Investment Q&A

Q: TFSA I have mishandled my TFSA and am down a stupidly large amount. I recognize that I cannot utilize the losses but is there a way to replenish to the full amount? IE Could I withdraw the entire amount and then replace it with $31K?

Q: Hi Peter & team,
Would it make sense to transfer “in-kind” slow moving / losing stocks from TFSA to cash (non-registered) account?
This way my TFSA account will have next year an extra contribution room and I will be able to use the losses against capital gains.
Your advise is much appreciated.
Morris

Q: I have approx 30k to invest in a TFSA which currently has Questor as it's only holding. My RRSP pretty much mirrors your Model portfolio with the addition of DHX , GUD and DEE. I would like to maintain a 20-25 total stock approach across both accounts but wonder what companies you recommend at this time or what positions I should add to?

Thank you

Q: Hi 5i: A comment on Ronald’s question (Aug 1) about spreading holdings across more than one account (RSP, TFSA, Taxable). I took his issue to be that, given the amount of his total investments, two 5% equity positions would max out his TFSA capacity, resulting in his betting his potential for TFSA tax benefits on only two higher growth (and quite possibly higher risk) equities. I suffered through a period where a similar concentration that did not work out as desired seriously hamstrung my ability to grow my TFSA. Back in the first couple of years of TFSAs, when the accumulated contributions were $5k or $10k, this concentration for equity holdings was only really avoidable through an ETF or mutual fund. But now that one’s total contributions may be as high as $31k, and one may have grown from that with some years of investment returns, TFSA account balances can be large enough to warrant treatment as mini-portfolios and in my view many of the regular principles regarding diversification and stability should be applied. I agree with your general suggestion that the TFSA accounts be weighted toward higher growth companies because if you can get some of the high growth benefit in a tax free form it is great. Probably even better than no tax bill is the accomplishment of increasing your total allowable tax free investment space, which would otherwise be severely restricted by the annual contribution limits. However, by the same token, the value of that tax free investment space makes the TFSA the worst place to suffer a significant loss. So I would say have some high growth potential in your TFSA but also have some relatively stable reliable stuff in there that will preserve your ability to salvage the account and recover in the event that one of the high growth vehicles doesn’t work out. That probably means you don’t concentrate your TFSA in just two positions (at least, it wouldn’t fit most people’s investment profiles to be that concentrated). Particularly now that an equity transaction costs most do-it-yourselfers $10 or less, you are not costing yourself much in fees to have some diversity in TFSA positions starting in the 3 to 5 thousand dollar range. And you are not costing yourself much in extra fees to have some of the same holding in different types of accounts in order to have a stabilizing or growth effect on each of them. Thanks!

Q: Hello Peter and Ryan,

This is a question regarding diversification and stock allocating strategy according to different types of accounts for income tax efficiency.
From what I have read I understand in the case of a portfolio consisting of 3 accounts: RRSP, TFSA and non registered account it’s advisable for income tax efficiency to have the following strategy : high growth stocks in the TFSA account, foreign stocks in the RRSP account and dividend paying stocks in the non registered account.
In my case my RRSP has done very well and spreading a 20 stocks portfolio across the 3 accounts RRSP, TFSA and non registered account in even 5 % positions only puts 2 stocks in the fully loaded TFSA account.
Although this will generate extra trading fees I’m thinking of moving the stocks around into the right accounts and also spreading half positions 2.5 % of same stock into TFSA and RRSP in order to get more then 2 stocks in the fully loaded TFSA account for growth, diversification and tax efficiency.
Please let me now this strategy makes sense for the long term and if so which 4 to 5 stocks do you recommend from the 5I Model Portfolio or other 5I stocks that have better valuations for a TFSA account?
Thanks for a great No Conflict service and helping in achieve great returns. Ronald

Q: I am putting 31 000 into my wife's TFSA investment account. Perhaps 5 different stocks from the Model Portfolio which will result in growth and also garner dividends. Which 5 would you recommend and should it be all done at once or over a period of time? Thanks

Q: Recently you replied to a question about tourmaline that you would hold it in a tfsa account or, taxable account because of favourable tax treatment on capital gains. I thought an rrsp would be a better place if you didn't have roon in tfsa. In an rrsp you won't pay any taxes at all. Obviously, you know more than me in this area and so i am wondering if i have overlooked something
Thanks as always for the great , informative and interesting service

Q: What is the advantage of in kind transfers from a non registered account to a TFSA if one is charged capital gains anyway, and can't claim capital loss--which presumably you COULD claim if you sold the stock and transferred the $? Is it that the transfer is done without a transaction fee?

