TFSA instead of Casino

[NotADcotor]

making at least 3% interest even in savings, all tax free

So you are going to try your luck at the Wall Street Casino instead?

Reading is for girls and gheys, if you want to post be one of two ways
either you have no clue what you are replying to, or you have no clue what you are replying to

-Jon Lajoie heavily changed.

Also Wall Street is not anything like a casino, I mean it can be if you are a foolish person but for most people it isn't. So double fail.

 

[NotADcotor]

Do not waste your time playing casino games and slots. If you gamble on sports you must study everything about the teams such as injuries and past performances.

The problem is most of the people you are competing against also know about injuries and past performances.
If there is an edge there might be a small one betting against fan favorites... maybe. Guessing there are some people who will bet on the maybe leafs and the Habsnots regardless of how much they will stink up the joint and how dim their prospects are. However I am not sure if that would be a significant factor, I would hope not.

Myself I bet everything on the Washington Generals, they are due for a win vs the Harlem Globetrotters. One day man, one day

 

[NotADcotor]

Thought I would toss in an update, TFSA over 5K now, slipped a few times with casino trip but seeing savings grow is making that more infrequent

Much like controlling junk food, it's a learning process, keep at it.

 

[NotADcotor]

I don't frequent the gambling sites, but from the start of TFSA's I put the maximum in every year.



Bonds, GICs, reits and foreign market holdings in the rrsp account.

Canadian dividend payers in the non registered account.

I invest in stocks that pay little or no dividends in my tfsa account.
That is often enough gambling for me.

If your income is low enough, dividends should be outside of the TFSA as you are not paying much on taxed on them, you can earn 36K a year in dividends and barely pay a dime. It's weird.

 

[NotADcotor]

It's amazing that GIC rates are higher than some dividend stocks and without the volatility. On important thing to keep in mind is that a GIC is only insured up to $100 K if the financial institution should fail. That's unlikely to happen, but I take precautions by buying GIC's from different financial institutions and only up to $100K

The 2023 maximum you can put in your TFSA is $6500. You must login to the CRA web-site to see your past contributions because it's not shown on your tax return. Be very careful that you don't over-contribute to the TFSA or RSP because there are tax consequences.

It's 7K this year.

Also CIBC is paying IIRC about 6.5 and BNS over 7%, sure the capital is volatile but the dividends seem pretty solid. National cut theirs in half in the 80's, BMO cut theirs in half in two steps but it took a great depression then a world war to do it, and back then their payout ratios are much higher. I guess more recently there was Manulife but that isn't a bank. Also unlike interest, dividends usually go up over time higher even than inflation.

If you can buy and hold, it's what I like, they also serve as proxy index funds because the banks are in everything. If one wants to get fancy, at the end/beginning of each year switch everything to the worst one or two banks based on PE ratio, dividend yield and or last year's performance. THe theory being that they are all basically in the same heavily regulated business and reversion to the mean. It used to work much better than buying all the banks equally, but alas the globe and mail was big on this idea and they don't do paper delivery to my hick town anymore.

I live off my dividends, banks drop in half, I have 0 fornication to give as long as they don't cut them payments.
I do have smaller amounts in the other banks and insurance companies each amount roughly being the amount of the TFSA contribution and the dividends that are in the TFSA so if the stocks are at down I can just sell one of them for the cash. Yes it's a sale, but as the money is either going back into a TFSA or represents dividends that are staying in the TFSA, kinda not. I could just the stock or 2 I have a big position in, but if it's down, there are weird rules involved if you buy it back again within 30 days regarding capital gains taxes.

 

[explorerzip]

It's 7K this year.

Also CIBC is paying IIRC about 6.5 and BNS over 7%, sure the capital is volatile but the dividends seem pretty solid. National cut theirs in half in the 80's, BMO cut theirs in half in two steps but it took a great depression then a world war to do it, and back then their payout ratios are much higher. I guess more recently there was Manulife but that isn't a bank. Also unlike interest, dividends usually go up over time higher even than inflation.

If you can buy and hold, it's what I like, they also serve as proxy index funds because the banks are in everything. If one wants to get fancy, at the end/beginning of each year switch everything to the worst one or two banks based on PE ratio, dividend yield and or last year's performance. THe theory being that they are all basically in the same heavily regulated business and reversion to the mean. It used to work much better than buying all the banks equally, but alas the globe and mail was big on this idea and they don't do paper delivery to my hick town anymore.

