Most of us will admit that after two years with our TFSA (Tax Free Savings Account) program, you still have a relatively flat balance of a few hundred dollars above what you put into it for all your troubles.
What can I do to make more with my Tax Free Savings account in 2011?
Here is where a capital gains and simple dividend strategy would be an effective plan with TFSA going forward into 2011. Choose two or three quality stocks in companies that are industry leaders and have a well established history of surviving even the toughest of times. Here in Canada the bank stocks would be a good place to start. Quality companies that also pay a steady dividend inside of your TFSA.
How many of you have any dividend paying securities inside your TFSA today?
Invest the $5,000.00 maximum amount each year if possible. Remember, that if you need to with drawl any of the cash, you can at anytime without penalty and without tax. Profit ‘s earned with any stocks inside your TFSA are not subject to capital gains tax when you decide to sell. Funds withdrawn from the account can be added onto your contribution room in the following year or carried forward.
Believe it or not, TFSA’s can make you a millionaire! Not in one year, or five, or even ten. But if you stay with the plan, earning a return of 5% percent instead of less than 2%, make the maximum contribution at the start of the year you would have $1,004,042 over a 30 year period. Not bad for what is today ”small potatoes”
Most all plans (95%) are held today where they were opened initially and are simply limited to financial products such as money market, GIC & internal mutual funds. This is limiting your TFSA’s real potential to grow and compound. If you move your TFSA account up one level sort of speak, you will have a full range of securities to choose from. It’s a case of location, location, location. So promise yourself that you will make a New Year’s resolution to get these accounts out of first gear and move them into 3rd in 2011.
When you do the math “I know you don’t want to do math” the difference between staying where you are today/doing nothing or moving it to full service firm can mean hundreds of thousands of dollars lost over a time frame of say age 40 & 65.
Do you have any real life questions or concerns about your current financial portfolio, RRSP’s or TFSA’s. I encourage you to contact my office. We will share with you some effective ideas on how you can make more while saving money on fees and we are always available to help new people. (905) 849-3425 or kevin_mcammond@scotiamcleod.com
Tags: Investing, Planning, Retirement, TFSA, Wealth Management
About the author: Kevin McAmmond
Kevin McAmmond contributes a bi-weekly online business column called "The Oakville Advisor" where he shares real life financial questions and ideas from professional advisors. Kevin has worked in the financial private banking industry for 24 years as a Wealth Advisor with CIBC & ScotiaMcLeod as well as in the real estate industry with Royal LePage in Oakville. Today he combines his knowledge and passion for investments and real estate as a Mortgage Planner for Designer Mortgages. (FSCO Lic.# 10194) On-Line at: www.haltonmortgages.ca * Contact Kevin Directly; (905) 617-4422 or EMail: kevin.mcammond@verico.ca
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