap😂. So much detail and knowledge and I appreciate your videos. I'm literally taking notes and watching everything👍🏾👍🏾👍🏾
Can any one type in top 20 or top 10 dividend stocks in CANADA, that i can buy at wealthsimple and QuestTrade for my TFSA investing account, so i can choose my own from them, first time investing, just wanna buy few stocks. example canadian banks and fortis etc
Check out my Stock Picks Playlist to see my favourite Canadian and US stocks and ETFs that I personally invest in and recommend =) ru-vid.com/group/PLj8bU3AuW2qFD4sCsCxXdaAADlyiP8bqB
This question is regards to TFSA. When I add funds from a Canadian financial institution to Questrade TFSA or buy stocks using the TFSA account in Questrade , does my TFSA contribution affect. If yes, what is the recommended way of transferring funds from a Canadian financial institution to Questrade.
If you are adding money into your Questrade TFSA from a non-registered account (like a bank account or another investing account) this WILL count as a contribution and so it takes away from your available TFSA room. Instead, if you have money already sitting inside a TFSA account with another bank, you can TRANSFER that money into a Questrade TFSA account by following the steps in this video =) ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-Bf1zufNlQSk.html
Just want to understand. For example ...I have maxed out my TFSA and earned additional $2500 profit from my etf/stocks can I still keep that in my account and the government won’t charge me the 1% as this is not my contribution?
Nope!!! Any income you make in your TFSA (capital gains, dividends or DRIPs) do NOT count as contributions!! So if your TFSA was maxed out but then you earned $2.5K in dividends (or $2.5K worth of shares through DRIPs) this would NOT put your over your limit! You get to enjoy watching your TFSA grow worry-free! =)
Hi Adrian. I subscribed to your channel last week and I found your videos are very useful for people like me. Both Canada and finance are new to me. I have a question about TFSA. Assume I maxed out my TFSA room. If I want to sell $10k worth of stock in TFSA and buy another stock with that money in TFSA, should I wait for the following year or can i do it right away? Thanks in advance
Not at all! Selling a stock inside your TFSA does NOT affect your room since that cash will remain INSIDE the TFSA. It only counts as a withdrawal if you actually move that money out of the TFSA and into your bank account. You can buy and sell as many times as you want as long as it remains INSIDE the TFSA, just don't do it everyday or else it will count as day trading =)
Unfortunately you don't start building TFSA contribution room until you actually live in Canada so in your case you will have gained $6K in 2019 and $6K in 2020 so you will have $12,000 worth of TFSA room right now. In a few weeks on January 1, 2021 you will gain an additional $6K so you will have $18K in January =)
Very informative video. Thanks much for educating us. Well I am new to this and I wanted to clarify about REITs. Say my Airbnb guest is paying 2000 monthly but the final amount that get deposited in my account after tax will be 1600 (roughly). In this case how does TFSA work? Are you saying that if 2000 is transferred to TFSA, it won't cut tax and final amount I receive will be 2000 ?
Oh no no, you're thinking of a tax-deferral account like the RRSP. But the TFSA is NOT tax-deferred, it's made with after-tax dollars. So if you make $2000 from Airbnb, you will have to pay taxed on those $2000 since that's income. But what do you do with that $2000? If you decide to invest it in the stock market, your $2000 will earn you investment income and that income is taxed again! BUT if you put that $2000 into a tax-sheltered account like a TFSA, then all of the investment income you earn from that $2000 will be totally tax free! =)
Make sure you check out my videos on the RRSP: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-bKMNgnMBSdE.html With the RRSP, when you put money into it, you will reduce your taxable income and thus reduce your tax bill for the year. So let's say you made $100K this year. You have a high income and thus you're at a high tax bracket. If you put $10K into an RRSP, you REDUCE your taxable income by $10K so you'll only be takes on $90K of income. This could save you $4000 in taxes depending on your province! There's a lot to go over with RRSPs so make sure you check out my two videos! =)
@@CanadianTShirt Thankyou for taking your time to clarify. It makes total sense now. Yeah, I have been looking around for understanding about Canadian way of tax and investments and voila! bumped into your channel. Since I landed Canada recently, all these sound pretty new to me and I am processing them one by one. Hope you won't mind me popping up with pretty basic queries once in a while😀
So can you regain lost contribution room for a lost penny stock investment by withdrawing the profit from another stock? Say you're down 5k but another stock is up 5k, could you withdraw the profit and account for that lost contribution room? Also incredible video man! Take my sub! The CRA should be paying YOU
Exactly! If you sell a risky stock that's currently down, on paper you have lost that contribution room but if you have another investment that has gone up in value, then you have broken even! But still, I strongly suggest do NOT invest in risky penny stocks in your TFSA. You are very very likely to permanently lose that precious room =)
I'm your subscriber and love your videos. Following your idea my grown my portfolio from 40k to 55k. I wanted to ask about tfsa limit. As my limit was 55 for 2021 and my investment has grown from 40 to 55 does that capital gain plus divident a part of tfsa limit, or capital gain is not , dividends are? Can you please clarify?
Hey Faizan! I'm happy to hear that my videos have helped you with your financial journey! And NOPE! The income your earn inside your TFSA does NOT count as a contribution! So even if your TFSA was maxed out, any income you earn from dividends or capital gains will NOT push you over your limit! =)
Hi Adrian, I want to trade option with Questrade. However, they only allow you to do it using tour TFSA or RRSP. In case I use my TFSA and I lose $ would that impact my contribution room on my TFSA? If I gain that amount will be transferred to my contribution room next year? In case I lose $ will my contribution room be reduced? I appreciate the help. Regards
You should also be able to trade options in your Margin account (non-registered account), that's where riskier investments should be made since there are no contribution limits. If you use your TFSA and you lose money then yes, you will lose contribution room if you sell and then withdraw that cash. I would caution against options trading if you are a beginner.... it is definitely more complicated and riskier than regular stock ownership. I hope that helps! =)
