Squandered

Why, I asked him, are you calling it that?

Actually he never answered me. That was consistent, because Jim Flaherty (I’m pretty sure) hated me. He was a Stephen Harper man. I was radical, populist, blogger MP with the heretical view that people should tell government what to do, not vice versa. It didn’t end well.

Jim was the finance minister, who did some good deeds. One of those was adopting my idea for a new retirement-investment vehicle based on the American Roth IRA. Unlike an RRSP, nobody would get a deduction for using it but assets placed inside would grow free of tax while withdrawals would also be tax-free. That way it could boost retirement income without pushing people into a higher bracket. Oh, and it would be universal. The most democratic of shelters – equal contribution for all, regardless of income, assets or station in life.

Then he called it the TFSA. Tax-free savings account. I despaired, knowing what would occur. The whole thing went further off the rails when the government gave examples of how to use it – like saving for new flooring. Ugh.

Well, it’s been about a dozen years now. The limit again next year is six grand, taking the grand total of all possible contributions to $75,500 – plus growth. Along the way the TFSA was viciously attacked by the current prime minister who, in gutting the yearly space from the $10,000 Conservatives had in place, labelled it a tool of the rich. That was a fiction and piece of political theatre. Shame on him.

If the Libs want to attack something of benefit to the wealthy, the RRSP is a better target. The more people earn the more they can contribute, getting a whopping tax break for doing so. The annual limit of $26,500 is four times that of the TFSA and can save a high-income dude about $14,000 in tax. Moreover you can borrow for an RRSP and use the tax refund to pay the loan down (not possible with a TFSA). A big-income earner can contribute to a spousal RRSP, grab all the tax benefit while the other person takes the money out at lesser or no tax. Can’t do that with a TFSA, either. You can slide assets you already own into a RRSP and receive a tax break for doing so. No such benefit with a TFSA.

In short, Trudeau’s attack on the people’s tax shelter, as modest, humble, egalitarian and democratic as it may be, was just as dumb as F calling it a ‘savings’ account. The Cons corrupted it. The Libs diddled it.

Okay, so here we are. The latest stats show Canadians have placed more than $300 billion into 19 million accounts held by 14 million people. That’s almost half the entire adult population. A new BMO survey says the average amount held is just a hair over $30,000. All of that = success. Despite Mr.Socks’ attempts to shame it.

But wait. We have a problem.

The same bank survey found only 49% of people are aware “a TFSA can hold both cash and at least one other type of investment.” In fact, about 40% of the hundreds of billions in those millions of accounts sits in… cash. Savings. Making way less than 1%.

F may be gone, but this horrible legacy lives on.

For the record, a TFSA is not for saving money. It’s not a glorified bank account for your next Fluevogs, trip to Cub or bamboo flooring. That is a complete waste of a beautiful thing. So stop thinking like a Trudeau.

The TFSA is a money machine designed to be stuffed with growthy assets like equity-based ETFs. None of that growth is ever taxed. No withdrawals will be added to your taxable income. And unlike an RRSP you can actually put back (in the next calendar year) anything you withdrew. A major benefit is that a fat, old TFSA can, in retirement, throw off a great income stream which is unreported and therefore will cause zero claw-back of government pogey, like the OAS.

For example, someone who starts contributing six grand a year at age 28, earns an average of 7% in the TFSA and retires at 65 will have $1.127 million in there, of which about $900,000 is taxless growth. That would throw off $75,000 a year in annual retirement income. Add in CPP (average $710 a month) and OAS (currently $614) and you have a retirement income of $91,000, with zero tax. If you retired with an RRSP of $1.1 million, this would be impossible. Less income. More tax.

Now, imagine what would happen if 14 million people properly invested that $120 billion in TFSA cash for the next few decades.

We don’t lack the tools. Or the money. Or the income or the vehicles.

We just need a whack on the head. And better leaders.

About the picture: Terri J. is a Toronto dog rescue photographer who routinely shoots critters at the Etobicoke Humane Society. “Nefeli is a sweet and stunning German Shepherd mix. I fell in love with her – it’s a pity that  I’m not in the market for a new dog or I would have taken her home with me!”

152 comments ↓

#1 Frank on 12.15.20 at 2:56 pm

Preaching to the choir my friend …. can you elaborate on what you meant by

“You can slide assets you already own into a RRSP and receive a tax break for doing so. No such benefit with a TFSA”

A ‘contribution in kind’ means you do not need cash to make an RRSP contribution. Existing assets can be employed. You will receive the same favourable tax treatment as if you had used cash. Be aware accumulated gains on assets may become taxable when shifted into your RRSP. – Garth

#2 Roial1 on 12.15.20 at 2:58 pm

Damn! I already have 2 large rescued dogs.

Hey Garth, that looks like a great chance to fill that empty place in your life with a great looking dog.

Looks smart too.

We have learned from you that the right way to fill the TFSA is with investments.

Thanks.

#3 Comrade on 12.15.20 at 3:05 pm

Well, we just may know someone who is in the market for a new dog! hint hint, Garth

#4 Blobby on 12.15.20 at 3:08 pm

Okay, I can put in $6k to $10k a year.

Who do i get to manage that? Picking someone to manage your money is hard.

#5 Jimmy Zhao on 12.15.20 at 3:08 pm

Thank you Garth for having such long term thinking and Canadian’s future financial well being at heart.

yay TFSA !

#6 Dolce Vita on 12.15.20 at 3:10 pm

“Trudeau…just as dumb as F”

For a moment you had me cheering…but alas, F means Flaherty. My bad.

People read what they want to read and for a brief moment, so did I….My Liege.

#7 UmiouiuS on 12.15.20 at 3:12 pm

Garth,
I fully agree with #2 Roial1’s suggestion:

Does fate intervene, once again?
Does Nefeli move to Lunenburg?

#8 thebarold on 12.15.20 at 3:15 pm

If RRSPs are targeted, I hopw to see similar treatment applied to defined benefit [public service] pensions. If you valued these pensions for what they provide, I think the number of ‘millionaire’ retirees would balloon.

#9 Felix on 12.15.20 at 3:18 pm

“Squandered” – Pron. /skwander-d/

Synonyms: wasted, frittered away, put down the drain

Definition: All resources or attention directed towards canines

#10 BlogDog123 on 12.15.20 at 3:19 pm

You forgot to mention again the “Successor Holder” that you need to set up (TFSA forms from your provider) so your spouse can continue your plan and its growth potential when you die without needing to collapse the plan…

except for Quebeckers (another topic), everyone should use the successor holder form…

#11 Dolce Vita on 12.15.20 at 3:23 pm

With all the vaccine news over the past few days mesmerizing the Cdn MSM today I took the time to thank:

1. Maj.-Gen. Dany Fortin @CanadianForces for pulling off what so far looks like a seamless distribution of the vaccine in Canada [told you so about our Cdn. Military].

2. @AnitaOakville (Minister Anita Anand & her Department) for procuring the vaccine & the paraphernalia needed.

Odd from Mr. ‘Outta Here living in Italia.

As Flop… (the real one) might say:

“Well possums, I know from where my bread is buttered and that is Canada.”

——————————

I can only wish the EU were HALF as good. Embarked on a 1 person D-Day, take no prisoners assault on:

Ursula von der Leyen, Charles Michel, European Medicines Agency (approve vaccines).

Why?

Apparently they (EMA) will approve it in 8 days times (earlier than their “scheduled”, Let them eat cake in the meantime, Dec. 29).

Told Ursula and Charles to FIRE them all if they do not approve Belgian made Pfizer today. Told them they have BLOOD on their HANDS. In 8 days time this many Europeans will die from Covid:

+32,000

Italians saying mid-January vaccinations start.

+15,000 Italian Covid dead by then.

…Tweet, or whatever, thanks to @CanadianForces and @AnitaOakville Canada. Just peruse the alternative above if you have any hesitation.

#12 Timmy on 12.15.20 at 3:25 pm

I’m in my mid 50’s and while the TSFA helps, trust fund boy Trudeau, born a millionaire cut contributions in half. That has made a serious dent in the amount of tax I’ll pay when I retire, as I keep maxing out my RRSP. Thanks Trudeau.

On another note Rob Carrick says in the Globe that now may be the best time to buy a house–when they are at all time highs, with a sputtering economy. Who hires these people?

#13 50% of $ from CERB? on 12.15.20 at 3:35 pm

Does that mean a big portion of CERB was never used?

#14 Steven Rowlandson on 12.15.20 at 3:49 pm

“We just need a whack on the head.
And better leaders.”

The first is assault and the other is prohibited due to the sins of excessive legislation and political correctness.

#15 Svet on 12.15.20 at 3:50 pm

Thank you for helping set up the TFSA option for Canadians, Garth. BTW, I’m impressed you know about Fluevogs!

#16 Ponzius Pilatus on 12.15.20 at 3:51 pm

@Faron
Came upon a fantastic dystopian movie called Children of Men on Netflix.
Quite topical. Played out in London in 2027 during a pandemic where all women have become infertile because of pollution.
The protagonist is called Theo Faron.
Any chance that he is a relative of yours?
Joking of course.

#17 Dolce Vita on 12.15.20 at 4:03 pm

Sorry Garth some more Virus Porn below when today is YOUR DAY to stand in the Sun and say about TFSA:

“I did that.”

