Stocks in TFSA or RRSP or CASH?

0
0

I have been reading in many post that the stock purchase is suggest in TFSA and in some cases RRSP.
My question is, are any specific industry/sector stocks one should buy in TFSA and another specific sector stocks in RRSP??
I need better understanding on these points.

In my case I have already purchased and exhausted my TFSA & RRSP limits and also purchased many other stocks in CAD-CASH account and there are many stocks which are partial qty in TFSA and partial qty in CASH….or some other stocks partial qty in RRSP and partial CASH or RRSP…basically mix of everything….so would like to understand if that is an issue or does it bring in any additional liability????

Den knows that I’m not an experienced investor, recently started and build a portfolio without much of a knowledge but I want to correct my mistakes if done in accumulating stocks with your guidance.

Marked as spam
Asked on August 26, 2020 11:28 am
2 views
0
Private answer

Ultimately where to put holdings depends on a large amount of things.

For one, RRSP's are extremely beneficial to contribute to in your highest income days and pull out in your lowest income (retirement). However, if you've got stuff like pensions and CPP, these may push you into a higher tax bracket and the RRSP isn't as beneficial.

The one thing I can answer definitively though, is if you're holding U.S. dividend paying stocks, they are best held in an RRSP. There is a witholding tax placed on these stocks that is forgiven inside of a RRSP, but the United States does not consider the TFSA a retirement type account, and thus they charge the witholding tax.

Here is my personal take on it. Ultimately, you'll never be charged taxes on gains in a TFSA. So, I place more of my pure growth plays within a TFSA and more of my lower growth income options inside of a RRSP.

However, this is absolutely key. I DO NOT invest in hyper growth style stocks within a TFSA. Lots of people do this, hoping to strike it rich on a tax free basis. For one, you cannot claim a capital loss on a TFSA investment gone bad. Secondly, you lose that contribution room. If I contribute $5000 and lose it all on a penny stock, I don't get that room back next year.

So, my style of investing:

RRSP - left for slower growing, dividend growth style companies
TFSA - some dividend options with higher growth potential, pure growth plays
Cash account - speculative pure growth plays

The speculative growth plays in a cash account at least lets me take advantage of a capital loss in the event one were to happen.

I am one of many, many investors. Strategies will vary. But this is what I do, and what I feel helps my situation best. Keep in mind, I have no pensions.

Marked as spam
Posted by Dan Kent
Answered on August 26, 2020 11:41 am