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I have not seen a thread covering actual ideas for one's TFSA and wondered if people would be willing to submit their suggestions for TFSAs. I personally have mine invested in Royal Bank shares (RY) and Rogers Sugar Fund (RSI) and I am thinking of selling part of my Royal (keeping enough to maintain 1 full share per dividend in a synthetic DRIP plan) and investing the rest in RSI. Any thoughts/ideas?
 

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I attempted to stimulate a dedicated TFSA thread http://canadianmoneyforum.com/showthread.php?t=2271&referrerid=2912 but not think that it should be its own topic of threads like 'real estate'

It seems that people are always asking the same questions about TFSAs.

To answer your question - I use my account as a high risk gambling account for junior mining companies - currently only hold one company - which has increased my investment from $9,984 to between $40,024-$42,350 on average for the last week or more.

I am interested on a Tax Free specific strategy for when the account holds a higher amount and I want 'lock in' some gains and diversify. So what would I want to hold in a Tax Free account compared to a taxable account? The same balance? I am thinking higher yields (with some higher risk) to get tax free cash flow.

In the meantime I am satisfied watching the account rise in value.
 

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I have not seen a thread covering actual ideas for one's TFSA and wondered if people would be willing to submit their suggestions for TFSAs.

Other than satisfying idle curiosity, I am not sure it would accomplish much, because investment objectives for TFSAs cover too broad a spectrum.
 

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I think that we can go past the "contingency account" concept, because as the contribution room piles up (increasing to $30,000 for a couple aged 21 or older in January), you have more TFSA room than you can plausibly use for a contingency fund. Thus, we should talk about what kinds of investments beyond a contingency fund. From a tax efficiency standpoint if you have any bonds or REITs in your portfolio, it makes a lot of sense to hold them in your TFSA. If you still have room after that part of your portfolio, I'd go for any short-term capital gains investments, so you don't have to worry about tax disadvantages of selling your position. I'm not entirely sure I agree with the 'gambling account' perspective. If you consider an investment a gamble, I'm not sure it makes sense to buy it in your TFSA. It's still real money you're playing with.
 

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I think that we can go past the "contingency account" concept, because as the contribution room piles up (increasing to $30,000 for a couple aged 21 or older in January), you have more TFSA room than you can plausibly use for a contingency fund. Thus, we should talk about what kinds of investments beyond a contingency fund. From a tax efficiency standpoint if you have any bonds or REITs in your portfolio, it makes a lot of sense to hold them in your TFSA. If you still have room after that part of your portfolio, I'd go for any short-term capital gains investments, so you don't have to worry about tax disadvantages of selling your position. I'm not entirely sure I agree with the 'gambling account' perspective. If you consider an investment a gamble, I'm not sure it makes sense to buy it in your TFSA. It's still real money you're playing with.
Agreed. The TFSA should not be used for savings. Open another high yield account for that. Generally speaking I think b/c of advertising too many people worry about getting 2% return in a TFSA, instead of a .8% return in a high yield account at a bank. Inflation is 2%.

I use mine to hold and synthetically drip 1 REIT. It currently has the highest yield of all of my equities. The 1 REIT compliments the rest of my holdings. Balanced portfolio. Not too heavy on any one sector.
 

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I also drip the XRE REIT in my TFSA. I don't really want to put cash in there, because I want to grow the size of what I can do tax free.
 

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agri your present selections look excellent to me. But i'm curious why you'd want to sell roy bank. If you have a td account you'll notice the video with td's dividend fund manager naming his top 2 picks as royal bank & exxon. He believes canadian banks will not raise dividends this year but are likely to do so in 2011. RY is reasonably priced at present - other than to persons awaiting armageddon - i have some (although not in a tfsa) & do not plan to sell.

in addition RY has recently seen the first net insider buying - along with nat bank - of the big 5 chartered banks in nearly a year.

what you might do, if you think upside is limited for the time being, is sell out-of-the-money calls in RY. These will generate more cash in your tfsa. Perhaps a strike price high otm in order to give yourself less angoisse.

i belong to the school that thinks tfsas should be motored as fast as possible to the highest level that is possible, because a tax-free income won't mean much until the capital of such a fund gets well over 50k. This means aggressive stock picks for capital gains for some, or carefully-chosen hi-yields for others, plus zero withdrawals. My own is far more daring than any other account i have, because only 10k was injected in the first place. It's embarassing to think what's been in there, let alone how fast it gets traded. Gold mines, a shaky reit that could have a big break, an XEG leaps option twice, even a diamond mine for about 8 weeks. In spite of all this the tfsa is up 50%.
 