Q: BIP.UN/TFSA

Hello,
We hold BIP.UN in a (joint) non-registered account and currently have no contribution room in our TFSA's. Come January I would like to transfer BIP.UN "in kind" into one or both of our TFSA's (the value will likely exceed the limit for any one account). From reading previous posts, I understand this can be done with certain caveats or conditions. I could not find any details on the Service Canada TFSA webpage. Would you be able to elaborate on how and "in-kind" transfer is done and what conditions need to be satisfied? Should it make any difference, we use RBC Action Direct - with whom I have not yet spoken about this issue.
If there is a "standard" procedure or set of guidelines to this process, perhaps a post or blog or something would benefit others who may not be familiar with such a process - I know I am completely unfamiliar with it....
Thanks!!
Cheers,
Mike

Q: Hi Peter and Team,

How would you differentiate the holdings in an RRSP vs. TFSA account, with regards to risk, reward, etc. etc. (I have until now mirrored each as I have 20+yrs before I withdraw either and max out contributions to both).

Q: Hello Peter!
I have no room for contribution to my TFSA account for this year, but I want to buy now ACQ and put it into my Unregistered account and hold it until next year and then move it "in kind" to my TFSA acc.in form of yearly contribution. Is this good strategy and do I have to pay tax on capital gain if price of ACQ go up.
Regards Andrew.

Q: 5i team:
The wife and I both hold CGI Group (GIB.A) : ~ 20% each
in our TFSA's. We are each up ~ 17% from purchase.
Our approach for our TFSA's is to hold growth Co's.
CGI seems to be lagging lately. Would you recommend we :
1- continue to hold; 2- reduce the % held;
3- or take our profits and look for something to replace.
If 3, could you make a few suggestions.
Thanks,
we greatly appreciate your service.

Q: Hi

I currently have 2700 in cash in my TFSA, and holding AYA and AVO. What other stocks do you recommend.

Thanks

Q: Hi Peter and Team,

I'm looking to add an energy stock to my TFSA holdings (which currently include AYA, ENB, BNS, T, and STN). I've seen you recommend BAD, SGY, and TOU and have also been seeing various articles suggesting SU might be a good purchase given that it's relatively inexpensive at the moment.

Do you have a preference between any of these four?

Q: Good morning...

My wife has the following positions in her TFSA:

AYA 19% of portfolio
DHX 15% of portfolio
MFC 29% of portfolio
TA 25% o portfolio

She has around 13% of cash in account. Judging by other responses to questions about TA, I know you are not positive about it but she is down a little in this stock and hate to sell it for a loss. What are 3 stocks you would choose to invest in if you were her. She wants high capital gain opportunities...with a small amount of money, is it better to invest in a company with a low share price like PRW or CMI TO maximize number of shares?

Thank you for your time and your advice.

Q: Regarding Jacques' question on March 26, 2014 and the response, it is correct that no tax slips would be issued for any TFSA since it is a tax free account. All that happens when dividend withholding taxes are applied is the cash dividend you receive in your TFSA from US holdings is reduced by the withholding tax. This is also true if you hold foreign non-US holdings in an RRSP based in countries in which Canada does not have a tax treaty with in relation to RRSP's. I have seen this in my own RRSP account where I have had withholding taxes taken off my Teva dividends. The main purpose of a T3 tax slip is to distribute income to the taxpayer for a taxable account. They are not going to give you the benefit of any deductions if there is no income to be taxed. Hope this helps.

Q: Another TFSA VS RiF question: I take out the mandated % of my RiF. Does it make sense to take out even more and invest those dollars inside our TFSA's because of the no tax on TFSA withdrawals? Or even take out RSP funds from my wife's account and invest those inside her TFSA?
My logic is - for example SGY - I expect it to grow and provide a nice dividend in the years ahead neither of which would be taxed when/if I withdraw those $ from one of our TFSA's.
Thank you. (What a difference 5i is making the lives of so many people!)

Q: Hi 5i Team,

I am looking at putting 500 a month into a TFSA discount brokerage account. Do you have any suggestions? Should I invest 500 a month or wait til I have a couple thousand? And do you have any suggestions for good dividend/equity growers?

Thanks so much for answering my question,
Terri.

Q: Good morning fine Team. I am about to start buying my chosen stocks for my TFSA (all $31,000.00)and my Non registered account (about $50,000.00.) I plan on almost duplicating your Model Portfolio (not the Income PF - that is for another bank). I try to buy a stock when I see that it is down a bit. That said, is it best to spread the buying "spree" out over time anyway? If so, why? How much time would be reasonable? (I am keen to buy all 20 today!) Thank you for this amazing site!

Q: I have adjusted the older portfolio per your suggestion ... TY. I have 95 K in my TFSA ... BPF,SYZ,MG,IPL,AD,EIF,SGY ... if I balanced (13K each) this portfolio would you be comfortable or should I be dropping IPL and BEP and if so what suggestions would you make to change them to? TY so much for your help.