Starting To Invest; *(Transferred TFSA to Questrade)

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doom_diver
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Starting To Invest; *(Transferred TFSA to Questrade)

Post by doom_diver »

Hey guys, thought I would come into here for input.

Currently a little shaky about investing into the Canadian stock market, I'm a Canadian resident but I'm having a little bit of trouble as a first time investor getting things worked together. So I come with a couple of questions and just an explanation of my plans.

So I had a TFSA that was sitting at the bank that was only making interest, I've recently opened up a Questrade Account, *(I would've much much rather had a Canadian Equivalent of Robinhood, it's embarassing how slow/worst options Canadians have in comparison to our American counterparts.) I'm starting off with $10,000 dollars.

The companies I'm looking at include; CPR;TSX, CNR;TSX, TSE;ENB, TSE;TRP and maybe some bank stocks/Mutual funds. From my understanding TFSA's arn't meant to be actively traded, so I want to focus on Blue Chip stocks that pay dividends. From my understanding as well I can't purchase American Stocks into a TFSA otherwise it complicated the TFSA *(And isn't tax free when it is American)

Thoughts?
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Re: Starting To Invest; *(Transferred TFSA to Questrade)

Post by Spudd »

Why not just buy an index ETF, or several? ETF's are free to buy at Questrade so you would save on transaction fees and get automatic diversification.

Don't worry about taxes - inside a TFSA, the only tax that applies is the US will withhold 15% of any dividends paid out, but this is really a minimal amount and not worth stressing over. Once you get to big numbers you can worry. But let's say your US index fund pays 2% in dividends, that means 0.3% of your investment will be withheld as tax. You don't have to do any paperwork for this, it happens automatically. And 0.3% isn't worth worrying about until you get to a larger portfolio. Eventually, you will want your US holdings in your RRSP as there's no withholding tax there. But for now it's fine in TFSA.
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adrian2
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Re: Starting To Invest; *(Transferred TFSA to Questrade)

Post by adrian2 »

doom_diver wrote: 28 Mar 2017 18:26 From my understanding as well I can't purchase American Stocks into a TFSA otherwise it complicated the TFSA *(And isn't tax free when it is American)
You can purchase US-listed stocks in a TFSA and any gains / income from them are tax free in a TFSA.
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Re: Starting To Invest; *(Transferred TFSA to Questrade)

Post by Peculiar_Investor »

doom_diver wrote: 28 Mar 2017 18:26 Currently a little shaky about investing into the Canadian stock market, I'm a Canadian resident
This choice of wording has me a bit curious. Are you a citizen of another country and therefore subject to other than Canadian tax laws/rules?
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doom_diver
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Re: Starting To Invest; *(Transferred TFSA to Questrade)

Post by doom_diver »

Why not just buy an index ETF, or several? ETF's are free to buy at Questrade so you would save on transaction fees and get automatic diversification.
Well I'd be interested in recommendations for ETF's, yeah the transaction fee's at Questrade are a killer, *(Exceedingly so with the piddly amount of money I'm playing with right now) but I imagine as I bring in more funds I'll have better opportunities.
Don't worry about taxes - inside a TFSA, the only tax that applies is the US will withhold 15% of any dividends paid out, but this is really a minimal amount and not worth stressing over. Once you get to big numbers you can worry. But let's say your US index fund pays 2% in dividends, that means 0.3% of your investment will be withheld as tax. You don't have to do any paperwork for this, it happens automatically.
Wow I did not know this. Well that is interesting, future wise was going to put US stocks in my RRSP, but sounds like it really isn't that bad in a TFSA. Do you think considering that the *(15%) dividend take out is worthwhile in a TFSA? Other question is what happens if I buy a stock that makes substantial gains in my TFSA, then sell it doesn't that bring in tax's of the U.S?