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This discussion is very interesting and has caused me to consider doing something else with the TFSA money. It is true I need the money in the TFSA as my life emergency fund. But there are virtually no consequences to withdrawing money from this thing, so as long as I monitor it on my web account, there is no reason I couldn't invest say half of it and leave the other $5K as the emergency fund. If I invest half as described above and monitor it is the stocks start to drop, then I can just plunk the money back in cash if the market crashes again.

Great thread, great forum! Thanks all!
 

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If I invest half as described above and monitor it is the stocks start to drop, then I can just plunk the money back in cash if the market crashes again.
Would that not be buying high and selling low? :eek:

I would suggest that if you need $10k for 'emergency', then it shouldn't be invested at all in equities. If all you need is $5k, then this strategy should be fine. Patience can be a virtue when investing in equities, but more important would be insuring security with your emergency fund.
 

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Yeah you're right. Looking at my tier 1 (cash) goal, I had in mind something between $15-30K in cash. I just thought as this savings amount grew I would be better able to try and risk a bit with a portion of it. At this point it's probably too soon. I'll monitor in the years ahead, since they say you should have 6-12 months cash living expenses on hand. This tier 1 savings should be protected at all costs. Thanks for the reminder.
 

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I am new here and hopefully not stepping on anyones toes but I will throw out my ideas on what I do with my TFSA. I am relatively young (32) and have just switched everything over to TD so I can manage it myself. I was tired of the fees and see now that there were some errors and lack of direction along the way. With lots of reading an planning here is my opinion. I think that growth of the TFSA as quickly as possible is the right way to go, unfortunately risk for me is also a concern.

I would consider myself a dividend/distribution investor and if I had the last 10 years back I would reorganize things a bit differently. I would structure my RRSP account (which I no longer contribute to as I do not see RRSP's as being as big a benefit as they are made out to be) with all US dividend paying stocks allowing me to avoid withholding taxes. My non-registered account would hold all canadian diviend paying stocks allowing me to take advantage of the dividend tax credit and therefore lower taxation on the dividends when I retire and use them for income. Finally in my opinion the best thing I could have in my TFSA are REIT's. REIT's that qualify are not required to convert from the income trust structure and ususally have higher yields than most common shares post 2011. Due to this ability to remain in the trust strucutre they will be hit at your marginal tax rate, therefore to me it makes sense to have the highest yielding highest taxed equities (for me REIT's) in a tax free account.
 

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Wow, $10,000 to $40,000 with junior mining stocks? That sounds pretty darn awesome... and I was proud of my 20% gain from the $5000 I had in my tax free trading account. :eek:

Be careful about withdrawing the tax free savings account (while using it as an emergency fund). If you don't wait until the following year (January) to deposit the money you took out, you can be slapped with a penalty.

I personally wouldn't use it as a high interest savings account, because if you get 1.6% interest (current going rate), inflation is around 2-3% right now and you're not even covering that with a HISA.

I personally like using my TFSA as a trading account. Questrade has one.. I bought mainly income trusts in my TFSA, and am very happy with my choice.

One of my financial advisors did advise me on purchasing smaller/ junior type companies that have good financials and forget about my TFSA (and come back when it's doubled or tripled.
 

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One of my financial advisors did advise me on purchasing smaller/ junior type companies that have good financials and forget about my TFSA (and come back when it's doubled or tripled.
With all respect due to your financial advisor, IMHO, you cannot make any investment and "forget about it", esp. highly volatile junior mining companies.
You gotta watch your investments like a hawk, whether it's a $50B company or a $1M company.
How many financial advisors do you have BTW?
 

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Discussion Starter #15
further explanation

Thanks for all the info/suggestions. My RY stock in the TFSA is enough to synthetically drip 1 share and then cash. My intent is to sell shares to remove the cash part of the RY dividend and use that amount for something else (intent to take advantage of non-taxed cap gains).
Agrivar
 

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I would consider myself a dividend/distribution investor and if I had the last 10 years back I would reorganize things a bit differently. I would structure my RRSP account (which I no longer contribute to as I do not see RRSP's as being as big a benefit as they are made out to be) with all US dividend paying stocks allowing me to avoid withholding taxes. My non-registered account would hold all canadian diviend paying stocks allowing me to take advantage of the dividend tax credit and therefore lower taxation on the dividends when I retire and use them for income. Finally in my opinion the best thing I could have in my TFSA are REIT's. REIT's that qualify are not required to convert from the income trust structure and ususally have higher yields than most common shares post 2011. Due to this ability to remain in the trust strucutre they will be hit at your marginal tax rate, therefore to me it makes sense to have the highest yielding highest taxed equities (for me REIT's) in a tax free account.
Not an unreasonable plan. I would consider holding some bonds also, and as you haven't mentioned how many stocks you plan on holding in RRSP/TFSA/non registered accounts, I would make sure that the holdings are well balanced obviously.
 
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