I realized it when it came out what a deal it was (and still is) despite ham handed Gov’s trying to wrap their limited minds around explaining it thinking Canadians need to spoken to like children.

Keep evangelizing Garth.

————–

The Virus Porn:

First (in both official languages):

N’est panicker pas.

Second, 25th Covid mutation since Wuhan “MAY”:

-spread more easily and is causing more infections (SE England, 1000 so far)
-N501, H69/V70 deletion ALTER spike protein (medical for its altering its spikey parts to better attach to your lung cells and thwart your immune system better…though no one knows for sure but it’s what the Zombie Danish Mink had).

“We know there’s a variant, we know nothing about what that means biologically.”

-Prof Alan McNally, U of Birmingham

A better down to Earth explanation from factual UK’s Doc Campbell…go to the 21 minute mark:

https://www.youtube.com/watch?v=c38i4_4o1DI

Quote above from the BBC article:

https://www.bbc.com/news/health-55312505

———————-

In case the Cdn MSM get an infarction or ictus this evening in Canada at the news.

Hopefully you won’t.

#18 Supernatural on 12.15.20 at 4:15 pm

About the picture: Terri J. is a Toronto dog rescue photographer who routinely shoots critters at the Etobicoke Humane Society.

//==\\^
//==\\^

Dont be giving Felix any ideas!!!

#19 Dolce Vita on 12.15.20 at 4:20 pm

One last thing.

I forgot to thank Dr. Tam at Health Canada and the Minister of Interior Desi…I mean Health Canada, the Hon. Patty Hajdu.

Actually, I didn’t forget.

Give them credit for a speedy approval and realizing that Cdn lives are at stake if you delay even for a day vaccinations.

It’s just I have a tough time warming up to Dr. Tam which to me has all the charm and wit of a garden slug munching away at my favorite plants.

Putting my personal peeves aside I will fire off a thank you to Health Canada as well, besides Anand and Maj.-Gen. Dany.

————————–

Oh and guess who could not resist a Vaccine Photo Op:

https://twitter.com/JustinTrudeau/status/1338939791166083082

…where’s the sandbag guy when you need him to tell Trudeau where to go?

As in F (Flaherty) Off.

#20 Window dressing on 12.15.20 at 4:21 pm

#12 Timmy on 12.15.20 at 3:25 pm

On another note Rob Carrick says in the Globe that now may be the best time to buy a house–when they are at all time highs, with a sputtering economy. Who hires these people?
___________________________

Show me an all time high that wasn’t preceded by a previous all time high.

#21 tbone on 12.15.20 at 4:24 pm

It has been said before that there should be a mandatory course in high school regarding investing for your future.
It is mind boggling how many people have no idea what a TFSA or RRSP is and the different types of investments that they can hold.

#22 Hilroy on 12.15.20 at 4:27 pm

For a balanced strategy (growth:security) – would it make sense to put your riskier investments in the TFSA and conservative in the RRSP, since the higher returns wouldn’t be taxable?

Also, is it possible to invest in the CPP by way of an ETF?

#23 Dolce Vita on 12.15.20 at 4:29 pm

…ya, I know I came close on my last Comment to crossing the line.

Surprised it went up so fast.

You rock My Liege and not just for having given me the TFSA. Truth.

And ya, I just fired off a thank you Tweet to Dr. Tam and the Hon. Hajdu for doing something that the EU and its EMA are incapable of doing with any “lives are at stake”, time is of essence, haste.

FWIW

#24 Miss Anthropic on 12.15.20 at 4:35 pm

I’m in love with my TFSA. I tried to resist at first, but after a year I couldn’t take it anymore… that free spirit, that young smirk, those firm gains and divs omg… I luv you forever my hunky TFSA!

#25 Faron on 12.15.20 at 4:35 pm

#4 Blobby on 12.15.20 at 3:08 pm

Okay, I can put in $6k to $10k a year.

Who do i get to manage that? Picking someone to manage your money is hard.

Any is better than none unless you do something really silly.

Basic: sign up for a roboadvisor and dump your money in. Wealthsimple for example. You will do better in the long run than savings. By far.

Slightly less basic but more thorough: hire Garth or someone like him. You will get investment info as well as other financial advice that will pay the fees back many times over esp if you have a large amount to invest.

Fire up a discount brokerage account and follow

https://canadiancouchpotato.com/

or just buy a bunch of XBAL. Qtrade lets you buy XBAL and XGRO commission free for quantities over $1000. Wealthsimple Trade offers commission free trading (but don’t make trading a habit).

Or, DIY, waste all of your time on analysis and trying to beat the market and miss all the good days and/or buy the wrong things and end up underperforming. I can speak from experience on that one.

#26 Faron on 12.15.20 at 4:40 pm

#16 Ponzius Pilatus on 12.15.20 at 3:51 pm

@Faron

Hah. Nope, but maybe I’ll watch it if the Netflix algos even surface it for me…

Faron’s a rare name, but I meet one now and then.

#27 Drill Baby Drill on 12.15.20 at 4:42 pm

Unfortunately if everyone did maximize their TFSA the Feds would find a way to grab that cash.

Nope. – Garth

#28 Smartalox on 12.15.20 at 4:46 pm

A populist Conservative? Garth, you were ahead of your time – it seems that everyone is a populist now, at a time when thus country could really benefit from making some unpopular (un-populist?) choices, in particular with regard to unchecked spending on the left, and unchecked dog-whistling on the right.

The TFSA has been a boon for us, or for me at least, since my spouse is also a US citizen, and despite the fact that the TFSA is modeled after the US Roth IRA, the US IRS doesn’t recognize it as such, and makes it prohibitive for a dual citizen to hold one.

Unlike that lucky-break for the rich, the RRSP, whose equivalence with the US 401k is well established by tax men and women on both sides of the border.

After 12 years and at least one major trade negotiation, you’d think that the powers that be would have figured that out, eh?

#29 Alberta Ed on 12.15.20 at 4:47 pm

Silver Spoon socialist Justin Trudeau couldn’t run a lemonade stand, much loss an economy. The sooner he is replaced by someone with integrity and a sense of ethics, the better.

#30 Piano_Man87 on 12.15.20 at 4:48 pm

Garth,

What was your ideal name for the TFSA? I bet you had some good ideas.

#31 Cheese on 12.15.20 at 4:55 pm

age 39
tfsa ~100k

Am i doing OK?

#32 Sara on 12.15.20 at 4:57 pm

“And unlike an RRSP you can actually put back (in the next calendar year) anything you withdrew. ”

Not quite an accurate statement. You can’t put back the gains(or the losses) but rather are limited to the total contribution you made.

That seems obvious. – Garth

#33 crowdedelevatorfartz on 12.15.20 at 4:59 pm

Well well well.

When the Presidential Immunity ends Joan 20th…..the Lawyers will be waiting…

https://www.dianomi.com/click.epl?url_id=637858973&ru_variant_id=102

#34 tbone on 12.15.20 at 4:59 pm

TFIA … Tax Free Investment Account would of been a better name for it

#35 Prince Polo on 12.15.20 at 5:00 pm

Got my 2021 TFSA contribution ready to deploy on Jan 4! For those stressed out about the holidays, grab a scotch, sit back on da couch, and light up a Drake candle! This one’s for you Garth: https://people.com/home/drake-releases-line-scented-candles/

#36 crowdedelevatorfartz on 12.15.20 at 5:00 pm

@#31 Cheese
“age 39
tfsa ~100k

Am i doing OK?

“””””

You’re about $100k ahead of most Canadians….

#37 Bob in Hamilton on 12.15.20 at 5:01 pm

“One of those was adopting my idea for a new retirement-investment vehicle based on the American Roth IRA. Unlike an RRSP, nobody would get a deduction for using it but assets placed inside would grow free of tax while withdrawals would also be tax-free. That way it could boost retirement income without pushing people into a higher bracket. Oh, and it would be universal. The most democratic of shelters – equal contribution for all, regardless of income, assets or station in life.””

One of the greatest investment vehicles ever bestowed on the Canadian public courtesy of a government….unfortunately, not used very well by the majority of citizens in this here land.

#38 Barb on 12.15.20 at 5:02 pm

Yes, Garth, Nefeli it MUST be!
She looks so smart, and would be respectful of Bandit’s legacy.
Please…

#39 Bob in Hamilton on 12.15.20 at 5:04 pm

#31 Cheese on 12.15.20 at 4:55 pm

“age 39
TFSA ~100k

Am I doing OK?”

Yes…stay the course

#40 Bill on 12.15.20 at 5:04 pm

#29 Alberta Ed on 12.15.20 at 4:47 pm
Silver Spoon socialist Justin Trudeau couldn’t run a lemonade stand, much loss an economy. The sooner he is replaced by someone with integrity and a sense of ethics, the better.
—————–
You stole my line! But I’m not sure anyone fitting that description exists.

Good one on TFSA…I’ve ignored mine should prolly do something. More important for junior…

#41 Brammer on 12.15.20 at 5:07 pm

Starting to think about retirement and only recently came to realize that a TFSA can hold something beyond “Savings”. Thanks for confirming.

#42 Bob in Hamilton on 12.15.20 at 5:10 pm

“That was consistent, because Jim Flaherty (I’m pretty sure) hated me. He was a Stephen Harper man. I was radical, populist, blogger MP with the heretical view that people should tell government what to do, not vice versa. It didn’t end well.”