I live off my dividends, banks drop in half, I have 0 fornication to give as long as they don't cut them payments.
I do have smaller amounts in the other banks and insurance companies each amount roughly being the amount of the TFSA contribution and the dividends that are in the TFSA so if the stocks are at down I can just sell one of them for the cash. Yes it's a sale, but as the money is either going back into a TFSA or represents dividends that are staying in the TFSA, kinda not. I could just the stock or 2 I have a big position in, but if it's down, there are weird rules involved if you buy it back again within 30 days regarding capital gains taxes.

Yes, I am aware the TFSA limit for upcoming year 2024 is $7000.

 

[John_Jacob]

If your income is low enough, dividends should be outside of the TFSA as you are not paying much on taxed on them, you can earn 36K a year in dividends and barely pay a dime. It's weird.

Actually, it's higher than $36K - depending on the province. Taxtips, I just put in $60K actual dividends in and the tax rate was $1753 or $2.92%. Not bad considering employment income is 16%. Love that Dividend Tax Credit.

 

[John_Jacob]

I live off my dividends, banks drop in half, I have 0 fornication to give as long as they don't cut them payments.

Absolutely, who cares what the market does and it's (very) unlikely banks will cut dividends.

 

[NotADcotor]

Actually, it's higher than $36K - depending on the province. Taxtips, I just put in $60K actual dividends in and the tax rate was $1753 or $2.92%. Not bad considering employment income is 16%. Love that Dividend Tax Credit.

I was referring to my situation actually as an example.

Granted you are not getting those sorts of dividends without some capital gains at the least which makes the math a bit more awkward. Also if you qualify for OAS or GIS, that mark up before the credit rather hurts.

But yeah, it's pretty sweet. Actually I think I might try to identify as a dividend tax credit and change my pronoun to dividend tax credit.

 

[NotADcotor]

Absolutely, who cares what the market does and it's (very) unlikely banks will cut dividends.

Which is one reason I prefer high yield dividend stocks over growth oriented ones. The latter seams very stressful.

 

[John_Jacob]

Granted you are not getting those sorts of dividends without some capital gains at the least which makes the math a bit more awkward.

Also if you qualify for OAS or GIS, that mark up before the credit rather hurts.

capital gains are for the estate as dividends are for income.

making more $ is never a problem…the extra income far outweighs the downside of clawbacks.

 

[NotADcotor]

capital gains are for the estate as dividends are for income.

making more $ is never a problem…the extra income far outweighs the downside of clawbacks.

Sure more income is always good, but deciding on where the income should come from via RRIF, TFSA or unprotected, then to max out stuff the impact on clawbacks needs to be considered.

When I turn 65, I'll probably keep my banks or whatever int he TFSA and go to the annuity bar for everything else. The extra GIS and OAS will put me over the edge, by that age the risk needs to be lowered and IIRC most annuity payments are not taxed.

 

[John_Jacob]

Sure more income is always good, but deciding on where the income should come from via RRIF, TFSA or unprotected, then to max out stuff the impact on clawbacks needs to be considered.

When I turn 65, I'll probably keep my banks or whatever int he TFSA and go to the annuity bar for everything else. The extra GIS and OAS will put me over the edge, by that age the risk needs to be lowered and IIRC most annuity payments are not taxed.

Shrug, I get the annuity in terms of safety and mentally managing your investments. However, I don’t think you’re correct about Annuities not being taxed - do you have a reference for that? They are taxed as income which is the highest rate. However, there may (?) be some tax reduction if counted as pension income.

Everyone‘s situation is different. Mid-50s and I retired about 10 years ago and for me, the mix of RRSP withdrawal, the dividend income increasing >5% a year (annuities are generally fixed) combined with the DTC to offset the associated taxes is magical In terms of retaining as much income as possible. TFSA is just set to grow when I don’t need the income.

Of course dividends become really ‘problematic’ when they get over $100k or so. Then it’s “oops”, should have done capital gains income. However, with $100k, too much $ is not really a problem.

 

[NotADcotor]

Shrug, I get the annuity in terms of safety and mentally managing your investments. However, I don’t think you’re correct about Annuities not being taxed - do you have a reference for that? They are taxed as income which is the highest rate. However, there may (?) be some tax reduction if counted as pension income.

