# New opinion of TFSA in the media



## DavidJD (Sep 27, 2009)

Has anyone else noticed how the columnists and advisors are just now recommending aggressive investing or dropping the GIC/saving tune. Over the years they have mainly been advising people simply to, a) contribute, b) don't lose any money in their account because it cannot be written off. !?

Lately the tone is more about taking advantage of the accounts with riskier holdings and aiming for quicker and greater returns. About time.

Mind you these guys have had so little to say about these accounts that is of any value, (description with a few scenarios spelled out) this was bound to surface as a given.

On a side note, I surf the financial blogs etc often and when fresh ideas appear I often see them mentioned in an article in the more main-stream media soon after.

Of course it would be silly for them not to surf the same places for inspiration. When you have a column you gotta produce, every week, and not be too stale.


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## the-royal-mail (Dec 11, 2009)

I have not noticed what you describe, David, but in general I've found the world to be very slow on the uptake when it comes to TFSAs. I think everyone is quite slow to realize all of the potential of this type of account. 

(I'm a huge fan, mostly because I don't need the tax "refund" of an RRSP and like the idea that all my gains are tax free AND the flexibility of getting the money out of there without being eaten alive in penalties and fees, touch wood.)


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## Four Pillars (Apr 5, 2009)

DavidJD said:


> Has anyone else noticed how the columnists and advisors are just now recommending aggressive investing or dropping the GIC/saving tune. Over the years they have mainly been advising people simply to, a) contribute, b) don't lose any money in their account because it cannot be written off. !?
> 
> Lately the tone is more about taking advantage of the accounts with riskier holdings and aiming for quicker and greater returns. About time.
> 
> ...


I wrote a post a while ago where I listed the reasons I thought most investors played it safe in their TFSAs. Some are legit reasons (using it for emerg funds or account too small to bother with equities), others not so much.

http://www.moneysmartsblog.com/why-...igh-interest-savings-accounts-in-their-tfsas/


I'm not sure about the whole "no capital losses" in a TFSA idea. There are also no capital gains, so it's kind of a non-issue. Ideally you would put your capital gain stocks in the TFSA and put the losers in your non-reg account. But you don't know in advance, which is which.

I think if you are buying any kind of equities, you should be confident that they will go up (otherwise don't buy them) which should indicate that they should go in the TFSA rather than the non-registered account.

This argument of course is the TFSA vs non-reg account debate. I think it's a no-brainer, use the TFSA before non-reg.


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## steve41 (Apr 18, 2009)

I am not 100% sure, but I think the Roth IRA is the US equivalent of our TFSA, except it has been in place far far longer. I don't get the impression that the Roth has eclipsed normal 401K, IRA investing in the US. The TFSA is not a big deal... when you run the numbers, the RRSP refund makes a difference.


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## crazyjackcsa (Aug 8, 2010)

As the amount of money you can put in a TFSA grows, the uses for the account grows as well.

My wife and I have our accounts maxed out at this point, sitting in High interest accounts. It's our emergency/car/house repair fund.

But with an increase of 5K a year each, it makes less and less sense to be sitting on ever increasing amounts of cash.

I think what you have seen over the last few years is just that. People shifting savings account emergency money out of standard accounts and GIC's into the TFSAs


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## Four Pillars (Apr 5, 2009)

steve41 said:


> I am not 100% sure, but I think the Roth IRA is the US equivalent of our TFSA, except it has been in place far far longer. I don't get the impression that the Roth has eclipsed normal 401K, IRA investing in the US. The TFSA is not a big deal... when you run the numbers, the RRSP refund makes a difference.


TFSA is definitely overrated.  But it's still a good tool.

From a tax point of view, the Roth IRA is the equivalent of the TFSA (contribute after-tax money). 

One big difference however is that the Roth IRA can be set up by anyone, anywhere, anytime (like the TFSA or RRSP). The 401K is completely tied to your employer, so you have to have a job in order to have one. Many companies offer contribution matches which makes it a great choice.

A lot of people will default to the 401k, even without the match, just because it is there. Not so many will go out of their way to set up a Roth IRA.

My point is that those other factors probably influence the popularity of the 401k vs Roth IRA, more so than the relative financial benefits of either account.


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## CanadianCapitalist (Mar 31, 2009)

DavidJD said:


> Has anyone else noticed how the columnists and advisors are just now recommending aggressive investing or dropping the GIC/saving tune. Over the years they have mainly been advising people simply to, a) contribute, b) don't lose any money in their account because it cannot be written off. !?


I'm a bit puzzled by it as well. It's asset allocation that's most important. Then, we find the appropriate location to place the portfolio components. It's not a great idea to take risk or avoid risk just because the account happens to be a TFSA.


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## GeniusBoy27 (Jun 11, 2010)

steve41 said:


> I am not 100% sure, but I think the Roth IRA is the US equivalent of our TFSA, except it has been in place far far longer. I don't get the impression that the Roth has eclipsed normal 401K, IRA investing in the US. The TFSA is not a big deal... when you run the numbers, the RRSP refund makes a difference.


It depends on your marginal tax bracket, but the RRSP refund is a big deal for us, at a marginal tax rate of 46%. 