True….but today you’re still kicking and dancing rhetorically on his historical legacy (if there was any to speak of).

#43 Sydneysider on 12.15.20 at 5:12 pm

This kind of article brings home the financial punishment that Canada exacts from people with modest incomes and no understanding of investing.

It is often said that money matters should be taught to students at high school, but I wonder if this would improve matters. Our PM himself is a former teacher, and I suspect that he genuinely believes that he has done people a favour in tightening the TFSA. The road to Hell…etc.

#44 J in Van on 12.15.20 at 5:16 pm

Thank you for the continued free content and advice over the years, I have greatly improved my financial situation because of you.

Merry Christmas

#45 Sara on 12.15.20 at 5:16 pm

Sara on 12.15.20 at 4:57 pm
“And unlike an RRSP you can actually put back (in the next calendar year) anything you withdrew. ”

Not quite an accurate statement. You can’t put back the gains(or the losses) but rather are limited to the total contribution you made.

That seems obvious. – Garth

=======================

To you it does and to me it does, but not to everyone.

https://financialpost.com/personal-finance/taxes/judge-says-blame-the-bank-not-the-cra-in-latest-tfsa-overcontribution-case

#46 LP on 12.15.20 at 5:18 pm

Nefeli looks wise and kind and patient. Find out if she likes flying, Garth. You need her.

#47 earthboundmisfit on 12.15.20 at 5:25 pm

OK, fess up man. Was it you as Min. of Rev. or Jimbo as Min. of Fin. who “effed over” folks with coin parked in
income trusts in 2006/07? In my case, to the tune of about 30K. I never could bring myself to go to Belfountain for ice cream.

Nah, that was his thing. I was already kicked to the curb. – Garth

#48 Mehling on 12.15.20 at 5:31 pm

Grateful Garth for your crusade in getting us this wonderful tool.

Lets hope the most senior government staffers (who may read your blog) get the message and convince him to increase the limit asap.

I shudder when I imagine what the annual limit would have been been if the past trajectory was intact. $15k, 20k, who knows.

One can dream.

I guess the young voting base prefers the govt handouts vs supporting themselves.

#49 Overheardyou on 12.15.20 at 5:33 pm

Sadly, our ‘leaders’ are only interested in the next 4 years. At least in the States there is a limit of two terms.

#50 DON on 12.15.20 at 5:34 pm

183 LP on 12.15.20 at 11:19 am
#144 the Jaguar on 12.14.20 at 10:12 pm

Better include Flop in the invite..you know, for keepin’ it real.

F73ON

**********
The Flopper is welcome for sure.

I could bring a laptop and zoom you in…

Only pre-requisite is a smile and PANTS

@Jag

Fishman is a safer bet than BC Ferries in the winter.

Will have to reserve a booth for Crowded and Ponzi…now that would be intetesting…lol

#51 Penny Henny on 12.15.20 at 5:39 pm

May I suggest that once a week you post a photo of a pound puppy waiting to go to their forever home. You just might stop someone from going to a breeder for a dog.

#52 Jake on 12.15.20 at 5:39 pm

#31 Cheese on 12.15.20 at 4:55 pm
age 39
tfsa ~100k

Am i doing OK?

I would say so. Thank you Garth for stressing the gift that the TFSA is many moons ago. In my 50’s now with a TFSA at ~130k and delivering $550 in monthly dividends + more to come when Chorus reinstates theirs.

#53 Hawk on 12.15.20 at 5:54 pm

So if I understand this correctly, the goal of the TFSA is to never withdraw your capital from it, but only the income that it earns at the age at which you choose to retire and such income can be withdrawn indefinitely tax free.

Then what happens when you die? Surely your inheritor cannot also keep receiving the tax free income forever from that TSFA?

Yes, a successor holder can (your spouse). – Garth

#54 Reximus on 12.15.20 at 5:56 pm

that dog is gorgeous

#55 Yukon Elvis on 12.15.20 at 6:00 pm

#27 Drill Baby Drill on 12.15.20 at 4:42 pm
Unfortunately if everyone did maximize their TFSA the Feds would find a way to grab that cash.

Nope. – Garth
…………………….

You keep saying that. I hope you are right. He slashed contribution room with the stroke of a pen. He could do more damage, again with the stroke of a pen. TFSA is the best thing we have.

#56 Joe on 12.15.20 at 6:07 pm

Hello, care to comment on day trading in your TFSA account. The Gov have taxed individuals on this but there does not seem to be specific rules concerning Day Trading in your TFSA. In other words when does the Gov tax you when you day trade in your TFSA and when do they not tax you when you day trade in your TFSA?….tks

Just don’t do it. – Garth

#57 Doug t on 12.15.20 at 6:08 pm

That is a gorgeous pooch – soon to be yours Garth?

#58 ALL FOR WHAT??? on 12.15.20 at 6:16 pm

DON’T SWEAT IT….

IF we ALL participated and benefited from a TAX-FREE instrument the government would do away with it.

KEEP our TFSA secret amongst us.

The LESS government and the less who participate the better.

Sad to say but it is what it is.

#59 Cici on 12.15.20 at 6:19 pm

Your last two posts have been especially wonderful and generous.

Thanks for reminding us to be charitable to those in need, to invest diligently and to take care of our animal friends ;-)

Early Merry Christmas to you and Dorothy. Take great care of each other.

xoxoxoxo
Cici

#60 John in Mtl on 12.15.20 at 6:20 pm

In Quebec there’s the “Fonds-FTQ”, a a development capital fund contributed to by workers for RRSP’s and non-reg investments. They just recently announced that contributors can now open a TFSA account with them, something that was not allowed previously.

However, they made the same mistakes as banks & other financial institutions did in describing what the TFSA can be used for – the emphasis is mostly as a “savings account for renovations projects, an emergency fund or a supplement income for retirement” and only lip service is paid to the long-term investment potential.

#61 Stone on 12.15.20 at 6:26 pm

Here’s my pitch to get elected as an MP:

Increase TFSA limit to $20,000 per year and make it retroactive to the year the TFSA was introduced.

Does anyone think I have a chance?

#62 Paddy on 12.15.20 at 6:34 pm

If I’ve contributed the max every year to my TFSA and say it’s grown to 100k, If i withdraw the 100k on Dec 31/2020, my contribution room for Jan 1/ 2021 should be 106k correct? If I was an idiot and lost it all on a stock that went to Zero, my room would be a paltry 6k….it goes both ways yes?

#63 Phylis on 12.15.20 at 6:41 pm

So will claiming the home office tax credit, impact your principle residence designation?

It’s $2 a day. Who cares? (And the answer is no.) – Garth

#64 Do we have all the facts on 12.15.20 at 6:42 pm

Is it possible that any type of investment will generate a return of 7.0% per year over the next 37 years.

Compound interest will increase an investment of $6,000 per year but it seems a touch optimistic to suggest that a return of 7.0% per year can be achieved in a world where inflation is being held to less than 2.0%.

The reason you suggest a balanced and diversified portfolio is that the value of various investment vehicles, including equities fluctuate over time. If equities could generate a return of 7.0% per year every year why in the world would you need to diversify.

We seem long overdue for a correction in the value of equities issued by companies that are sailing into a serious headwind without any way of predicting where they might land.

#65 MF on 12.15.20 at 6:45 pm

6 Ponzius Pilatus on 12.15.20 at 3:51 pm

One of the greatest movies ever. Clive Owen at his best too.

The scene at the end when the only pregnant woman on earth goes into labour in the middle of a warzone is incredibly powerful and haunting.

MF

#66 Long-Time Lurker on 12.15.20 at 6:46 pm

Zoolander 3. Script update.

Location: Canadian press conference.

Reporter: “Prime Minister Zoolander, will vaccine companies be held liable for any damages caused by their vaccines?”

Prime Minister Zoolander: “The contract’s signed. There were questions for liability and Canada has undertaken the necessary measures to ensure that everyone is protected.”

Reporter: “Does that mean the vaccine companies will be held liable for any damages caused by their vaccine?”

Zoolander: “I stress that the government would not approve a vaccine unless it’s safe. Health Canada has one of the most rigorous approval processes in the world.”

Reporter: “Are you evading my question?”

Zoolander: “This car has never been in an accident and has never needed a repair. It has less than 100 kilometres on it. It was owned by a 60-year-old grannie who used it to drive across the street to get a litre of milk. Trust me.”

Reporter, smiling: “Actually, I do trust used car salesmen more than politicians.”