Everyone‘s situation is different. Mid-50s and I retired about 10 years ago and for me, the mix of RRSP withdrawal, the dividend income increasing >5% a year (annuities are generally fixed) combined with the DTC to offset the associated taxes is magical In terms of retaining as much income as possible. TFSA is just set to grow when I don’t need the income.

Of course dividends become really ‘problematic’ when they get over $100k or so. Then it’s “oops”, should have done capital gains income. However, with $100k, too much $ is not really a problem.

I didn't say not taxed, I said most of it isn't taxed, but I can see how you can read it your way, I was about as ambiguous as Ace and Gary. Part of the payment is considered return of capital, that isn't taxed.

Taxation on Annuities: Annuity Tax Information - LifeAnnuities.com

Annuity income is subject to tax. Learn more about annuity taxation rules on registered and non-registered products such as prescribed, non-prescribed (accrual) annuities.

lifeannuities.com

"For annuities that are purchased with Non-Registered funds, only the interest portion of the payment is taxable. In other words, only a portion of the payment is taxable in the year that it is received. Non-Registered annuities can either have prescribed or non-prescribed (accrual) taxation."
From numbers I've seen from one annuity provider or another a while ago, it's pretty low.
Here is an example from RBC, not sure how recent it is.

For example, a 65-year-old male who
buys a $1 million annuity at today’s
rates generates about $63,000, the
majority of which is return on capital
(based on an actuarial calculation of
the typical lifetime of the annuitant).
Of that, $14,000 is taxable each year.
That compares to someone who buys
a $1 million GIC at three per cent
and pays tax on the entire $30,000 in
interest income.

I figure I might have half that outside of a TFSA, so 7K for me, thus I lose 3500 from the GIS and all the GAINS [which is I have no chance of collecting. I would get some sort of inflation protection, so the numbers might be a bit different but still. If I had that in bank stocks I ain't getting shit from the GIS. Fuck that noise hommie, I am entitled to my entitlements.
Having OAS and GIS, plus stocks in the TFSA and an annuity outside would feel a bit more diversified which at 65 I think I would value.

I am in my mid 50's now. All in on dividends currently, but when I hit 65 I want as much of that GIS action as I can get. Also with the government payouts I can afford not to work my investments so hard. Now I can't.

 

[John_Jacob]

I didn't say not taxed, I said most of it isn't taxed, but I can see how you can read it your way, I was about as ambiguous as Ace and Gary. Part of the payment is considered return of capital, that isn't taxed.

Taxation on Annuities: Annuity Tax Information - LifeAnnuities.com

Annuity income is subject to tax. Learn more about annuity taxation rules on registered and non-registered products such as prescribed, non-prescribed (accrual) annuities.

lifeannuities.com

"For annuities that are purchased with Non-Registered funds, only the interest portion of the payment is taxable. In other words, only a portion of the payment is taxable in the year that it is received. Non-Registered annuities can either have prescribed or non-prescribed (accrual) taxation."
From numbers I've seen from one annuity provider or another a while ago, it's pretty low.
Here is an example from RBC, not sure how recent it is.

For example, a 65-year-old male who
buys a $1 million annuity at today’s
rates generates about $63,000, the
majority of which is return on capital
(based on an actuarial calculation of
the typical lifetime of the annuitant).
Of that, $14,000 is taxable each year.
That compares to someone who buys
a $1 million GIC at three per cent
and pays tax on the entire $30,000 in
interest income.

I figure I might have half that outside of a TFSA, so 7K for me, thus I lose 3500 from the GIS and all the GAINS [which is I have no chance of collecting. I would get some sort of inflation protection, so the numbers might be a bit different but still. If I had that in bank stocks I ain't getting shit from the GIS. Fuck that noise hommie, I am entitled to my entitlements.
Having OAS and GIS, plus stocks in the TFSA and an annuity outside would feel a bit more diversified which at 65 I think I would value.

I am in my mid 50's now. All in on dividends currently, but when I hit 65 I want as much of that GIS action as I can get. Also with the government payouts I can afford not to work my investments so hard. Now I can't.

Big thanks, I need to investigate annuities further as ROC is taxed differently versus income as I previously assumed.