Yes, you have to pay tax on this down the road, but it provides an immediate refund. I agree with Steve that the refund does make a difference.


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## DavidJD (Sep 27, 2009)

If I were 18 in 2009 I would want someone to sit me down, look me in the eye and say, listen, the government has given you the best opportunity in the world. You can start to stream your earnings into a magic account. It is like a secret off shore bank account. Even better is that the money you squirrel away in there can grow by gains, interest and the like. By the time you are 40 you could easily be a millionaire from this account alone, and all you would have put in is $110,000*.

I have put in $15,000 and now have $41,000. That may not be sustainable over several years, but say it was only 20%? It is possible to sustain for quite a while. Not reliable but possible. By the time the 18 year old is 30 he may be in a position to max out accumulated contribution room for his RRSPs and truly benefit from it from a tax perspective (rate). He could do the TFSA/RRSP Shuffle. 

The 'Magic of Compounding' that we are all told works best if we start as early as possible would be that much more sweeter if it were tax free.









*assuming no increase to contribution room at $500 increments based on inflation which WOULD occur over 22 years.


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## the-royal-mail (Dec 11, 2009)

Long live the TFSA!

$41K? How did you do it? What holdings?


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## OptsyEagle (Nov 29, 2009)

Most of the media is driven by the larger investment dealers, brokerages and advisors. Until the TFSA contributions get to a critical mass, the TFSA is pretty much a loss leader for these businesses. Most people probably took their non-registered money and dumped it into their TFSA. Now to the investor, this saves them a lot of tax. To the financial institution, this just generates a lot of paperwork, hand holding with questions and arguments about fees and transferability, you name it.

Until TFSAs allow $25,000 or more (2 more years) I don't think you will see these institutions pushing the program here. They are happy to open the accounts, but still unhappy with the profit margins surrounding them.


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## Rico (Jan 27, 2011)

I have a couple TFSA issues to mention, I hope it's OK to put them here.

1. A couple years ago, I started a direct investing account. Then, the TFSA comes around and I wanted to move my investments into one. After some reading, it appears that I'd have to sell my stocks (thus incurring a small capital gain and some commission costs) and then repurchase them inside the TFSA (more commissions). Does anyone have thoughts on this scenario. I'm in the process of buying a house otherwise I'd just open a TFSA with new money and go from there. I'd rather move the non-reg funds into a TFSA but it seems like a pain/costly.

2. I should probably know this but if one maxes out a TFSA (say, 10000) and you have gains inside (say the NBV becomes 12000), there is no "1% penalty" because the contribution was only 10000, right? 

3. Say you withdraw the 12000 from the above scenario; that would mean next year's room is only 13000, correct? (10000 room +5000 the next year = 15000 room - 12000 w/d = 3000. Add that 3000+10000 orginal room totals 13000). My point for asking: I'm trying to ascertain that unless one makes over $5000/yr in investment gains, any withdrawals generally won't muck up your TFSA room.


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## stephenheath (Apr 3, 2009)

Rico said:


> I have a couple TFSA issues to mention, I hope it's OK to put them here.
> 
> 1. A couple years ago, I started a direct investing account. Then, the TFSA comes around and I wanted to move my investments into one. After some reading, it appears that I'd have to sell my stocks (thus incurring a small capital gain and some commission costs) and then repurchase them inside the TFSA (more commissions). Does anyone have thoughts on this scenario. I'm in the process of buying a house otherwise I'd just open a TFSA with new money and go from there. I'd rather move the non-reg funds into a TFSA but it seems like a pain/costly.


I'll let the more knowledgable members field this one... I think you can move it in kind but it will still trigger the capital gains.



> 2. I should probably know this but if one maxes out a TFSA (say, 10000) and you have gains inside (say the NBV becomes 12000), there is no "1% penalty" because the contribution was only 10000, right?


Right, gains don't count as overcontributions, only putting in more.



> 3. Say you withdraw the 12000 from the above scenario; that would mean next year's room is only 13000, correct? (10000 room +5000 the next year = 15000 room - 12000 w/d = 3000. Add that 3000+10000 orginal room totals 13000). My point for asking: I'm trying to ascertain that unless one makes over $5000/yr in investment gains, any withdrawals generally won't muck up your TFSA room.


No, it would mean next year's room is 17000... the total you've withdrawn + 5000 for the next year.


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## CanadianCapitalist (Mar 31, 2009)

Rico said:


> 1. A couple years ago, I started a direct investing account. Then, the TFSA comes around and I wanted to move my investments into one. After some reading, it appears that I'd have to sell my stocks (thus incurring a small capital gain and some commission costs) and then repurchase them inside the TFSA (more commissions). Does anyone have thoughts on this scenario. I'm in the process of buying a house otherwise I'd just open a TFSA with new money and go from there. I'd rather move the non-reg funds into a TFSA but it seems like a pain/costly.


You don't have to sell your investments in a taxable account and buy the same security in the TFSA. You can contribute in-kind from a taxable account to a TFSA. Just call your broker and they should do this without any charge. Keep in mind that the transaction is a deemed disposition. If you have capital gains, you have to declare it. If you have capital losses, you cannot claim it.