#67 Long-Time Lurker on 12.15.20 at 6:48 pm

The UK’s quest for affordable fusion by 2040

By Peter Ray Allison
15th December 2020

For decades, fusion has been the alchemy of our technological age. So, how feasible is the UK’s plan to build a commercially viable fusion power plant by 2040?….

https://www.bbc.com/future/article/20201214-the-uks-quest-for-affordable-fusion-by-2040

#68 Long-Time Lurker on 12.15.20 at 6:49 pm

>Hey, Dolce Vita, I found this through a link and read it with Google Translate:

CINA COVID 19 – La chimera che ha cambiato il mondo
Di Sabino Paciolla|Luglio 28th, 2020

“Il prof. Joseph Tritto è un microchirurgo, esperto di biotecnologie e nanonotecnologie nonché presidente della Wabt (World Academy of Biomedical Sciences and Technologies), importante accademia nata sotto l’egida dell’Unesco nel 1987. Forte di questo bagaglio, ha dato alla luce un libro-rivelazione, in uscita in Italia il 4 agosto, Cina Covid 19 – La chimera che ha cambiato il mondo (Cantagalli, pp. 288, euro 20), destinato a suscitare un dibattito globale, in quanto dimostra, con prove scientifiche, che il coronavirus responsabile del Covid-19 è stato il frutto di una ingegnerizzazione di laboratorio. Nella fattispecie, il laboratorio di alta sicurezza di Wuhan”….

https://www.sabinopaciolla.com/cina-covid-19-la-chimera-che-ha-cambiato-il-mondo/

#69 Axehead on 12.15.20 at 6:50 pm

What I don’t understand is, why do Canadians think they can survive comfortably in their old age on CPP and OAS alone?

#70 S.Bby on 12.15.20 at 6:53 pm

Thanks for the TFSA efforts Garth..

#71 kommykim on 12.15.20 at 6:59 pm

RE: “Then he called it the TFSA. Tax-free savings account.”

========================================

You have to cut F a bit of slack. No way he could have known at the time the depths and length to which interest rates would plunge.
Besides, like most government programs, you have to sell it to the average Joe who relates better to GICs, and renos than ETFs and markets.

#72 kommykim on 12.15.20 at 7:04 pm

RE:#6 Dolce Vita on 12.15.20 at 3:10 pm
“Trudeau…just as dumb as F”
For a moment you had me cheering…but alas, F means Flaherty. My bad.
People read what they want to read and for a brief moment, so did I….My Liege.

=======================================

Ever heard of a “double entendre”?

#73 Sara on 12.15.20 at 7:09 pm

#59 Paddy

Garth, so much for TFSA withdrawal rules being obvious.

Paddy, forget about your gains or losses. They have no effect on what you can withdraw or recontribute.

Everyone has X amount in total contributions allowed (increases every year). If you withdraw an amount Y less than X, you can put Y back in. If you withdraw an amount greater than X, you can put (at most) X back in.

#74 the Jaguar on 12.15.20 at 7:16 pm

#50 DON on 12.15.20 at 5:34 pm
@Jag

Fishman is a safer bet than BC Ferries in the winter.

Needs to be a summer gig, Don. The Shady Rest Waterfront Pub & Restaurant is unpretentious, right on the water with a nice patio. I like their coleslaw. Not sure that Fishman could ever be referred to as a “safe bet”. I have visions of Johnny Depp in Pirates of the Caribbean.

Nefeli is stunning. Will Dorothy rename her when she wakes up Christmas morning and finds her under the tree? Have a feeling today’s photo won’t be her last appearance.

#75 Mr Canada on 12.15.20 at 7:19 pm

The government of Canada quietly announced your Annual Maximum CPP Employee Contribution premium is going up almost 6% in 2021 — from $2,898 to $3,166.

For those self employed like me, you pay twice – $5,796 this year to $6,332.90 in 2021.

Whatever is left over, put it in a TFSA !

#76 Sara on 12.15.20 at 7:28 pm

A woman in the same predicament as the “cake lady” discussed here the other day, is the subject of another CBC article. You would think that “an author of books on personal finance and a former Toronto Star financial columnist and CBC host” would understand the difference between income and revenue, but apparently not. Either that or she is a bit of a scammer with a lot of nerve to go public about it.

https://www.cbc.ca/news/politics/canadians-told-to-pay-back-cerb-cra-1.5834950

#77 crowdedelevatorfartz on 12.15.20 at 7:32 pm

@#65 MF
“The scene at the end when the only pregnant woman on earth goes into labour in the middle of a warzone is incredibly powerful and haunting.”

+++++
Not bad but Michael Caine’s final scene in the movie was gold.

https://www.youtube.com/watch?v=ioTMlrCoU2E

#78 Faron on 12.15.20 at 7:32 pm

For those who think that Amazon induced mega wealth is on paper only:

https://www.bloomberg.com/news/articles/2020-12-15/mackenzie-scott-gives-away-4-2-billion-within-four-months

Someone with enough conscience to realize that at a certain point enough is enough. But, if it were me and speaking naively, the marginal tax rate on any income over a couple million would be 100% and that threshold would grow with inflation.

#79 Sara on 12.15.20 at 7:33 pm

#70 S.Bby on 12.15.20 at 6:53 pm
Thanks for the TFSA efforts Garth.

========================

I’ll second that!

I just wish I was younger, or it had been implemented earlier. Young people especially are truly fortunate to have this financial tool.

#80 Big Al on 12.15.20 at 7:34 pm

Hey Garth,
If I had 2 TFSA accounts could I have a different successor-holder for each.

Of course. Both wives. – Garth

#81 crowdedelevatorfartz on 12.15.20 at 7:39 pm

@#71 kommykim
“You have to cut F a bit of slack. No way he could have known at the time the depths and length to which interest rates would plunge.”

++++

Nah.
F had no idea the depths the Liberals would increase our debt in one fricken year….

$400 BILLION dollars tacked on to all the other govt debt …..

That gets us sooooo deep in the hole….we may never get out…..

#82 Useless on 12.15.20 at 7:41 pm

Is it possible that any type of investment will generate a return of 7.0% per year over the next 37 years.

Compound interest will increase an investment of $6,000 per year but it seems a touch optimistic to suggest that a return of 7.0% per year can be achieved in a world where inflation is being held to less than 2.0%.

The reason you suggest a balanced and diversified portfolio is that the value of various investment vehicles, including equities fluctuate over time. If equities could generate a return of 7.0% per year every year why in the world would you need to diversify.

We seem long overdue for a correction in the value of equities issued by companies that are sailing into a serious headwind without any way of predicting where they might land.

——–

If you havent noticed low rates and inflation have been good for the market. Also the average return has been higher than 7 percent over the past 30 years

#83 Uncle Charlie on 12.15.20 at 7:42 pm

“The TFSA is a money machine designed to be stuffed with growthy assets like equity-based ETFs. ”

So, do you recommend 100% equities in a TFSA? I currently have 75%, but with tons of room available (if I can ever afford to fill it that is).

#84 Drinking on 12.15.20 at 7:43 pm

TFSA good deal; Flat, I still cannot forgive that @*%@$ for what he did to income trusts! Not so much as to why he did what he did but that bas**%$ lied every step of the way just to get elected! I absolutely cannot stand people like him; hmm; kinda reminds me of the current team in power…

Usually enjoy your posts Dolce Vita but please lay off the praise of the one’s you posted; you do not live here. It could have been much better situation if the one’s that you have praised actually listened to Canadian’s when this all unfolded last year; you know like cancel flights from hot spots!! IT DID NOT HAVE TO BE THIS WAY! I hold no praise for Tam or T2; they ignored what the populace had to say and now try to take credit where credit is not due!! It is all a S*it show, but we are moving forward! Italy is in a terrible situation, cases per million are terrible. Be aware and stay safe everyone!!

#85 crowdedelevatorfartz on 12.15.20 at 7:47 pm

Hmmm
Tom Hanks may have a winner this Christmas.

https://www.youtube.com/watch?v=zTZDb_iKooI

#86 Jo on 12.15.20 at 7:48 pm

Nefeli is very striking for sure. Just looked her up, no surprise appears she has found a home.

#87 mike from mtl on 12.15.20 at 7:58 pm

#22 Hilroy on 12.15.20 at 4:27 pm
For a balanced strategy (growth:security) – would it make sense to put your riskier investments in the TFSA and conservative in the RRSP…
//////////////////////////////////////////////////////////

From a “risk” profile, you’d model both identically. Though it’s not that simple, the RRSP is not free once withdrawals time comes, figure at least 30% is gone in taxes. If anything put as much risk in RRSP as you can take given decades long timeline. Getting taxed again on your own devalued dollars if not grown against inflation is silly – yes there’s that yearly income tax refund but to be simple.

Personally I just have VOO and some % BND in RSP account.

#88 David Greene on 12.15.20 at 8:19 pm

Garth:

Good article and an interesting history about the TFSA. I believe it was also …er..”F” who came up with the RDSP idea. Maybe you could comment on that a little bit, or even tell us the story, if you were there while it developed? I read it was because F had a disabled daughter?

The TFSA is a money machine designed to be stuffed with growthy assets like equity-based ETFs. None of that growth is ever taxed. No withdrawals will be added to your taxable income. And unlike an RRSP you can actually put back (in the next calendar year) anything you withdrew. A major benefit is that a fat, old TFSA can, in retirement, throw off a great income stream which is unreported and therefore will cause zero claw-back of government pogey, like the OAS.

#89 All the trimmings! on 12.15.20 at 8:19 pm

#80 Big Al on 12.15.20 at 7:34 p

Hey Garth,
If I had 2 TFSA accounts could I have a different successor-holder for each.

Of course. Both wives. – Garth

__________——>>>>>>>>^

In that case, I would recommend that they not know about one another… Or they are likely to take your other accounts as well!

BTW, I have three TFSA accounts… Lucky me!

