Tax-Free Savings Account And Dividend Stocks?

[Probyn]

I new to investing, so bear with me. I would like to invest in Dividend Stocks. Is it a good idea to place Dividend Stocks in a Tax-Free Savings Account?

 

[Jay8964]

TFSA's r great but you can't really put much into them. Theres a legal contribution limit of 5000$ a year so they're not exactly ideal if you want to throw in some real money. Its more of a government incentive to save to add to whatever you already put aside.

 

[MtlNewbie]

If you don't plan to lose any money and don't plan to take it out anytime soon then yes.

Once you take money out of a tfsa you can't put it back in. The other thing is you don't pay tax on your gains but you don't get to claim your capital losses. Let's just say I missed out on a lot of capital losses. One more thing, if you use a TFSA you don't get any margin, if you were thinking about going big.

I put a bunch of money in there without thinking, then bought a bunch of stocks without thinking and lost a lot of money. Now I realize even though I sold them all off to eat my losses but end further losses, I realize the money is stuck in that account. At the time I played it safe and bought Canadian bank stocks and telecom like Bell, basically what I thought would be safe investments and still got obliterated.

My best advice is not to do what I did and just take it easy to start.

In response to John, the limit now is at least 25k since its cumulative. I think they might have even increased the contribution limit but I don't follow anymore. I think 25k is a decent about...

 

[bourne]

TFSA maximum contribution for 2013: $ 5500

 

[reg2011]

Hi, better seek advise from your financial advisor, but for TFSA, I read that it is practically useless to use it for term account with small rates of yearly 1% (what the point of saving 1% from taxation impact). Therefore, it is indeed better to use it for dividend stocks, mutual funds, segregated funds, which may have higher interest return. Of course, the market may crash and there's no interest...

 

[oldbutartful]

TFSA is cumalative and you can go back 5 years max investment 5 k per year. Government is considering raising the limit. Interest is modest but tax free. Also capital losses are Nil other investments carry risk of loss of initial capital.
Sound Financial advise from professionals is for risk free investment OK but only as part of a full investment strategy

 

[G1GBallday]

The above statement in false; and is reason 46 out of 372 as to why an escort review board is not the place to look for financial advice.

Have to agree with this however here are a few facts.

- TFSA limits in years 1 through 4 was $ 5000.00/year.
- This year the limit is $5500.00
- You can reimburse any withdrawals but you have to wait until the next calendar year.
- TFSA should be your first choice if you make < $40, if you are over then first max your RRSP.
- Canadian dividends are tax free but foreign divies will have witholding taxes i.e. 15% on US stock, etc.
- The key is to think long term and use DRIP programs. (dividend reinvestment programs)

I opened a TFSA last March after maxing my RRSP and put the whole 20K into 850 shares of Sun Life. As of last Friday I now have 894 shares at a total value of $24,701.22 using the DRIP. Putting everything into one stock is not for everybody but in my case it's just a potion of many other investments. My time frame is still a long time away.

Lastly, I put this year's 5.5K into Crecent Point Energy whos dividend is $0.23 and is paid monthly which comes to an annual yield of about 7%. If you've got at least a two year time frame I would recommend this oversold company without hesitation.

 

[ClubMed]

You say it's oversold, there must be a reason
why people are getting rid of it. Is there some
Kind of risk or downside you have overlooked?

 

[MtlNewbie]

The above statement in false; and is reason 46 out of 372 as to why an escort review board is not the place to look for financial advice.

Haha! Nice one! Made me LOL. Sorry for the misinformation. Describing my personal obliteration was somewhat of a disclaimer.

 

[busty_asians]

If you don't plan to lose any money and don't plan to take it out anytime soon then yes.

Once you take money out of a tfsa you can't put it back in. The other thing is you don't pay tax on your gains but you don't get to claim your capital losses. Let's just say I missed out on a lot of capital losses. One more thing, if you use a TFSA you don't get any margin, if you were thinking about going big.

I put a bunch of money in there without thinking, then bought a bunch of stocks without thinking and lost a lot of money. Now I realize even though I sold them all off to eat my losses but end further losses, I realize the money is stuck in that account. At the time I played it safe and bought Canadian bank stocks and telecom like Bell, basically what I thought would be safe investments and still got obliterated.

My best advice is not to do what I did and just take it easy to start.

In response to John, the limit now is at least 25k since its cumulative. I think they might have even increased the contribution limit but I don't follow anymore. I think 25k is a decent about...

played it safe lol

 

[MtlNewbie]

played it safe lol

haha, nice catch. Yeah, at least we can laugh about it.