 

[NotADcotor]

Big thanks, I need to investigate annuities further as ROC is taxed differently versus income as I previously assumed.

Hey I like money

 

[Not getting younger]

If your income is low enough, dividends should be outside of the TFSA as you are not paying much on taxed on them, you can earn 36K a year in dividends and barely pay a dime. It's weird.

dividend income is taxed around 22% if I recall.

Fast forward 20-30 years. After that money growing tax free vs taxed. But then also being treated as income.

Also what’s important isn’t really the rate being paid ( dividend or interest) but the resulting yield.

 

[John_Jacob]

dividend income is taxed around 22% if I recall.

Fast forward 20-30 years. After that money growing tax free vs taxed. But then also being treated as income.

Also what’s important isn’t really the rate being paid ( dividend or interest) but the resulting yield.

with the DTC , dividends are actually negative taxation up to $55, 867 for Canadian dividends. Tax tips.ca has a great table and calculator this. https://www.taxtips.ca/taxrates/on.htm

22% marginal tax rate is for non-Canadian dividends (e.g, US) at the $100k-ish level.

Taxtips.ca has other good tables to look up the value of the DTC or the values to do the math yourself. 25% of the gross up (fed+on) IIRC.

Based on the table in the link, Dividends income is taxed less than Capital gains income until the $111, 733 marginal tax bracket. I have yet to do the average income/tax math yet to see when the crossover is But $130k seems reasonable. Meh, at that level, too much $ is a good thing.

The negative taxation is great to offset my RRSP income (no need for a RIF) withdrawals for <1% tax rate, until recently.

I did the math/spreadsheet for dividends versus capital gains to 65. Under a lot (lots) of assumptions, starting out at 100% capital gains makes sense until age 45-50. If you’re starting to invest at age 45-50, it makes more sense to do dividends, pay the ongoing taxes and you come out ahead if you die at 85 Compared to the capital gains Only approach. All taxable account math of course.

The biggest downside to the dividend investing approach is of course you can’t decide how much nor what the timing of your income is.

 

[Not getting younger]

with the DTC , dividends are actually negative taxation up to $55, 867 for Canadian dividends. Tax tips.ca has a great table and calculator this. https://www.taxtips.ca/taxrates/on.htm

22% marginal tax rate is for non-Canadian dividends (e.g, US) at the $100k-ish level.

Taxtips.ca has other good tables to look up the value of the DTC or the values to do the math yourself. 25% of the gross up (fed+on) IIRC.

Based on the table in the link, Dividends income is taxed less than Capital gains income until the $111, 733 marginal tax bracket. I have yet to do the average income/tax math yet to see when the crossover is But $130k seems reasonable. Meh, at that level, too much $ is a good thing.

The negative taxation is great to offset my RRSP income (no need for a RIF) withdrawals for <1% tax rate, until recently.

I did the math/spreadsheet for dividends versus capital gains to 65. Under a lot (lots) of assumptions, starting out at 100% capital gains makes sense until age 45-50. If you’re starting to invest at age 45-50, it makes more sense to do dividends, pay the ongoing taxes and you come out ahead if you die at 85 Compared to the capital gains Only approach. All taxable account math of course.

The biggest downside to the dividend investing approach is of course you can’t decide how much nor what the timing of your income is.

Possibly. What happens if you hold ABC. Say a Sched A in unregistered or RSP for 25 years and assume you elect to participate in their drip program. So a dividend yield of 5% and if recall, the shares are discounted another 5% from mkt Val. And over the 25 years the capital appreciation for ANC is 200%

TFSA: tax owing is nil.

 

[John_Jacob]

Possibly. What happens if you hold ABC. Say a Sched A in unregistered or RSP for 25 years and assume you elect to participate in their drip program. So a dividend yield of 5% and if recall, the shares are discounted another 5% from mkt Val. And over the 25 years the capital appreciation for ANC is 200%

TFSA: tax owing is nil.

Ya, since I'm using dividends for income and not the capital, that's my kid's problem on what the BIG FUCKING MESS the actual cost of the stocks (Fortis comes to mind) will with the ongoing re-investments over the years. I'm dead, not my problem. I'm sure Direct Investing does great at tracking what it is but .....who knows.

For the TFSA, too bad the limits are relatively low though.