#90 will on 12.15.20 at 8:25 pm

surely flaherty was conflicted. he was another one of those people along with harper who no doubt was personally conservative but didn’t care or even want you or i to be conservative. all those people who make up the so-called conservative party are actually quite happy to have you spend spend spend while thinking you are being conservative. conscious ambiguity of a sort. well, let’s maybe call it reverse conscious ambiguity. anyway let’s just keep pushing the word out: it’s not TFSA, it’s TFIA.

#91 Shame on me on 12.15.20 at 8:26 pm

79 Sara on 12.15.20 at 7:33 pm
#70 S.Bby on 12.15.20 at 6:53 pm
Thanks for the TFSA efforts Garth.

========================

I’ll second that!

I just wish I was younger, or it had been implemented earlier. Young people especially are truly fortunate to have this financial tool.

Yes, they are fortunate… But that is no way to talk about Garth.
I hear he reads this blog.

Oh.. You were speaking of TFSAs!

#92 Phylis on 12.15.20 at 8:31 pm

Besides the two wives (more like naughty boys hiding assets), is there a material advantage to have more than one tfsa? 5 million extra accounts seems like allot.

None. It’s a materially bad idea. – Garth

#93 Faron on 12.15.20 at 8:35 pm

US is nearing the grim milestone where one in 1000 people will have died of COVID. In just 3/4 of a year.

Excess death statistics will show that this is a 14% increase in the rate of dying in 2021 if not greater. Time for the black mask…

#94 Sara on 12.15.20 at 8:44 pm

#87 mike from mtl on 12.15.20 at 7:58 pm
#22 Hilroy on 12.15.20 at 4:27 pm
For a balanced strategy (growth:security) – would it make sense to put your riskier investments in the TFSA and conservative in the RRSP…
/////////////////////////////////////

From a “risk” profile, you’d model both identically. Though it’s not that simple, the RRSP is not free once withdrawals time comes, figure at least 30% is gone in taxes. If anything put as much risk in RRSP as you can take given decades long timeline.
======================

I think the reason Garth suggests putting growthy assets in your TFSA and more conservative assets in your RSP (example bonds) is because over time your more risky portfolio (TFSA) will have outgrown your more conservative portfolio (RRSP), such that you will end up paying less tax overall (TFSA’s are tax free) than if you had balanced within each rather than across both.

#95 Wile E. Coyote on 12.15.20 at 8:56 pm

73 Sarah

You can replace any withdrawals the following year. The withdrawals are added to your contribution room. For example if I withdraw 50k in 2020, January 1, 2021 I can deposit 56k. 6k for the new contribution room of 2021 and 50k replacing my previous withdrawal.

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4466/tax-free-savings-account-tfsa-guide-individuals.html#replacing_withdrawals

The original article you posted had a tax payer trying to replace their tax losses within the TFSA, over and above their contribution room. That is not allowed.

#96 Frank N Beans on 12.15.20 at 8:58 pm

Preach Garth! Preach!
I posted the BMO release on my FB wall today, curious to see what kind of dialogue would arise from the 49% stat.

Crickets, save for the usual suspects I know are active investors. I have 900 FB ‘friends’, if just sub 450 of them, hell, even 300 of them don’t know what a beautiful think the TFSA vehicle is, then I hope someone throws them a life line!

Well, then I fed my nightly ritual of coming to your blog and voila you spelled it out for the misinformed, with the Flaherty context and all! The first loss most certainly was in semantics of the damn thing, and I was glad you pointed it out.

So I shared your post on the wall. Maybe more crud will land themselves in your steerage, after a revelatory read or two.

#97 LeeMan on 12.15.20 at 9:11 pm

Beautiful Dog. I’d consider adopting that Mutt but I’ve got 3 already.
Wouldn’t it be great if Health Canada could approve all medical devices and drugs in such record time.? Shows you what happens when bureaucrats get off their butts and actually work hard for a change.

#98 Dr V on 12.15.20 at 9:17 pm

73 Sara – the way Paddy has explained it is the way I understand it.

https://www.td.com/ca/en/personal-banking/personal-investing/learn/tfsa-contribution-room-withdrawal-rules/

“There is no limit on how much you can withdraw from a TFSA.

If you withdraw from your TFSA, you do not permanently lose your contribution room. You can recontribute amounts you have withdrawn in the following year or years and your contribution room carries forward indefinitely.”

#99 Jbl on 12.15.20 at 9:23 pm

Shouldn’t a higher earner ($200k/year) be stuffing a TFSA throughout the year, then splitting the contributions and growth at end of year between the spousal RRSP and personal RRSP? Wife has little income as is main care giver for kiddos. Am I on the right track here? Total investments of $155k and am 39. $7000 is in current TFSA which will soon be transferred.

#100 the jaguar on 12.15.20 at 9:25 pm

@ 86 Jo…..

Oh yes. She has found a home. Get some photographer to take the photo and has the dog in safe custody/transport somewhere and then will hand a card with the photo to D. just moments before the doorbell rings on Christmas Eve. Shush now! We all have to keep the secret. I am beside myself with excitment…

#101 Shame on YOU! on 12.15.20 at 9:37 pm

#76 Sara on 12.15.20 at 7:28 pm

A woman in the same predicament as the “cake lady” discussed here the other day, is the subject of another CBC article. You would think that “an author of books on personal finance and a former Toronto Star financial columnist and CBC host” would understand the difference between income and revenue, but apparently not. Either that or she is a bit of a scammer with a lot of nerve to go public about it.
_________________________________________________

Wow… Feel the compassion, the vitriol.

It really says more about you than it does about these people. By all accounts, she did nothing wrong. Why don’t you put the blame where it really falls? Squarely on the shoulders of a pathetic government that couldn’t even get this simple thing right. Quite possibly that you voted in! They failed to make it abundantly clear. And why this wasn’t just determined by a computer program rather than based on assumptions? Tell me no one could see this coming?

Do you really think these are isolated cases? Do you really think that most Canadians have a true understanding of taxation, let alone their own finances.

At least you didn’t call her a thief, like the “cake lady” was called on this blog recently. I wonder whether she would feel worse about having to repay the money… Or knowing that the majority of people on this blog thinks she’s a scammer and a cheat!

Shame, shame on YOU!

P. S. The word “revenue” doesn’t appear on her tax form.

#102 Bobc on 12.15.20 at 9:44 pm

You asked me to leave the blog. I tried but it’s so hard. I love Canada and it’s sad to see what’s going on and the direction it’s taking.

#103 Grunt on 12.15.20 at 9:56 pm

Most young folks would do better funneling their internet shopping habit into a TFSA or RSP instead of junk.

#104 Robin on 12.15.20 at 10:00 pm

“And unlike an RRSP you can actually put back (in the next calendar year) anything you withdrew. ”

Not quite an accurate statement. You can’t put back the gains(or the losses) but rather are limited to the total contribution you made.

That seems obvious. – Garth

Are you certain about this? It appears Money Sense disagrees with you.

https://www.moneysense.ca/save/investing/tfsa-contribution-limit-rule/

“The key thing to remember is that any amount you withdraw—regardless of whether it was your original contribution, a gain from appreciation while held in the TFSA, dividends or interest—qualifies to be put back in at a later time.”

#105 DON on 12.15.20 at 10:01 pm

#74 the Jaguar on 12.15.20 at 7:16 pm
#50 DON on 12.15.20 at 5:34 pm
@Jag

Fishman is a safer bet than BC Ferries in the winter.

Needs to be a summer gig, Don. The Shady Rest Waterfront Pub & Restaurant is unpretentious, right on the water with a nice patio. I like their coleslaw. Not sure that Fishman could ever be referred to as a “safe bet”. I have visions of Johnny Depp in Pirates of the Caribbean.

***************

I know the place well…hometown boy. Great Halibut and chips. Its been a solid restaurant since the 80s at least.

I always pictured fishman as Liam Neeson.
but your take is funny.

Garth..My first dog was a german shepard part wolf.
No one will get close to you or Dorothy with that dog at your side. Cool eyes…

#106 Sara on 12.15.20 at 10:14 pm

#95 Wile E. Coyote on 12.15.20 at 8:56 pm
73 Sarah

You can replace any withdrawals the following year. The withdrawals are added to your contribution room. For example if I withdraw 50k in 2020, January 1, 2021 I can deposit 56k. 6k for the new contribution room of 2021 and 50k replacing my previous withdrawal.

https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4466/tax-free-savings-account-tfsa-guide-individuals.html#replacing_withdrawals

The original article you posted had a tax payer trying to replace their tax losses within the TFSA, over and above their contribution room. That is not allowed.
===============================

Yes, that is my understanding as well.

I linked to that article because I thought it was an interesting example of both an individual and a bank representative misunderstanding TFSA withdrawal and contribution rules that are supposedly obvious.

#107 Barb on 12.15.20 at 10:22 pm

We are regularly grateful for what Garth has done and continues to do.

My only regret is not finding him before we got old.

When it’s about personal finance, “better late than never” just barely works…

#108 MDQ on 12.15.20 at 10:23 pm

Not to mention that the government had the same tos at their disposal to help during the pandemic.

We already have EI, TFSA, RRSP. What was the reason for all the helicopter money? Either a political reason or ineptitude or both.

