How much has the pandemic hurt your retirement plans? We delve into the retirement portfolios of two couples hit hard by COVID-19 to see what damage was done + MORE Feb 16th
U.S. stocks in TFSA
U.S. stocks in RRSP
Canadian stocks in RRSP
A. It’s great to hear we motivated you to start investing, Tawheeda. Stocks are a great way to build wealth for the long term, despite the short-run volatility. Tax plays a role in your portfolio construction and returns, so let me explain the implications.
Tax-free savings accounts (TFSAs) are mostly tax-free. When you buy and sell an investment for a profit, that is tax-free inside a TFSA, regardless of the type of investment.
One exception could be if you are day trading in your TFSA. If you are engaging in frequent trading activity, there is a risk your profits could become taxable as business income. For most long-term, buy-and-hold investors, this is not an issue…
Walter Schultz, who is in his 40s, lives in Kitchener, Ont., and through his employment as a technician at a lab, he has a deferred profit-sharing plan and an employee Registered Retirement Savings Plan (RRSP). For now, at least, he says that’s as much as he’s willing to invest towards his so-called golden years.
“I watched how the markets were tanking last spring and while you want to do the right thing, you don’t want to throw money down a rat hole,” says Schultz of his decision to hold off on individual contributions to his RRSP early in 2020.
On top of the effect COVID-19 was having on the market, he worried about the virus itself. “Without going into detail, I’m classified in the at-risk category when you do the screening for COVID,” he says. “Seeing how the economics of the world was going and as my life could be in jeopardy here, I thought ‘OK, it’s time to suspend putting that little bit extra that was being stashed away and not having access…
These are rates offered by Ratehub partners. You can find information about additional product options below.
You can compare high-interest rates in the table above or input your estimated account balance to compare the growth between HISAs, tax-free savings accounts, registered retirement savings plans and youth savings accounts…