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## Rico (Jan 27, 2011)

CanadianCapitalist said:


> You don't have to sell your investments in a taxable account and buy the same security in the TFSA. You can contribute in-kind from a taxable account to a TFSA. Just call your broker and they should do this without any charge. Keep in mind that the transaction is a deemed disposition. If you have capital gains, you have to declare it. If you have capital losses, you cannot claim it.


Thanks for the reply. Right now I have about a $1000 gain for one stock and a $340 loss for another. So, I'd have to pay on the gain but couldn't claim the loss (if done in-kind)?


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## HaroldCrump (Jun 10, 2009)

Rico said:


> Thanks for the reply. Right now I have about a $1000 gain for one stock and a $340 loss for another. So, I'd have to pay on the gain but couldn't claim the loss (if done in-kind)?


Correct, if you transfer in-kind.
I believe it would be ok, however, if you sold the losing stock in the taxable account, and then contributed the cash plus the winning stock in-kind.
You would have to pay taxes on the deemed disposition of the winning stock, however, you should be able to claim the loss as well.
Allow 30 days between the sale of the losing stock and the TFSA contribution just to be on the safer side.


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## m3s (Apr 3, 2010)

steve41 said:


> The TFSA is not a big deal... when you run the numbers, the RRSP refund makes a difference.


No big deal unless you have a pension, or you've maxed the RRSP or taxes go up in 10, 20, 30 years etc. No chances of that happening with all the debt in the world I'm sure

I prefer the TFSA for the flexibility/simplicity and the fact that I never have to pay taxes on it, which is a big uncertainty imo. I'd just rather pay the taxes now than later.

The RRSP is very deceiving to most Canadians who blow the tax return every year and kill most of its benefit. Similarly most Canadians waste the TFSA on 1% savings acct


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## larry81 (Nov 22, 2010)

Junks bonds and REIT in my TSFA 

Short bonds in RRSP

Equities in non-reg !


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## Rico (Jan 27, 2011)

HaroldCrump said:


> Correct, if you transfer in-kind.
> I believe it would be ok, however, if you sold the losing stock in the taxable account, and then contributed the cash plus the winning stock in-kind.
> You would have to pay taxes on the deemed disposition of the winning stock, however, you should be able to claim the loss as well.
> Allow 30 days between the sale of the losing stock and the TFSA contribution just to be on the safer side.


Thanks HC, I'll look into that.


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## Eclectic12 (Oct 20, 2010)

Rico said:


> I have a couple TFSA issues to mention, I hope it's OK to put them here.
> 
> 1. A couple years ago, I started a direct investing account. Then, the TFSA comes around and I wanted to move my investments into one. After some reading, it appears that I'd have to sell my stocks (thus incurring a small capital gain and some commission costs) and then repurchase them inside the TFSA (more commissions). Does anyone have thoughts on this scenario. I'm in the process of buying a house otherwise I'd just open a TFSA with new money and go from there. I'd rather move the non-reg funds into a TFSA but it seems like a pain/costly.
> 
> ...


In response to #1: 
A sale is not required. I've transfered In-Kind three investments so far. The key things are to check for transfer charges (In-Kind to my RRSP has a fee but not the TFSA) and to make sure you are even or at a gain. A capital gain has to be paid but a capital loss can't be claimed. Other posts around the capital loss options (i.e. sell and wait 30 days) are correct - though as other threads have mentioned, selling TD Bank and buying Royal Bank is a way to stay in the same sector, without the 30 day wait.

In response to #2:
Gains in a TFSA are tax free. What will generate penalties are things like contribution room is $5K for 2011 and:
a) $6K is contributed (i.e. total 2011 contributions is $11K).
b) Decide to withdraw $2K for a vacation and try to put it back in 2011 when the vacation is cancelled. This is due to withdrawals can only be re-added in the *next* year.
c) decide to move $2K to a new institution offering higher rates and withdraw instead of a transfer.

In response to #3:
I didn't follow your example but as mentioned before, growth is tax free. The simple way is to think of withdrawals as additions to *next* years contribution room. 

Example - Contribute in 2011 $5K which doubles to $10K (assume the 2011 contribution maxes out the overall contribution room). Withdraw in Dec 2011 $5K, this makes the 2012 TFSA room the $5K withdrawal + $5K contribution room for a 2012 total of $10K.

*** Update: In the "wait 30 days" comment, I was assuming the plan was sell losing stock, move cash into TFSA and wait 30 days before buying the same stock to avoid the superficial loss rules. If there is no intent to buy the same stock, there is no need for the 30 days. Regardless of the plan, the cash from selling the stock for a gain or loss can be deposited without delay into the TFSA.


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## Argonaut (Dec 7, 2010)

The TFSA has made the RRSP completely irrelevant for someone my age. An RRSP only works if you plan to make less money at some point in your life. I don't know about you, but I plan on making more money every year. The only thing I would use an RRSP for is holding US stocks to avoid withholding tax.

I have employed something of a dividend-growth strategy in my TFSA and I love it. Hold BCE, Inter Pipeline, and RioCan within it.


