agoodwinsmith (![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png)
agoodwinsmith) wrote2015-05-03 01:35 pm
agoodwinsmith) wrote2015-05-03 01:35 pm
Entry tags:
So. Then bank interest dropped below one percent.
In Canada, there is a thing called the TFSA:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/menu-eng.html
Any Canadian Citizen (& probably Permanent Resident) who is 18 years of age or older may put a portion of their after-tax money into it, and then any interest or dividends or capital gains it makes are not taxable. It started in 2009, and the amount has changed each year, as follows:
2009 = $05,000.00
2010 = $05,000.00
2011 = $05,000.00
2012 = $05,000.00
2013 = $05,500.00
2014 = $05,500.00
2015 = $10,000.00
total to date = $41,000.00
Saving that much each year is a bit tricky at my economic level, but one doesn't have to submit the whole amount to be allowed to participate.
For many years we have had RRSPs:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/rrsps-eng.html
which allows one to put pre-tax money in, based on a percentage of one's income, and reduce one's taxable income in the year of contribution. If one's income is large enough that some of it is taxed at a higher rate, this can be doubly attractive because the theory is that one's income will be reduced in retirement, and one will pay less tax. Yes, the advantage is meant to be less tax now and less tax later. However, tax rates continue to go up, and one will need at least as much income in retirement as prior, if not more, because one's unit of currency buys less as one ages (See Smarties story http://agoodwinsmith.livejournal.com/161877.html). Also - everything coming out of the RRSP, including interest, dividends, earning, and so on, is taxable.
Current advice is that, the older one is, the more one should favour contributing to one's TFSA over one's RSSP. Those with pots of income should do both.
The problem is that TFSAs at banks pay pitiful interest, and the higher paying options lock up the money for years at a time, so if one experiences a crisis prior to the end of the term, one loses all the gains made to that point. So I have known for a while that, while the TFSA is where to grow one's equity, I had no idea how to do it. Yay internet.
I started by reading about Warren Buffet, who, whatever else is true, has amassed a rather large fortune through stocks. Value Investing sounds good, as does buying stocks in consumer consumables that people want whether times are good or bad, but I realized that I have neither the time nor inclination to hover over an exchange ouija board buying and selling and buying again in a fever of fear.
So, next I stumbled across this:
http://retiredat48book.blogspot.ca/p/where-to-buy.html
and bought the book, which led me to this:
http://www.chapters.indigo.ca/en-ca/books/dividend-stocks-for-dummies/9780470466018-item.html?ikwid=Dividend+stocks+for+dummies&ikwsec=Home&ikwidx=0
and this in paper because the above is USAian:
http://www.chapters.indigo.ca/en-ca/books/investing-for-canadians-for-dummies/9780470676264-item.html?ikwid=investing+for+Canadian+dummies&ikwsec=Books&ikwidx=6
So, since the dividend book teaches one how evaluate the financial reports produced by companies, I selected a company to follow through the very scientific method of seeing a press release in my http://academica.ca/topten newletter. I read the financials - and didn't understand them at all. Based on my plugging the numbers into the appropriate formulas my company was on its last legs and should be spurned as beneath my contempt. But my company had just felt strong enough to give a hefty donation to a research school, so I suspected I was not finding the correct numbers for the formulas.
So, then I started reading anything and everything about Canadian dividend companies (my favourite blog is no longer available), and I started watching various stocks. Then I went to reddit http://www.reddit.com/r/PersonalFinanceCanada/ which led me to http://www.greaterfool.ca/ , and eventually to this post: http://www.greaterfool.ca/2014/11/21/trust-4/ , and then I started tracking some ETFs.
So. I kept reading and tracking and reading and tracking and this past month I got myself an online discount brokerage (a whole 'nother lengthy dithering decision process) account , transferred some money and started buying stocks. The learning curve is no longer a roof over my head, but I am still a fawn gambolling amongst the carnivores. My first purchase immediately lost money. :) I now have five stocks, and I am somewhat ahead overall, but the individual stocks which are up or down changes everyday. :)
But but but! I was not anticipating getting any of the dividends for quite sometime, since entitlement to dividends follows later than ownership of stock - but I got $22.44 at the end of April - even though I owned some of them less than a week. Neato!
What is sad is that when this pile is fully operational on the dividends, each month I will get more payout than I do on my RRSP, and the RRSP pile is three times larger. AAAaaaannd - also not taxable, unlike the RRSP earnings.
Oh yes. The stock where I can't figure out how to use the financials for evaluation? Its stock price has increased 30%. It's not part of my portfolio, though, because it doesn't pay dividends often enough.