#109 Km on 12.15.20 at 10:31 pm

@henny
I have never understood people berating buying from a breeder. I have had rescue pets and had dogs from a breeder and loved them all. If I want a certain breed why should that matter to anyone? Instead take issue with people who don’t care for them properly and puppy mills etc. that lead to animals needing to be re homed. Anyone I know who has spent $$$ on their pets takes excellent care of them. Absolutely nothing wrong with either method of having a pet. You can say the same of having kids, why make your own when so many need families. Silly.

#110 Sara on 12.15.20 at 10:35 pm

#98 Dr V on 12.15.20 at 9:17 pm
73 Sara – the way Paddy has explained it is the way I understand it.

https://www.td.com/ca/en/personal-banking/personal-investing/learn/tfsa-contribution-room-withdrawal-rules/

“There is no limit on how much you can withdraw from a TFSA.

If you withdraw from your TFSA, you do not permanently lose your contribution room. You can recontribute amounts you have withdrawn in the following year or years and your contribution room carries forward indefinitely.”

=================================

Excellent! Thanks for that. Obviously the TFSA contribution rules were not obvious to me. LOL.

@All Ignore what I wrote in comment #73.

#111 Sara on 12.15.20 at 10:42 pm

#101 Shame on YOU

You don’t think it’s strange that “an author of books on personal finance and a former Toronto Star financial columnist and CBC host” would misunderstand the CRA definition of income that has been in place for decades?

#112 Faron on 12.15.20 at 10:44 pm

#94 Sara on 12.15.20 at 8:44 pm

#87 mike from mtl on 12.15.20 at 7:58 pm
#22 Hilroy on 12.15.20 at 4:27 pm

I might be wrong here and a less important effect: Growthy things in a full TFSA will bump up the contribution limit. If the market drops, You will have room to stuff more money in before the assets swell back up.

#113 Drinking on 12.15.20 at 11:00 pm

#101 Shame on YOU!

Seriously, what a rant, she ran a business and if a person in business does not know between gross and net then what the hell can I say??

I read another 420 k people received a letter. My question is; did 420k bright people in this educated country “really” not understand the rules posted”???? I doubt that, but go ahead and rant; lol!!

Meanwhile, I wish I could find the link but many have paid back what they were paid with no complaint’s!!! Imagine that!!!

#114 Drinking on 12.15.20 at 11:07 pm

#101 Shame on YOU!
#76 Sara

My apologies to #101 my last post was directed to #76 Sara in which I have no more comments to this naïve individual! :(

#115 Ponzius Pilatus on 12.15.20 at 11:11 pm

#51 Penny Henny on 12.15.20 at 5:39 pm
May I suggest that once a week you post a photo of a pound puppy waiting to go to their forever home. You just might stop someone from going to a breeder for a dog.
———–
This being the x-mas season, I agree with you.
Show some love for the pound animals.

#116 Chanel Sufi on 12.15.20 at 11:14 pm

http://www.bnnbloomberg.ca/canada-to-receive-moderna-vaccine-doses-before-year-s-end-1.1536790

So, this is how you get Trudeaus attention? We’ve had to badger and embarrass him ruthlessly to take even baby steps in the right direction. Still, there’s no timeline for Canadians to receive the vaccine. Sadly , Justin’s Journo’s are protecting him from the absolute shellacking of shame he rightly deserves. More will die and the media will obfuscate, such is the state of Canada.

#117 Paeuget on 12.15.20 at 11:18 pm

Only one problem Garth…. you forgot to factor in the purchasing power of the Cnd dollar 40 years later for that 28 (now 68 yr old)…

Consider that the dollar HALVES in value every 20 years (and I’m being generous since it could be more levels me 1/10th what it is now after Trudeope’s Covid spending spree)

Yeah…Sure he’s collecting $75000/yr from his TFSA

But a loaf of bread cost $15
A gallon of milk $21
A liter of Gas $4 (more after Carbon pricing)
A new average car $80,000
A new house $4,000,000

Oh wait….he’ll own nothing and be happy after the great reset so it’s all moot

#118 Flop... on 12.15.20 at 11:22 pm

#50 DON on 12.15.20 at 5:34 pm
183 LP on 12.15.20 at 11:19 am
#144 the Jaguar on 12.14.20 at 10:12 pm

Better include Flop in the invite..you know, for keepin’ it real.

F73ON

**********
The Flopper is welcome for sure.

I could bring a laptop and zoom you in…

Only pre-requisite is a smile and PANTS.

/////////////////////////

Hey Donnie, might have to Zoom in myself.

Unless Fishman has wheelchair straps on his boat, then it’s possible I can make the trip.

I had ankle surgery again this afternoon, and will be out of commission for a while.

Lots of staff at the hospital, but very little patients around.

When they asked me if I was allergic to anything, I replied yes, I am allergic to the federal government racking up a 381.6 Billion dollar deficit…

M46BC

#119 C8.R on 12.15.20 at 11:27 pm

#73 Sara on 12.15.20 at 7:09 pm
“Everyone has X amount in total contributions allowed (increases every year). If you withdraw an amount Y less than X, you can put Y back in. If you withdraw an amount greater than X, you can put (at most) X back in”

Sara, not so, you can alway put the withdrawn amount Y back in the next calendar year. The contribution room X everyone has is not the limit since growth in the TFSA effectively “creates new room” and when withdrawn it can always be put back in the next year.

This TFSA is a thing is beauty… thank you Mr. Turner.

#120 Ponzius Pilatus on 12.15.20 at 11:33 pm

#29 Alberta Ed on 12.15.20 at 4:47 pm
Silver Spoon socialist Justin Trudeau couldn’t run a lemonade stand, much loss an economy. The sooner he is replaced by someone with integrity and a sense of ethics, the better.
—————
O’Toole is your someone.
Sorry,celebrating a birthday ,
So I had a few too many.

#121 Ms. Fool on 12.15.20 at 11:51 pm

Yesterday was a hopeful message Garth. There are no simple solutions to this pandemic, it has been very hard for many people around the world. I’ve seen the effects of lockdowns and the consequences of not shutting down an entire economy, both have brougth pain but the later has made people more responsible for their decisions and actions. One blog dog quoted Margaret Thatcher the other day; she couldn’t have said it better. Governments can’t solve the problems people get themselves (e.g. no saving for a rainy day). The future loooks gloomy but we humans are resilient and I trust we will come out of this experience with more empathy and understanding. And with more money to save into the TFSA!

@#31 Cheese
Well done! I’m also a low-income earner and haven’t been able to max out my TFSA yet. Happy to hear from your success despite your employment situation.

#122 Nonplused on 12.16.20 at 12:07 am

I don’t think it matters what the TFSA is called, those who would use it correctly are using it correctly. Maybe they need a little help from their financial advisor or this illustrious and canine friendly blog but when the student is ready the teacher appears.

#123 Nonplused on 12.16.20 at 12:20 am

#170 Gravy Train on 12.15.20 at 7:56 am
#86 Nonplused on 12.14.20 at 6:55 pm
“Policy discussions around energy would be a lot more productive if they involved people from the engineering or physics departments.” Do you deny the photoelectric effect in solar panels is a phenomenon of condensed matter physics?
https://en.m.wikipedia.org/wiki/Photoelectric_effect

“There is no such thing as a free lunch.” Uranium is non-renewable, but the sun is by definition a public good and is literally ‘a free lunch’. Who says there’s no such thing?
https://en.m.wikipedia.org/wiki/Public_good_(economics)

———————————

Sunshine is free, I’ll give you that. But solar panels, batteries, and backup generators are not. The solar panels last about 20 years and then need to be replaced, the batteries about 10 (if lithium), and the generators it depends on use and maintenance. There are power plants that are still hooked to the grid that are 50 years old, but I don’t know that they contain any original parts.

The big problem with “renewables” is that they are not “renewable”, they are “replaceable”. Well that and the fact that as George pointed out they cannot operate more than about 20% of the grid and need fossil fuels on standby for cloudy days.

I am hopeful for Gen IV nuclear and possibly fusion one day though.

#124 mike from mtl on 12.16.20 at 12:23 am

#94 Sara on 12.15.20 at 8:44 pm

I think the reason Garth suggests putting growthy assets in your TFSA and more conservative assets in your RSP (example bonds) is because over time your more risky portfolio (TFSA) will have outgrown your more conservative portfolio (RRSP), such that you will end up paying less tax overall (TFSA’s are tax free) than if you had balanced within each rather than across both.
///////////////////////////////////////////////////////

Can’t speak to Garth and Turner Investments, but…

E.g. 100k balance in TFSA and 100k in RSP are not the same thing. Cashing out 100k in TFSA is (at time of writing) equals 100k. RSP is anywhere from 70k to 49k depending on the current income tax bracket.

>TFSA is cool, but too small for serious amounts – I guess is the point, can’t have too much of a good thing. Don’t be too smart or the CRA will nail you. Basically a nice to have if you can invest 25k+ per year.
>RSP is basically deferred income taxes, can be great if properly grown. Lots of exceptions, taxes and withdrawal rules but when used properly is a good container for non-billionaires.

#125 Steve French on 12.16.20 at 12:28 am

Who else where misses ole Smoking Man?

It’s too bad he’s gone because he would have had a whole lot to say about the current state of the world. Not all of it worth reading.

And he would have been forced to face the decline and fall of his beloved Trumpolini- which alone would have been worth the price of admission to this blog !!!!