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## Four Pillars (Apr 5, 2009)

HaroldCrump said:


> Correct, if you transfer in-kind.
> I believe it would be ok, however, if you sold the losing stock in the taxable account, and then contributed the cash plus the winning stock in-kind.
> You would have to pay taxes on the deemed disposition of the winning stock, however, you should be able to claim the loss as well.
> Allow 30 days between the sale of the losing stock and the TFSA contribution just to be on the safer side.


Just to clarify - you don't need to wait 30 days after selling the stock before contributing the cash to the TFSA. You need to wait 30 days after the stock sale to re-buy the same stock inside the TFSA.


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## steve41 (Apr 18, 2009)

Argonaut said:


> The TFSA has made the RRSP completely irrelevant for someone my age. An RRSP only works if you plan to make less money at some point in your life. I don't know about you, but I plan on making more money every year. The only thing I would use an RRSP for is holding US stocks to avoid withholding tax.
> 
> I have employed something of a dividend-growth strategy in my TFSA and I love it. Hold BCE, Inter Pipeline, and RioCan within it.


Well duh. The SP in RRSP refers to saving for retirement, when you aren't earning as much as when you were working. For the normal, working/saving, retired/de-saving individual, the RRSP makes imminent sense. People in this category are almost always in a lower tax bracket when they are retired. You fall in the 'building up an estate' category. A nice place to be.


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## Eclectic12 (Oct 20, 2010)

Four Pillars said:


> I wrote a post a while ago where I listed the reasons I thought most investors played it safe in their TFSAs. Some are legit reasons (using it for emerg funds or account too small to bother with equities), others not so much.
> 
> http://www.moneysmartsblog.com/why-...igh-interest-savings-accounts-in-their-tfsas/
> 
> ...


To understand the frequency of the "no capital losses" in a TFSA (or RRSP for that matter) comments, I believe you have to consider the source/audience. Most of the articles I've read are aimed at the general public who mostly are beginners at investing. If they do their learning (plus likely their largest loss rate) in a TFSA, a couple of things happen:
a) they can't make use of the loss. [Most articles point this out.]
b) until more contribution room is earned, a non-registered taxable account is their only option to take advantage of any bargains. [Few articles point this out.]
c) until more contribution room is earned, the account stays small longer making economies of scale difficult.

Add to this, some will have a time factor. If I'm twenty, I likely have a lot of years of approximately $5K per year to balance out early losses. If I'm eighty, I can't count on lots of future contribution room to catch up.

Then too, the usual audience for these articles who are ready to jump into equities tend to be over-confident in their strategy/picks. I wish I had a buck for each time I heard about losses with three to six months after they started!

So I see this are more than a "TFSA vs non-reg account debate". If the investing experience isn't there yet, it makes more sense to me to go conservative or build a steady income stream than take the big risks.

I don't understand why so many articles focus on the basics instead of using a series of articles to start with the basics, suggest some ways of learning and promote that when ready, a TFSA is a great place to make large gains.


As for columnists/advisors changing their tune, I haven't run across this yet.


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## Rico (Jan 27, 2011)

So I opened a TFSA today to have it set up for some expected savings over the next year. I thought I'd share a little of that experience.

My one bank that I do most business out of (gave best mortgage rate back in the day) wanted me to come in and set the account up. To contribute to the TFSA, I would have to set up a pre-authorized regular contribution or come in in person to contribute. I poked through the fine print and found a high-interest savings account at 1.75% BUT I noticed there was a $25 withdrawal fee to take money out. YUCK!

My other bank, which I've kept for accepting rental income, using e-mail money transfers, and for my non-reg investing, let me sign up online and I can transfer money in/out online, any time, with no fees. The high-interest account was 1.5% however.

It wasn't a hard choice of who to go with.


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## Betzy (Feb 7, 2011)

DavidJD said:


> If I were 18 in 2009 I would want someone to sit me down, look me in the eye and say, listen, the government has given you the best opportunity in the world. You can start to stream your earnings into a magic account. It is like a secret off shore bank account. Even better is that the money you squirrel away in there can grow by gains, interest and the like. By the time you are 40 you could easily be a millionaire from this account alone, and all you would have put in is $110,000*.
> 
> I have put in $15,000 and now have $41,000. That may not be sustainable over several years, but say it was only 20%? It is possible to sustain for quite a while. Not reliable but possible. By the time the 18 year old is 30 he may be in a position to max out accumulated contribution room for his RRSPs and truly benefit from it from a tax perspective (rate). He could do the TFSA/RRSP Shuffle.
> 
> ...


Amen DavidJ
My plan is to use the TFSA to accumulate for 10yrs, wife and I together should have $100,000 combined by then (more no doubt with interest).
If one was to make 10% we are talking $10,000 a year tax free! i dont know why everyone is not seeing this as a great future tax free income.
With any wisdom and smart trading i figure a $200,000 total at 10 yr mark is pretty reasonable. So now that is $20,000 /year tax free.
Seems like a no brainer...
What if one was to professionally trade out of this account and do 30%/year?