Even if I can't earn my whole retirement in dividends, I don't see why what little money I have shouldn't earn as much as possible.
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/menu-eng.html
Any Canadian Citizen (& probably Permanent Resident) who is 18 years of age or older may put a portion of their after-tax money into it, and then any interest or dividends or capital gains it makes are not taxable. It started in 2009, and the amount has changed each year, as follows:
2009 = $05,000.00
2010 = $05,000.00
2011 = $05,000.00
2012 = $05,000.00
2013 = $05,500.00
2014 = $05,500.00
2015 = $10,000.00
total to date = $41,000.00
Saving that much each year is a bit tricky at my economic level, but one doesn't have to submit the whole amount to be allowed to participate.
For many years we have had RRSPs:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/rrsps-eng.html
which allows one to put pre-tax money in, based on a percentage of one's income, and reduce one's taxable income in the year of contribution. If one's income is large enough that some of it is taxed at a higher rate, this can be doubly attractive because the theory is that one's income will be reduced in retirement, and one will pay less tax. Yes, the advantage is meant to be less tax now and less tax later. However, tax rates continue to go up, and one will need at least as much income in retirement as prior, if not more, because one's unit of currency buys less as one ages (See Smarties story http://agoodwinsmith.livejournal.com/161877.html). Also - everything coming out of the RRSP, including interest, dividends, earning, and so on, is taxable.
Current advice is that, the older one is, the more one should favour contributing to one's TFSA over one's RSSP. Those with pots of income should do both.
The problem is that TFSAs at banks pay pitiful interest, and the higher paying options lock up the money for years at a time, so if one experiences a crisis prior to the end of the term, one loses all the gains made to that point. So I have known for a while that, while the TFSA is where to grow one's equity, I had no idea how to do it. Yay internet.
I started by reading about Warren Buffet, who, whatever else is true, has amassed a rather large fortune through stocks. Value Investing sounds good, as does buying stocks in consumer consumables that people want whether times are good or bad, but I realized that I have neither the time nor inclination to hover over an exchange ouija board buying and selling and buying again in a fever of fear.
So, next I stumbled across this:
http://retiredat48book.blogspot.ca/p/where-to-buy.html
and bought the book, which led me to this:
http://www.chapters.indigo.ca/en-ca/books/dividend-stocks-for-dummies/9780470466018-item.html?ikwid=Dividend+stocks+for+dummies&ikwsec=Home&ikwidx=0
and this in paper because the above is USAian:
http://www.chapters.indigo.ca/en-ca/books/investing-for-canadians-for-dummies/9780470676264-item.html?ikwid=investing+for+Canadian+dummies&ikwsec=Books&ikwidx=6
So, since the dividend book teaches one how evaluate the financial reports produced by companies, I selected a company to follow through the very scientific method of seeing a press release in my http://academica.ca/topten newletter. I read the financials - and didn't understand them at all. Based on my plugging the numbers into the appropriate formulas my company was on its last legs and should be spurned as beneath my contempt. But my company had just felt strong enough to give a hefty donation to a research school, so I suspected I was not finding the correct numbers for the formulas.
So, then I started reading anything and everything about Canadian dividend companies (my favourite blog is no longer available), and I started watching various stocks. Then I went to reddit http://www.reddit.com/r/PersonalFinanceCanada/ which led me to http://www.greaterfool.ca/ , and eventually to this post: http://www.greaterfool.ca/2014/11/21/trust-4/ , and then I started tracking some ETFs.
So. I kept reading and tracking and reading and tracking and this past month I got myself an online discount brokerage (a whole 'nother lengthy dithering decision process) account , transferred some money and started buying stocks. The learning curve is no longer a roof over my head, but I am still a fawn gambolling amongst the carnivores. My first purchase immediately lost money. :) I now have five stocks, and I am somewhat ahead overall, but the individual stocks which are up or down changes everyday. :)
But but but! I was not anticipating getting any of the dividends for quite sometime, since entitlement to dividends follows later than ownership of stock - but I got $22.44 at the end of April - even though I owned some of them less than a week. Neato!
What is sad is that when this pile is fully operational on the dividends, each month I will get more payout than I do on my RRSP, and the RRSP pile is three times larger. AAAaaaannd - also not taxable, unlike the RRSP earnings.
Oh yes. The stock where I can't figure out how to use the financials for evaluation? Its stock price has increased 30%. It's not part of my portfolio, though, because it doesn't pay dividends often enough.
Even if I can't earn my whole retirement in dividends, I don't see why what little money I have shouldn't earn as much as possible.