TFSA contribution 2017

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AltaRed
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Re: TFSA contribution 2017

Post by AltaRed »

chufinora wrote: 26 Nov 2017 21:08 I have been procrastinating, as to raise the cash for my TFSA payment I need to sell stocks in my non-registered account and realize the capital gains. Haven't been able to get my head around the right maths on whether this makes sense.
Look at it another way. You could always wait until that stock declines in price so that you have no cap gains and suffer a 100% loss from current price, or sell now and just pay circa 20% tax and keep 80%, now sheltered forever in the TFSA.
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Pickles
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Re: TFSA contribution 2017

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chufinora wrote: 26 Nov 2017 21:08
...
To bring it back on topic, I have not yet made 2017 contributions. I have been procrastinating, as to raise the cash for my TFSA payment I need to sell stocks in my non-registered account and realize the capital gains. Haven't been able to get my head around the right maths on whether this makes sense.
What's your hurry? There's no "deadline" to contribute. Do you hold stocks in your TFSA or just cash? I don't see the sense in taking a capital gain to transfer stocks or the cash from their sale from your non-registered account. The whole idea is to save taxes, not incur them. Why don't you just make smaller contributions (cash from savings, dividends, etc. until you have a losing stock to sell or one of your winners dips down to your cost of acquisition?
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Re: TFSA contribution 2017

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Theres no hurry but as AR said it doesn't make sense to wait until stocks tumble to not realize the capital gain. I am now a couple of years behind in TFSA contributions. I have enough non-registered money that I could fund TFSA for many years if I realize the capital gains. I do invest in stocks in my TFSA, and since I look at all my accounts when considering Asset Allocation, I would effectively be selling stocks in Non-registered to buy in TFSA.

If make an assumption I would buy the same stocks, my rate of return would be identical, so I just made a simple spreadsheet and took $12000 and in one column took 80% of that and accumulated at 6% rate of return, in the other I got a 6% rate of return on the full $12000. After paying capital gains in the future on the Non TFSA option the value of the two investments will be identical (One I pay less tax now, the other I pay more tax in future) - have I done something wrong here? I am kind of coming around to the view it will be better to pay tax in future than now.
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deaddog
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Re: TFSA contribution 2017

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I am struggling with that decision right now. I didn’t sell Nortel at over $100 because I didn’t want to pay Capital Gains Tax.

I now find myself in a similar position with a few stocks I bought in 2009. These stocks have appreciated to the point that they are a major percentage of my portfolio.

I am leaning towards crystalizing my cap gains now rather than in the future to give myself the flexibility to move in and out of investments on my timetable.

A buy and hold investor may see things differently but I have to ask myself how much of a draw down I am willing to put up with rather than pay capital gains tax.
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AltaRed
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Re: TFSA contribution 2017

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I am reluctant to crystallize cap gains any sooner than I'd like as well, but one needs to 'smart' about it. If something has gone up way out of whack and it seems obvious the stock likely will backtrack, it is better to pay one's MTR on the gains and move on. The message is to 'sell high'.
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Re: TFSA contribution 2017

Post by BRIAN5000 »

I was wondering what sectors would look like mixed with different ETF's, 40% XAW with 20% XEI, XIC or VCN not a whole lot of difference. You should verify all data.
VXC OR XAW.png
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