If you only started with $10,000 and made 30%/yr not adding anything to the account yr to yr your 10 yr total would be $137,858.48

If you started with $10,000 and added your maximum $5,000 each year and made 30%/yr. Grand total of $350,955.96
I for one am taking advantage of the TFSA


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## DavidJD (Sep 27, 2009)

Betzy said:


> Amen DavidJ
> My plan is to use the TFSA to accumulate for 10yrs, wife and I together should have $100,000 combined by then (more no doubt with interest).
> If one was to make 10% we are talking $10,000 a year tax free! i dont know why everyone is not seeing this as a great future tax free income.
> With any wisdom and smart trading i figure a $200,000 total at 10 yr mark is pretty reasonable. So now that is $20,000 /year tax free.
> ...


Today my TFSA closed at $42,600. I have only contributed $15K. However, in fall of 2010 I was at $46K+ WITHOUT the $5K I added last month. I expect to see a bit of a rebound...If I get back up to the levels I was at I will cash most in at $60K+ range. 

So I think your plan is doable. Elswhere on this blog people have posted even better results in the TFSA.


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## Plugging Along (Jan 3, 2011)

I am just curious on what is everyone investing in that they are consistently getting 30% on their returns each year. I can see that on a short term, but as a long term, or even 10 years. Wouldn't that put you in the same category as Buffet for returns. Actually, wouldn't that put you higher that Buffets returns.

I'm just wondering if I'm a really bad investor, as on average over the last 10-15 years, I have maybe averaged 8%, (that includes the dot com bust, and the recent busts)

I question if these high returns are a reasonable expectation.


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## OhGreatGuru (May 24, 2009)

No, they are not a reasonable expectation for long term. They are just are a reflection of how the market has recovered since TFSAs were started.


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## Betzy (Feb 7, 2011)

I would agree that 30% is high for the average investor. But what about the professionals? Is this still outlandish for them? Any one out there?...


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## lister (Apr 3, 2009)

DavidJD said:


> Today my TFSA closed at $42,600. I have only contributed $15K. However, in fall of 2010 I was at $46K+ WITHOUT the $5K I added last month. I expect to see a bit of a rebound...If I get back up to the levels I was at I will cash most in at $60K+ range.
> 
> So I think your plan is doable. Elswhere on this blog people have posted even better results in the TFSA.


My TFSA is currently at $120K. It peaked at $175K early in January on a wild run. Combined with the spouse's TFSA we were a hair over $200K. I sold off that stock for a profit of $80K (bought at $0.06, sold at $0.445.) That stock was SSU.v. Right now the spouse's TFSA has taken a beating and is at about $16.5K so combined we're at $136K.

*Just as a disclaimer, I am gambling with my money taking large risks. This is money I can afford to lose (though I wouldn't be too happy about it.) I do not expect these gains over any length of time, this is a short term gamble. If I achieve the amount of money I want it will be reinvested in safe dividend & distribution stocks, bonds, GICs, etc.*

And no this isn't bullshit (as someone has previously said), I don't have the time, the energy nor the inclination for that sort of thing.


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## DavidJD (Sep 27, 2009)

lister said:


> My TFSA is currently at $120K. It peaked at $175K early in January on a wild run. Combined with the spouse's TFSA we were a hair over $200K. I sold off that stock for a profit of $80K (bought at $0.06, sold at $0.445.) That stock was SSU.v. Right now the spouse's TFSA has taken a beating and is at about $16.5K so combined we're at $136K.
> 
> *Just as a disclaimer, I am gambling with my money taking large risks. This is money I can afford to lose (though I wouldn't be too happy about it.) I do not expect these gains over any length of time, this is a short term gamble. If I achieve the amount of money I want it will be reinvested in safe dividend & distribution stocks, bonds, GICs, etc.*
> 
> And no this isn't bullshit (as someone has previously said), I don't have the time, the energy nor the inclination for that sort of thing.


Thanks for sharing your success. The point of the thread is that some people are getting astronomical gains (like in this post) and some just great gains (Moi) and some are doing all right; therefore the media and pundits coverage is changing to say, "whoah these could be pretty amazing investment vehicles - if don't just sock away GICs".

My strategy is to gamble and hope for big gains early - then settle down with more diverse and stable investments. Same as mentioned above. I think this is going to become more and more newsworthy.


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## Betzy (Feb 7, 2011)

lister, good for you that is an incredible run!! If you dont mind me asking how much did you originally invest/gamble?
I have looked into penny stocks and am overwhelmed at this point...


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## lister (Apr 3, 2009)

Betzy said:


> lister, good for you that is an incredible run!! If you dont mind me asking how much did you originally invest/gamble?


$15K in each. The bulk of my gains has been on the first two $5K contributions in my TFSA. There is another post here somewhere that detailed the previous companies I held before SSU.



> I have looked into penny stocks and am overwhelmed at this point...


They're not for the faint of heart, the impatient or people who can't afford the gamble. I have lost some money on them. Right now I'm down across the board but I expect at least one stock to pick up starting in March/April. If I achieve my goal I'll be done with them.


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## Betzy (Feb 7, 2011)

I hear you lister, grab some patience and balls of steel and hang on.
You mind letting us know how many penny stocks do you hold at any given point to average out a winner in amidst the rest?