This choice of wording has me a bit curious. Are you a citizen of another country and therefore subject to other than Canadian tax laws/rules?
Sorry should've been clearer, only a resident of Canada. I am not subject to other tax laws/rules.
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Re: Starting To Invest; *(Transferred TFSA to Questrade)

Post by Spudd »

doom_diver wrote: 29 Mar 2017 12:56 Do you think considering that the *(15%) dividend take out is worthwhile in a TFSA? Other question is what happens if I buy a stock that makes substantial gains in my TFSA, then sell it doesn't that bring in tax's of the U.S?
I think it's worthwhile if you think that the holding is worth having. In other words, analyze the holding based on its own merits, and don't worry about the 0.3% you will lose off the dividends since it's very minor compared to the overall dividend + capital gains you can gain from it.

If you buy a stock that makes substantial gains in your TFSA and then sell it, there's no tax to pay to anyone. That's the great thing about a TFSA.

For ETF suggestions, check out: http://canadiancouchpotato.com/recommended-funds/
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Re: Starting To Invest; *(Transferred TFSA to Questrade)

Post by Peculiar_Investor »

Spudd wrote: 29 Mar 2017 14:00 For ETF suggestions, check out: http://canadiancouchpotato.com/recommended-funds/
Or closer to home in our wiki, Simple index portfolios - finiki, the Canadian financial wiki
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Koogie
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Re: Starting To Invest; *(Transferred TFSA to Questrade)

Post by Koogie »

Apropos for the OP.

four-dead-simple-solutions-for-diy-investors
http://www.theglobeandmail.com/globe-in ... e34418476/

""First, here’s what newbies should not do: Open a discount-brokerage account and start picking individual stocks. Managing a stock portfolio requires a fair bit of knowledge and emotional discipline, and while I think most people can do it if they put in some modest time and effort, it would probably overwhelm most beginners and could lead to costly mistakes.
That’s why I’ve deliberately chosen what I consider to be the easiest, lowest-stress DIY investing methods. All of these options will give you a nice combination of diversification and low costs – two of the most important ingredients in a successful investing plan.""
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Re: Starting To Invest; *(Transferred TFSA to Questrade)

Post by longinvest »

Peculiar_Investor wrote: 29 Mar 2017 14:07 Or closer to home in our wiki, Simple index portfolios - finiki, the Canadian financial wiki
+1 :thumbsup:

Personally, I think that the Finiki Simple index portfolios article is awesome. Let me explain.

It starts by addressing the critical philosophical aspect of index investing. It is my opinion that an investor who doesn't fully adhere to the philosophy of accepting market returns, without attempting to beat them, is likely to abandon his index portfolio at the worst of times, when its returns are low or negative. It's only when the investor fully embraces the philosophy that he will resign himself to accept the bad results along with the good ones and, in the end, achieve average results. An index investor is unlikely to make the first page of financial magazines as the genius investor who beat the market.

Then, the Finiki article covers the choice of asset classes in the portfolio, to diversify the portfolio's exposure to various types of risks.

It's only later that the article discusses the use of specific products (ETFs, mutual funds) within a portfolio, as well as model portfolios (3-funds, 4 funds, 5-funds, and variations).

One particularly good aspect of the Finiki article is that it does not put any emphasis on past results. To its credit, it does not even provide them. That's excellent!

I think that it would be a huge mistake to choose a portfolio based on past results (such as average returns, standard deviation, and other numbers), as past results can often be quite misleading. I believe that it is much preferable to approach investing into an asset class based on its specific nature and characteristics, not based on its past results.

Anyway, that's my opinion.
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Re: Starting To Invest; *(Transferred TFSA to Questrade)

Post by brad911 »

Just index the portfolio. If you want to try to become the next Warren Buffett read his shareholder letters to learn the secret to great investing success....index funds.
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Re: Starting To Invest; *(Transferred TFSA to Questrade)

Post by queerasmoi »

adrian2 wrote: 29 Mar 2017 08:55 You can purchase US-listed stocks in a TFSA and any gains / income from them are tax free in a TFSA.
Gains are tax free. Income is subject to unrecoverable withholding tax, but no additional tax. Whereas in an RRSP, no withholding tax.
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