TFSA loss - Stocktrades Canada

Hello,

I made a uncharacteristic move and bet big on gme stock. Bought the run up, and got greedy, did not sell at the top when i should have due to letting greed over take me (and hype) I ended up putting myself in a situation (in my TFSA) where I had 19.5k USD in GME, at and avg of 278 per share. While watching the stock fall after the squeeze and missing my chance for a short term gain (6-10k USD approx) I was left trying to figure out if i should hold the shares for a number of years and hope for the company to morph to the times and turn a profit, or get out now (which i did for fear of never getting the value back of my investment, so i took what was left (6k USD). So I understand that, the space i took a loss for, is now gone forever. Much of what i loss in the trade was profits from last year. I cant be sure how much, but i know i have made more in profit, than i lost in the gme trade last year. So all considered, id like your opinions on if i made the right move regarding the loss (not my gme gamble lol), Should i have road it out to see if the future brought the stock up and potentially lowering my loss? Or was cutting the loss there and getting some of my initial investment back the right move given the circumstances? I learned alot of lessons on this one. For reference, my portfolio was at 67k before this loss, now sitting at 51k. I understand this has huge consequences on my future gains and potential . For reference, after all the panicking, research and thought, i sold at 72 dollars.

Now i am considering, taking a small loan off my equity at a rate of 3% per month, to make up for the money i loss, so that it continues to benefit from a higher capital (higher retursn, dividends, etc) so that this mistake, doesn;t set me back as much as it could. I could repay the loan relatively quickly, 3-6 months. Thanks for your time. Cheers

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Asked on February 5, 2021 8:27 pm

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▲ 0 ▼ ✔	Private answer A big loss is a tough pill to swallow in the TFSA. You can't even use the loss to offset a gain. My TFSA started 2020 at $100,000, and went as low as $48,000 when the market tanked in March. I worked it back up to $75,000 over the course of the year, but it still stings. Gamestop is a $10/share company, so getting out at $72 doesn't seem so bad. If you plan to work hard to pay off a TFSA loan, I suggest that you just work hard and gradually contribute that money to the TFSA. Skip the loan. There is no tax advantage to a TFSA loan. Marked as spam Posted by Dan Kent Answered on February 7, 2021 3:10 pm
▲ 0 ▼ ✔	Private answer A big loss is a tough pill to swallow in the TFSA. You can't even use the loss to offset a gain. My TFSA started 2020 at $100,000, and went as low as $48,000 when the market tanked in March. I worked it back up to $75,000 over the course of the year, but it still stings. Gamestop is a $10/share company, so getting out at $72 doesn't seem so bad. If you plan to work hard to pay off a TFSA loan, I suggest that you just work hard and gradually contribute that money to the TFSA. Skip the loan. There is no tax advantage to a TFSA loan. Marked as spam Posted by Dan Kent Answered on February 7, 2021 3:10 pm
▲ 0 ▼ ✔	Private answer Sorry to hear about your situation – sometimes the best lessons are the hardest to learn. I’ve learnt a few myself over the years, so as much as it hurts the key is to learn from it – you’ll be a better investor for it. Now in terms of did you make the right decision? Honestly, I can’t answer that. The GME stuff is so far beyond anything normal we see, it really is a crapshoot. For all I know, it can go to $200 again or drop back to $10. We are in uncharted territory here and anyone that tells you otherwise is purely speculating – which is why when anyone asked, we said we were sitting on the sidelines. I would say that your ‘risk tolerance’ told you to sell and that you were not comfortable losing the remainder of your investment – so from that perspective, it was the right call. If you aren’t willing to lose it all (or even more of it), then once again, it was the right call. I am not sure what your TFSA limit is now. But if you maxed out your contributions every year (except 2021), then you would only have $6,000 to invest in your TFSA today. You can check your TFSA limit as of end of last year in your CRA account. I am not a fan of borrowing to invest, but once again that is a personal decision that should be inline with one one’s risk tolerance. You may not be able to put it in your TFSA however, so just be sure that whatever you contribute is inline with your room so you don’t get dinged for over contributing. Also, your borrow rate is 3% a month? That is a very high rate and if you expect to make that monthly from your investments, it is a lofty goal at 26% a year – not something that is easily achievable. Might look easy in these markets, but it is not. Mat Marked as spam Posted by Dan Kent Answered on February 6, 2021 12:54 pm
▲ 0 ▼ ✔	Private answer Sorry to hear about your situation – sometimes the best lessons are the hardest to learn. I’ve learnt a few myself over the years, so as much as it hurts the key is to learn from it – you’ll be a better investor for it. Now in terms of did you make the right decision? Honestly, I can’t answer that. The GME stuff is so far beyond anything normal we see, it really is a crapshoot. For all I know, it can go to $200 again or drop back to $10. We are in uncharted territory here and anyone that tells you otherwise is purely speculating – which is why when anyone asked, we said we were sitting on the sidelines. I would say that your ‘risk tolerance’ told you to sell and that you were not comfortable losing the remainder of your investment – so from that perspective, it was the right call. If you aren’t willing to lose it all (or even more of it), then once again, it was the right call. I am not sure what your TFSA limit is now. But if you maxed out your contributions every year (except 2021), then you would only have $6,000 to invest in your TFSA today. You can check your TFSA limit as of end of last year in your CRA account. I am not a fan of borrowing to invest, but once again that is a personal decision that should be inline with one one’s risk tolerance. You may not be able to put it in your TFSA however, so just be sure that whatever you contribute is inline with your room so you don’t get dinged for over contributing. Also, your borrow rate is 3% a month? That is a very high rate and if you expect to make that monthly from your investments, it is a lofty goal at 26% a year – not something that is easily achievable. Might look easy in these markets, but it is not. Mat Marked as spam Posted by Dan Kent Answered on February 6, 2021 12:54 pm

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