#126 Longterm on 12.16.20 at 12:34 am

#53 Hawk on 12.15.20 at 5:54 pm

Indeed it is true. I manage my mum’s portfolio. After my dad passed away a few years ago his TFSA rolled into her TFSA as I had her set-up as successor holder. Now her combined TFSA is $212,000, investing in an array of ETFs across asset classes.

Every year in the first week of Jan I make her annual TFSA contribution from her non-registered account or she drops it in from her bank account. Slowly, slowly year by year we are moving all of her money into the TFSA tax shelter.

What isn’t there is stashed in her RIF [into which my dad’s also rolled when he passed] and she takes out the minimum required every year. The remaining assets are in a non-reg account and held in ETFs containing Cdn qualifying shares and prefs which allow her to claim the dividend tax credit.

#127 Cyrus Golps on 12.16.20 at 1:09 am

Could you elaborate on day trading and why you advised against it Garth?

Not permitted inside a TFSA. – Garth

#128 Carline Polk on 12.16.20 at 7:29 am

Trudeau says climate plan will accomplish nothing. Alberta sees thousands more lay offs. Matinee those kids lives now that Mom and Dad are losing their homes and crying all through Christmas.

https://calgaryherald.com/

#129 Love_The_Cottage on 12.16.20 at 8:15 am

#53 Hawk on 12.15.20 at 5:54 pm
Surely your inheritor cannot also keep receiving the tax free income forever from that TSFA?

Yes, a successor holder can (your spouse). – Garth

and don’t call me Shirley

#130 BillyBob on 12.16.20 at 8:17 am

Sig other’s family dog is half-shepherd, half-wolf. So intelligent it’s a bit scary, particularly when he looks you over with those eyes like you’re his next small meal. 120lb of pure muscle. Beautiful animal, very friendly, would never hurt a fly unless provoked but NO ONE messes with you when you’re out walking him.

Since the family owns many guns, (brother is the DM in his paratrooper squad), his name is, naturally, Bren.

#131 TurnerNation on 12.16.20 at 8:27 am

Yes absent mavericks like Smoking man this steerage section is getting stale. Again not much to post about just sit back and let the new global progression unfold.

– Say are we still banging pots and pans at 7pm daily?
– Outside the city I used to see tons of heart signs and thanks to frontline workers signs. No longer.
Did people have a change of heart (or mind)?

– Never lose sight that this global war unleashed upon us – WW3 – is over LAND. Hence emptying our downtown restaurants, gyms and nightclubs. Even Toronto’s stadium Skydome is slated for re-development, once its team, the Jays, were banished to Florida – yep due to “CV”. See how the game is played lads?

I’ve been busy; I’ve volunteered to dig graves (by hand natch) this weekend. I may also try my hand at autobody painting, sans breathing gear – as I have some doubts on that process.
Later I may line up outside in the cold weather, 6-6-6 feet apart with other totally healthy people (who are barred from getting haircuts or going to the gym, in my prefecture), that I may transact commerce. Or not

I see Faron and Dolce Vita consumed with their doom cult messages. Meanwhile health officials state
https://twitter.com/TOPublicHealth/status/1275888390060285967
Toronto Public Health
@TOPublicHealth
Jun 24 -Individuals who have died with COVID-19, but not as a result of COVID-19 are included in the case counts for COVID-19 deaths in Toronto.

….
Faron and Dolce are needed. In every revolution. They have a place holding these Struggle Sessions.

I understand BOTH of them teach/taught in academics. To think…
Towering over us, pension penchants of gold. Don’t calk that boat; think or swim into a pool of proles.

https://en.wikipedia.org/wiki/Struggle_session
Struggle sessions were a form of public humiliation and torture used by the Chinese Communist Party (CCP) at various times in the Mao era, particularly during the years immediately before and after the establishment of the People’s Republic of China (PRC) and during the Cultural Revolution. The aim of struggle sessions was to shape public opinion, as well as to humiliate, persecute, or execute political rivals and those deemed class enemies.[1]

#132 the Jaguar on 12.16.20 at 8:44 am

Excerpt from business article in today’s National Post.
Keep hope alive.

“Oilsands win Wall Street favour after years in shadow of U.S. shale”

After years in the shadow of the U.S. shale boom, the Canadian oilsands are emerging from 2020’s historic market crash with a slew of upbeat outlooks from Wall Street equity analysts.

The eight largest oilsands producers by market value posted a combined free cash flow of US$ 1.4 billion for the third quarter, compared with US$ 163.7 million from the top eight U.S. exploration and production companies, according to data compiled by Bloomberg.

“The best days of the U. S. oil industry are definitely behind us,” he said. “We are very bullish on Canadian oilsands where others are not.”

#133 Stan Brooks on 12.16.20 at 8:51 am

There’s no reason to worry about inflation in 2021

https://ca.finance.yahoo.com/news/economists-inflation-expectations-risks-2021-morning-brief-110324754.html

The herd is constantly reminded that there is no ‘inflation’, meaning the artificial CPI that really measures consumer’s spending habits while cost of living increases north of 10 % constantly in the last decade and a half. If consumers have no money CPI will stay low, it is that simple.

And we keep lying about the true level of debt, the lack of accommodative monetary policy while in the midst of wildest ever money printing to subsidize record deficits.

The food is projected officially to increase by 6 + % so expect 10 %+ real increase. But no inflation folks. Houses increased by 11 % and still ‘no inflation’.

Wondering how long these lies will continue.
Not that it matters. The sheeple is so stupid and frightened so it has lost it’s independent and critical thinking long time ago.

Nobody questioning the ‘official’ inflation numbers any more. Amazing.

#134 crowdedelevatorfartz on 12.16.20 at 9:33 am

Could a $900 BILLION aid package be in the works for US citizens?
BUT
No aid for Cities or businesses…..

Will the recession continue to deepen?

https://www.reuters.com/article/health-coronavirus-usa-congress/potential-900bln-u-s-covid-19-bill-to-include-checks-for-individuals-reports-idUSKBN28Q1W7?il=0

#135 Gravy Train on 12.16.20 at 9:51 am

#123 Nonplused on 12.16.20 at 12:20 am
“Sunshine is free, I’ll give you that.” Hallelujah!

“But solar panels, batteries, and backup generators are not. The solar panels last about 20 years and then need to be replaced, the batteries about 10 (if lithium)[…]” My solar panels are guaranteed for 25 years, have a degradation rate of 0.5% per year, and should continue operating at about 88% of their original capacity at the end of the guaranteed period. I don’t use batteries.

“[…] and the generators it depends on use and maintenance.” How is that relevant to my cost-benefit calculations?
https://en.m.wikipedia.org/wiki/Cost–benefit_analysis

“The big problem with ‘renewables’ is that they are not ‘renewable’, they are ‘replaceable’.” Are you saying coal-fired and nuclear power plants will never be replaced?

“Well that and the fact that as George pointed out they cannot operate more than about 20% of the grid […]” Please provide an academic reference to support this assertion.

“[…] and need fossil fuels on standby for cloudy days.” Again, how is this relevant to my cost-benefit calculations? I get 52% of my energy from the grid, and 48% from my solar panels. I make a 9.6% ROI with a payback of 10 years. What’s not to like?

“I am hopeful for Gen IV nuclear and possibly fusion one day though.” Uranium is not renewable, and nuclear waste will remain radioactive for centuries if not millennia.
https://en.m.wikipedia.org/wiki/Generation_IV_reactor

#136 Dharma Bum on 12.16.20 at 10:13 am

#69 Axehead

What I don’t understand is, why do Canadians think they can survive comfortably in their old age on CPP and OAS alone?
——————————————————————–

That’s a good question. The answer is disturbing, however.

The reason is that Canadians for the most part are leading lives of day to day financial desperation as it is. Most are stupid, too.

https://www.ipsos.com/en-ca/news-polls/Canadians-and-Bankruptcy-Oct-2019

The combination of financial illiteracy, lack of skills and education, low wages, poor employment opportunities, horrible spending habits, preferring not to face reality lest it sends one into the deep abyss of chronic depression, insatiable debt addiction, and the general level of overall ignorance and stupidity keeps the majority of Canadians on the treadmill of unthinking daily drudgery.

Don’t stop ’till you drop.

The government does not encourage financial prudence amongst the citizenry. They encourage consumerism and debt accumulation in order to keep the economy humming.

The government will be very happy if you drop dead shortly after you stop earning income. They are better off without retired bodies sucking up their measly handouts.

Government is responsible for the misinformation (read: propaganda) spread about the generosity and ingenuity of the OAS and GIS and CPP system, and lull the populace into complacency about their future. “Don’t worry. We are the Government. We have your backs!”

And the stupid people either believe it (because they are too stupid to do the math), or are too afraid to take stock of their current financial situations, spending patterns, debt patterns, lack of savings/investments, and overall hopelessness to make serious changes in their lives in order to secure their financial futures.

Because that takes resolve, planning, reflection, fortitude, commitment, sacrifice, discipline, foresight, and intelligence.

Many, many Canadians have NONE OF THE ABOVE.

Even so called “smart people” are stupid.

https://www.newyorker.com/tech/frontal-cortex/why-smart-people-are-stupid

People would rather ignore the reality of facing up to what needs to be done in order to save themselves, and simply just continue to fool themselves by taking mental shortcuts rather than digging deep and examining the factual data.