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## lister (Apr 3, 2009)

Betzy said:


> You mind letting us know how many penny stocks do you hold at any given point to average out a winner in amidst the rest?


Right now I have three. At one point I had five or six. The more the better of course. I've put a good chunk of money into one stock that I think will do well which is why the total is low right now. I won't be adding any more money this year so I'm stuck with the three unless one or two of the three do something unexpected. Next year's contributions will be in two different companies, maybe not even pennies depending on how this year goes.


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## Four Pillars (Apr 5, 2009)

lister said:


> My TFSA is currently at $120K. It peaked at $175K early in January on a wild run. Combined with the spouse's TFSA we were a hair over $200K. I sold off that stock for a profit of $80K (bought at $0.06, sold at $0.445.) That stock was SSU.v. Right now the spouse's TFSA has taken a beating and is at about $16.5K so combined we're at $136K.
> 
> *Just as a disclaimer, I am gambling with my money taking large risks. This is money I can afford to lose (though I wouldn't be too happy about it.) I do not expect these gains over any length of time, this is a short term gamble. If I achieve the amount of money I want it will be reinvested in safe dividend & distribution stocks, bonds, GICs, etc.*
> 
> And no this isn't bullshit (as someone has previously said), I don't have the time, the energy nor the inclination for that sort of thing.


Lister - you rock!


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## Betzy (Feb 7, 2011)

Ok Lister,
Share some info, what brokerage do you use, can you trade penny's online or do you have to phone them in?
Any chance we can get some of your present picks, I would like to do some paper trading and research on some penny stocks. Are you in Canadian stocks or US?
Man do i wish someone told me about this knowledge when I was 16!
If you care to answer lister, thanks in advance.


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## Eclectic12 (Oct 20, 2010)

OhGreatGuru said:


> No, they are not a reasonable expectation for long term. They are just are a reflection of how the market has recovered since TFSAs were started.


+1

It helps a lot to recognise find solid but beatup companies. I'm usually happy with a couple that are up 100 to 1000% at a time.

In comparison - buying in between Oct 2007 and Mar 2008, of ten bought, two are down and the other eight are up (three up 30-40%, four up 100% and one up 250%). It also helps that the dividends range from 8% to 36%.


Cheers


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## Eclectic12 (Oct 20, 2010)

DavidJD said:


> Thanks for sharing your success. The point of the thread is that some people are getting astronomical gains (like in this post) and some just great gains (Moi) and some are doing all right; therefore the media and pundits coverage is changing to say, "whoah these could be pretty amazing investment vehicles - if don't just sock away GICs".
> 
> My strategy is to gamble and hope for big gains early - then settle down with more diverse and stable investments. Same as mentioned above. I think this is going to become more and more newsworthy.


Interesting ... between my time horizon and having done similar in my RRSP in my learning phase (with more losses than now), I decided to build a steady income stream first in my TFSA. It doesn't hurt than some of my income stream is paying dividends of 8% and as of today has pulled back a bit but is overall up 23%.

Cheers


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## lister (Apr 3, 2009)

Betzy said:


> Ok Lister,
> Share some info, what brokerage do you use, can you trade penny's online or do you have to phone them in?


Scotia iTrade. Trade online. I would suggest though that you look at all the online brokers and decide what's best for you. iTrade hasn't been perfect and has had some warts.



> Any chance we can get some of your present picks


No I don't share my present holdings for a few reasons.

I would like to reiterate the risk in this sort of thing. Please do some research and don't risk any money you can't afford to lose.



> Are you in Canadian stocks or US?


For regular stocks I've been in both. For pennies just Canadian.



> Man do i wish someone told me about this knowledge when I was 16!
> If you care to answer lister, thanks in advance.


I wish financial courses, both personal budgeting and investing, were available to me in high school rather than some of the useless crap that I had to take. I might have been much further ahead.


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## Betzy (Feb 7, 2011)

I wish financial courses, both personal budgeting and investing, were available to me in high school rather than some of the useless crap that I had to take. I might have been much further ahead.[/QUOTE]

Amen!
So where does one find out about all the Canadian penny stocks, a board or what? Some obscure night club with a 3 foot ninja guarding the door???


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## the-royal-mail (Dec 11, 2009)

lister said:


> I wish financial courses, both personal budgeting and investing, were available to me in high school rather than some of the useless crap that I had to take. I might have been much further ahead.


I completely agree - shakespeare and such was NOT a skill that proved useful in my life. However, knowing more about how to manage money, how to save for a rainy day and other such skills would have been far more useful. Thankfully the modern www has forums like CMF, this is an amazing resource.


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## cannon_fodder (Apr 3, 2009)

Nicely done, Lister! I can understand at least one reason why you may not want to share - you'd hate to think someone followed your plan, it failed, and they can't handle the loss of money.

Has your wife suggested you quit your day job? ;-)


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## MikeT (Feb 16, 2010)

Just an update on the US equivalents.

401(k) and IRA's are nearly equivalent. The 401(k) is employer sponsored, but both have similar withdrawl rules and can be thought of as equivalent to our RRSP.