They’d rather vote for a dimwit that doles out glorified welfare payments, while neglecting to put their own financial houses in order from the day they earn their first paycheque. It’s easier on their mushy brains to “believe” that everything’s gonna be alright.

Doomed.

https://financialpost.com/personal-finance/more-than-a-third-of-canadians-have-no-retirement-savings-half-live-paycheque-to-paycheque-poll-finds

#137 K-Pip on 12.16.20 at 10:44 am

Great insights – and love the dog! Thanks Garth. Appreciate you.

#138 Job#1 on 12.16.20 at 10:55 am

#135 Gravy Train

“…I get 52% of my energy from the grid, and 48% from my solar panels…”

So all the energy you use to run your home is electrical? No gas, propane, oil, wood? How do you heat the house or make hot water?

You say no batteries. That means only daytime draw from solar panels. Sorry but something is missing here…please explain.

#139 hingadin on 12.16.20 at 10:57 am

In keeping with today’s post about eluding the taxman, it’s instructive to see giant corps fleeing California as soon as the state takes steps toward a wealth tax.

In August, California’s talking heads said “nope, nobody will leave” : https://californiapolicycenter.org/will-a-wealth-tax-make-californias-wealthy-flee/

A rhetorical question was posed in the article:

“Sure, there are lower-tax states where Californians could go. Nevada, Texas, Florida, Alaska, South Dakota, for example. But do we really think many Silicon Valley billionaires — or millionaires — are going to pack up for South Dakota to avoid Miguel Santiago’s income tax surcharge? Do people in Bel-Air or Venice want to move to Dallas?”

Since that time four months ago, Hewlett Packard, Oracle, Tesla, and CBRE have all announced relocation to Texas, so the answer, it appears, is a definitive and resounding YES!

Tax wealth: Wealth relocates. Simple formula.

#140 Stan Brooks on 12.16.20 at 11:11 am

#136 Dharma Bum on 12.16.20 at 10:13 am

Excellent post.

Just to add that building a false sense of superiority in ‘excellent’ health care, ‘first’ world country standard and ‘wealth through debt’ and other stupidities of that nature keeps the idiocy going.

Brainwashing to the degree that defies any logic and that is not possible in any normal society, this is why I call it a mental institution.

Looking from outside, it is surreal.

Cheers,

#141 Luis on 12.16.20 at 11:13 am

“And unlike an RRSP you can actually put back (in the next calendar year) anything you withdrew. ”

Not quite an accurate statement. You can’t put back the gains(or the losses) but rather are limited to the total contribution you made.

That seems obvious. – Garth

So Garth, this paragraph (from https://www.moneysense.ca/save/investing/tfsa-contribution-limit-rule/ ) is not true ?

Here is how it works. Let’s say you turned 18 in 2009 and used up every cent of your contribution room. And, thanks to some fortuitous stock picking, you were able to grow your TFSA to $100,000. Realizing your luck, you decide to finally make a withdrawal, using it all for a down payment on a cottage. What is your contribution room on the first day of the new year?

The answer: $105,500

#142 bucket55 on 12.16.20 at 11:14 am

WOW, we have a lot to say about stuff. Who is really listening?

#143 Stan Brooks on 12.16.20 at 11:29 am

Here is an article from the brilliant boss of BoC:


https://ca.finance.yahoo.com/news/canadian-press-newsalert-annual-pace-133230886.html

“I have no doubt that that is a factor supporting the housing market,” Bank of Canada governor Tiff Macklem said Tuesday when asked by a reporter about the housing market.

“Frankly, that’s part of the way monetary policy works. That’s part of the way it puts stimulus in the in the system by encouraging spending particularly on things that are often bought with credit.”

Read it, he wants to cure peak debt with more cheap debt.

Keep trusting in the currency folks.

And also ‘frankly’, there is no inflation despite increase in 25-30 % of money supply M2 on yearly basis.

Wonders in wonderland folks.

#144 walk by on 12.16.20 at 12:02 pm

It’s about time. TFSA is an enemy of the state, as it sets people free (provided they know how to use it). For that reason TFSA has no chance of surviving, so the question is ‘when’, not ‘if’. TFSA is a very-very-very-long-term investment vehicle, and the beneficiaries will be the offspprings, not the contributors. Get over it. Seriously.

#145 IHCTD9 on 12.16.20 at 12:32 pm

#130 BillyBob on 12.16.20 at 8:17 am

Since the family owns many guns, (brother is the DM in his paratrooper squad), his name is, naturally, Bren.
___

We had a couple of African dwarf frogs at one time, they received the names Bob, and Joe. I was rooting for Heckler and Koch.

Almost won :)

#146 Gravy Train on 12.16.20 at 1:11 pm

#138 Job#1 on 12.16.20 at 10:55 am
“So all the energy you use to run your home is electrical?” That is correct. The EnerGuide rating of our house is 28 GJ per year. Beat that!

“No gas, propane, oil, wood?” That’s right. We do have a cast-iron gas stove for use in the event of a power outage, but we haven’t had to use it yet.

“How do you heat the house or make hot water?” We stopped using electric baseboard heaters, and now use a mini-split heat pump. Our water heater is electric.

“You say no batteries. That means only daytime draw from solar panels. Sorry but something is missing here…please explain.” Our power company has an enhanced net metering program. Read up on it!
https://en.m.wikipedia.org/wiki/Net_metering

#147 jess on 12.16.20 at 1:24 pm

..”According to a court document describing probable cause for the charge, Aguirre told police shortly after the Oct. 19 incident, that he was part of a group of private citizens called, “Liberty Center,” who were conducting a civilian investigation into the alleged ballot scheme.

According to Aguirre, he had been conducting surveillance on the victim for four days under a theory the victim was the mastermind of a giant fraud, and there were 750,000 fraudulent ballots in a truck he was driving. Instead, the victim turned out to be an innocent and ordinary air conditioner repairman.

Aguirre ran his SUV into the back of the truck to get the technician to stop and get out, according to the document. When the technician got out of the truck, Aguirre, pointed a handgun at the technician, forced him to the ground and put his knee on the man’s back – an image captured on the body-worn camera of a police officer.

Aguirre directed police to a parking lot nearby where another suspect, who has not been identified, took the truck. There were no ballots in the truck. It was filled with air conditioning parts and tools.

====================
Aguirre had been paid more than $260,000 by the “Liberty Center” group, prosecutors alleged, and received about $211,400 the day following the incident.

https://app.dao.hctx.net/former-houston-police-captain-charged-holding-repairman-gunpoint-bogus-voter-fraud-conspiracy

Texas Republican Lt. Gov. Dan Patrick!

Patrick announced on Tuesday night that he was offering up to $1 million — paid out of his campaign account —

#148 George S on 12.16.20 at 1:35 pm

#135 Gravy Train said:

““[…] and need fossil fuels on standby for cloudy days.” Again, how is this relevant to my cost-benefit calculations? I get 52% of my energy from the grid, and 48% from my solar panels. I make a 9.6% ROI with a payback of 10 years. What’s not to like?

“I am hopeful for Gen IV nuclear and possibly fusion one day though.” Uranium is not renewable, and nuclear waste will remain radioactive for centuries if not millennia.
https://en.m.wikipedia.org/wiki/Generation_IV_reactor

You are right. But the problem with all these intermittent sources of electricity is that they aren’t as good at reducing net GHG emissions as people would like to believe.

Your cost benefit calculations are just fine. But as you indicate you get 52% of your energy from the grid and 48% from your solar panels. That is the limitation to intermittent sources of “green” power. They have to be backed by a fully functioning grid with many sources of non-intermittent power that can instantly be switched on and off. in other words all heated up and idling. Usually fossil fuel or hydro. If your solar panel array was about twice it current size you would get 100% of your electricity from your solar panels and 0% from the grid.

That is only because there is a big grid there with lots of people using the electricity produced by your solar panels during the 20 to 30% of the day when they are producing power and allowing you to draw conventionally generated power from the grid the rest of the time.

Yes, nuclear waste is radioactive. So what. There isn’t very much of it anyway, even after all these years of power production. It has existed for a billion or so years buried in the ground without any problem so why not simply put it back? There are plenty of areas of land with at least a kilometre of overburden with loads of mining tunnels for things like Potash where the tunnels gradually slump and close up after a few years. Nuclear power is the best solution to GHG emissions by far but suffers from a bad reputation because of inadequate regulation in countries with bad governments.

#149 Job#1 on 12.16.20 at 2:39 pm

#146 Gravy Train

Thanks for your responses. You seem to have your situation well in hand.

#150 Ian B on 12.16.20 at 3:48 pm

I can’t see this 1.99% 10-year rate advertised anywhere. Can you cite your source please Garth. Thank so much!

Call a broker. – Garth

#151 earthboundmisfit on 12.16.20 at 3:50 pm

“Nah, that was his thing. I was already kicked to the curb. – Garth”

Thanks for the response. I humbly apologize for any negative vibe I may have directed your way. To yours and Dorothy’s very good health, Macallan in hand.

#152 Moose on 12.16.20 at 5:41 pm

Hey Garth,

How did you arrive at ….1,170,000 creates 75000 in income……6.6%

I thought the rule of thumb was 4%

Perhaps I haven’t been reading your blog long enough