Roth IRA's are only similar to our TFSA's in the sense that they are after tax accounts. The earnings from a Roth however cannot be withdrawn as easily as our TFSA's. The earnings are tied to retirement, and are penalized if withdrawn early unless there is a valid exception.

Our TFSA is much much better than a Roth for that reason.

One of the most popular uses of the Roth has not really caught on here in Canada yet is to reduce your post retirement taxable income. If you withdraw 50k per year from an RRSP you pay tax on 50k of income. If you withdraw 25k from your rrsp and 25k from your TFSA for a total of 50k, you will only be taxed on 25k, thus moving you into a lower bracket and reducing you post retirement income tax substantially.


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## Betzy (Feb 7, 2011)

For those who care, others turn away...don't say I didn't warn you.
I just did a search on all the TFSA investing on this board and it seems in my humble opinion that lister (since back in 09) has indeed been truthful and is totally on the up and up! Some smarts and some good fortune are responsible for his success. I wish him the best and hope to maybe one day have same results! Way to go "lister"


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## warp (Sep 4, 2010)

I have to smile to myself at some of you posters talking about 20-30 % returns per year.

most of you may be in for a big surprise.

The TFSA is a great tool for anyone,,,but mostly for young people, but mostly if they are in a taxable position already.
If they dont have the funds....perhaps a parent or granparent, ( or nice uncle), can help

They should be used with the RRSP....not one or the other.
Anyone with taxable income of less than about $ 40 K should use the TFSA first. thats because you will be at the lowest tax bracket....just pay the tax now,,,

For many ,,$5,000 a year is hard to come by for savings....if thats the case you dont want to be investing in high risk assets that could kill your savings in a big hurry.

When you hear these stories about 30-50-100-200 % increases in TFSA values, remember that the last 2 years have been staright up.....and these returns can only be acheived through high risk.....it can easily go ther other way in a big hurry.


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## lister (Apr 3, 2009)

cannon_fodder said:


> Nicely done, Lister! I can understand at least one reason why you may not want to share - you'd hate to think someone followed your plan, it failed, and they can't handle the loss of money.


As previously stated Murphy is the first reason, silly I know but He lurks... Next is what you've stated. I am in a special position that I can afford to do this, I don't know how many people can do likewise. I'd hate to think someone bet the farm on something I suggested and have it blow up on them. I haven't even told my close relatives and friends what I'm exactly doing other than generalities. Only the spouse knows and that's for sounding board purposes.

Thirdly, for selfish reasons, I've put a tonne of time and effort into this, why should I just hand out my high risk/potential high reward stock picks? If there were anyone I would want to help benefit it would be the relatives and close friends except reasons one and two are there.

I can't win either way, if I don't post the stocks I get the rude posts of BS directed towards me, if I do post the stocks I'll get called a pumper. Meh, I'll stick with posting the stocks once I've divested myself of them or of course I could not even bother posting anything at all.



> Has your wife suggested you quit your day job? ;-)


That's not possible being the sole source of income. In two years, if the plan works, I intend to pursue my passions regardless of what they may pay or not (including a stint doing some form of charitable work.) If the plan doesn't work, well, I can still slug it out at work. Lots of time left...


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## m3s (Apr 3, 2010)

I think lister has good reasons to keep specifics to himself. Although my significant other couldn't care less about stocks and I avoid talking about specifics with coworkers and friends for the same reasons. If anything, I would post specifics online but to each his own

I've noticed with the penny stocks publicity can really give them a boost, people will brag up their stocks trying to get everyone on board. That's the dangerous thing about reading advice about penny stocks

lister, how do you specifically find your picks though? Screeners? Where do you put in all this time and effort? I find the stocks that would give you that kind of return overwhelming to find, still trying to learn where to look for them


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## cannon_fodder (Apr 3, 2009)

warp said:


> I have to smile to myself at some of you posters talking about 20-30 % returns per year.
> 
> most of you may be in for a big surprise.
> 
> ...


I think you said something very astute in another thread. I'm paraphrasing but it was akin to, "I'm aware that my recent gains are more about the rising market than my own skill."

What I do hear is some people who are getting large increases talking about partitioning some of their gains into more conservative, stable investments yet still leaving some "play" money or "house" money to take some fliers.

I've personally seen some dramatic moves in my aggressive strategy - down 60% followed by a tripling in value. And this occurred in only 8 months. I keep track of every trade and then notate what I did wrong hoping to learn from my mistakes. Only time will tell...


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## warp (Sep 4, 2010)

I think what I said was this: and it is something all investors should rememeber:

"I try very hard not to confuse my own brilliance with a bull market"

That being said...to all you posters who have made great returns...good for you.
Just dont count on it happening year in and year out.


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## lewin (Jan 10, 2011)

To get back to the original point, one reason to avoid risky investiments in a TFSA is the loss of contribution room if you ever have to sell at a loss and withdraw the money.


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## Eclectic12 (Oct 20, 2010)

warp said:


> I have to smile to myself at some of you posters talking about 20-30 % returns per year.
> 
> most of you may be in for a big surprise.
> 
> ...


+1 for that 30-40% per year as unreasonable for the long term.

As for the TFSA being for the young - au contraire, I have co-workers whose defined benefit pension means they don't earn *any* new RRSP contribution room. After maxing out their RRSPs years ago, the relatively new option of the TFSA has them smiling.

On a similar vein - I've talked to people who wish they hadn't put so much into the RRSP due to the clawbacks. Bottom line is that your mileage can vary dramatically, so the more you know and think through the scenarios the more chance of a better decision.


Finally - while I do agree that 30 to 300% increases in TFSAs in the last two years are exceptional, I am puzzled by the


> ... can only be achieved by high risk ...


IMO a lot depends on correctly buying bargains that have been unjustly beat up. While I did it in a non-registered account to pay off my mortgage early, I hardly call companies such as BNS, BMO or AGU high risk. Then too, to become a loss of the original money, these stocks would have to drop 50%. 

Heck, my slightly higher risk investment at Friday's close has to drop 58%. If I factor in the dividends already paid, this becomes means an 85% drop would be required to lose the original money.


Cheers


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## Eclectic12 (Oct 20, 2010)

lewin said:


> To get back to the original point, one reason to avoid risky investiments in a TFSA is the loss of contribution room if you ever have to sell at a loss and withdraw the money.


Agreed - that's why I've setup stable dividend payers. Once I move into the more risky stocks, there is an income stream to fund new purchases/create new contribution room - should the risky ones tank.

IMO, being "all in" for either risk or guaranteed low returns without a plan is what should be avoided. Being conservative while taking time to plan for and get comfortable with choosing a higher risk/higher reward stock is not a bad thing. Similarly, being all risky when one is young with many years of future TFSA contribution coming - if one has thought it through, is also not bad. 

Then too - having lived through three or four crashes, a way to end up with better returns with less risk is to buy dividend paying conservative stocks at or near the bottom of a crash or when they are out of favour.

Buying a Canadian Bank around Mar 2009 is not nearly as risky as a penny mining stock but paid a healthy capital gain as well as dividends.


Cheers


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## warp (Sep 4, 2010)

Sometimes, the logic expressed here confuses me.

Its like the gambler who goes to the casino with $1000, and in the first hour wins $2000... WOW, a 200% gain.

He keeps gambling...telling himself he can lose $2000 and still be even!

WRONG!!.......after 1 hour he has $3000 in his pocket...that is HIS money.
He is not even at all, in any time frame AFTER that first hour.
( the casinos know , by the way, that you will NOT leave after you get back "even" to $1000...but will continue to play till you lose it all...the longer you stay IN the casino , the longer the odds against you...its the same with high risk investments)

Anybody on this board who thinks you can make 200% on any investment without risk, is in for a painfull ride.

After all that...I wish everyone good luck.


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## DavidJD (Sep 27, 2009)

I have noticed that those who have a good return usually recognize it as fortune smiling on them - not a savvy investment per se. However whenever some one does have a bit of luck, there is plenty to comment that this never happens.

The point is that taking a risk MAY allow for a fantastic return. Not taking the risk ensures that this cannot happen. It goes without saying that a fantastic loss may occur too - the risk. 

Risk is an individual's decision. I personally think it is very useful for all humans to wager on some risk and to lose once in a while. Such lessons cannot be taught any other way. All the warnings on this blog cannot teach it.

For those who risk lots and lose, too bad. For those who risk and are rewarded, enjoy. For those winners who push their luck, well...

I am enjoying the stories everyone is sharing!


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## Eclectic12 (Oct 20, 2010)

warp said:


> Sometimes, the logic expressed here confuses me.
> 
> Its like the gambler who goes to the casino with $1000, and in the first hour wins $2000... WOW, a 200% gain.
> 
> ...


Wow! +1 on the confusing logic.

Let's hit a few highlights:

First up -
Buying for $100, hitting a paper value of $200 and selling for $150 is the same
as buying for $100 and selling for $50 - they are both "losses of $50", right?

I'll have to remember that for my next tax return. I had no idea I had some many losses to claim. *grin*


Second up -
Like gambling, the longer one invests in high risk investments - the longer the odds (and presumably the more losses).

This is odd considering the last I checked, the "high risk" investments I mentioned are all in the TSE index. If BNS, BMO and AGU are going down - likely the index is moving in a similar direction.


Third up -
Making 200% on an investment involves risk.

Since the discussion was "high" versus "medium" or maybe "low" risk, I'm not sure why "no risk" is being brought up. I'm just puzzled why buying companies that make up the index is "high risk". 

As I posted, IMO - "high" risk is not the only way to make a 30 to 300% gain. 


To be clear - I'm already selling to clear off the mortgage - so I'm not concerned. Though as has happened in the past - I could be losing by selling too early. 


Cheers


*** Update: 

I figured out what was bothering me about the gambler analogy.
The gambler is like a day or momentum trader who converts back to cash at the 
end of the trading day. So both will have cash or equivalents in hand in a short 
period.

The index etf/stock investor will have shares that may be earning them income, 
which have to be sold to lock-in the gain. It is much more complex to figure out
if holding or selling is the better way to go.

Which also brings up the question of whether you'd be so concerned about paper 
losses if I'd bought an index etf instead of the individual stocks.


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