Weekend Reading: TFSA Limit Increase Edition
The federal government released its ‘Indexation adjustment for personal income tax and benefits amounts’ (IAFPITABA), which shows the increases to 2019 tax bracket thresholds, plus increases to income-tested benefits like the GST credit and Canada Child Benefit. These increases are tied to inflation using Consumer Price Index data from Statistics Canada, which pegged inflation at 2.2 percent.
Of note for many investors is the TFSA limit increase from $5,500 to $6,000. As you may know, the annual TFSA contribution limit is indexed to inflation each year and rounded to the nearest $500. If you were eligible to open a TFSA in 2009 and haven’t contributed then you’ll have $63,500 in available TFSA room.
I’m in the midst of re-filling my TFSA after several years of neglect. I was able to contribute $12,000 to it this year and plan to do the same next year. At that rate my wife and I will completely catch-up on our unused TFSA contribution room by 2024
Families receiving the Canada Child Benefit should also see a boost in their benefits next year. If you recall, the federal government announced that the CCB would be indexed to inflation starting July 1, 2018.
The indexing not only applies to the base amounts given to children under 6 and children ages 6-17, but also to the adjusted family net income at which the phase-outs begin. That places even more emphasis on the strategy I highlighted for families to get more out of the Canada Child Benefit by making RRSP contributions to reduce their adjusted family net income.
This Week’s Recap:
On Wednesday I shared 15 money saving tips to live by.
On Thursday I answered the question, is renting throwing away money?
And over on the Toronto Star I shared how to find the best cash back rewards credit card.
Weekend Reading:
Here’s Jason Heath on why you need to understand risk and uncertainty when planning for retirement.
I had a post last month on CoPower’s Green Bonds. Harvard Business Review explains why Green Bonds benefit companies, investors, and the planet.
We talk a lot about the importance of temperament for investment success. But what exactly is temperament? Here’s an excellent summary:
“Temperament, in the investment sense of the term, is how we deal with the uncertainty that comes with making decisions about the future. It is the way that we make decisions based on incomplete information where the results will often be unknown for a long time.”
Investing in the all stock ETF Model Portfolio? Take on the risk, if you can, says Dale Roberts from Cut the Crap Investing.
Hedge-fund manager James Cordier tells his clients via YouTube that he lost all of their money – some $150 million – selling options in the natural gas market:
Jason Heath tries to explain to a mother why selling her home to her son for $1 is not a good idea.
Millionaire Teacher Andrew Hallam explains why retirees and millennials face a tug of war:
“Millennials should hope that stocks stagnate for years… or that stocks fall hard. It would allow them to pay lower prices for stock market shares. As a result of lower prices, dividend yields would rise. This would increase their odds of building stock market wealth.
Some of my friends, however, are already retired. They don’t want stocks to fall. And that makes sense. Retirees are selling their stock market assets. They want to see those assets rise.”
Mark Seed at My Own Advisor says it’s never too soon to run some retirement numbers. Agreed.
Many retirees are sour on ETFs because their dividend distribution is too low. Michael James answers a reader question about rising dividends in ETFs.
Finally, here is some interesting research posted by PWL Capital about bull markets, bear markets, and the average length of a full stock market cycle.
Have a great weekend, everyone!
I do love these weekly round-ups, but I’m curious as to why the articles are mostly by men. That’s not a criticism – I just wish there were more women writing about money!
Anyone know of any good blogs or resources by women?
Names that immediately come to mind are: Sandi Martin (of Spring Financial Planning – the firm puts out a monthly email newsletter), Cait Flanders, Jessica Moorhouse, Kerry Walsh (Squawkfox) and Bridget Casey (Money After Graduation). All have a presence on Twitter, as well.
Oops, just realized I wrote Kerry Walsh. Don’t know why. It’s Kerry Taylor!
Awesome! Thanks 🙂
Thanks Robb, lots of great reading ideas in there on a wide range of topics. I’m on ’em.
How do I find out how much unused TFSA I may have
If you have an account set up on the CRA website or one set up with a partnered affliate (most major banks) you can view this information here: https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/account-individuals.html
Someone will correct me if I’m wrong, but I believe this information is from your last tax filing and not real-time so if you are close to your limits definitely keep a close eye on your contributions during the year.
Most historic tables on bond investing show the returns while bond yields were falling, which leads mostly to capital gains, not income. Now that yields are rising, what can be expected in the way of returns? Most of the results will include a capital loss on the principal. (reference PWL link). Thanks for keeping me informed.
In fact most of the return of a bond or bond fund is due to the yield. In a falling interest rate environment , you start at a higher yield so the return is higher. Now with rates possibly rising the starting yield is low, so the return will be lower. In other words the best predictor of the returns of a bond or bond fund is the yield when you buy it.
Rob, I’m surprized that a serious investor like yourself wouldn’t have their , & spouse’s, TFSA maxed out, as you are missing out on years of tax free capital gains, dividends & interest.
I can’t remember when you moved from stocks to ETFs but that would have been the ideal time as you would have had to pay capital gains on the stock sales anyway.
Even now you could transfer directly from a non-registered account, in-kind, some of your ETF’s to your TFSA. Of course you will have to pay the capital gains on the deemed sale but better to pay some now than a larger amount later.
Just curious what your thinking was?
Hi Mike, I emptied my TFSA in 2011 to top-up the down payment on our house and avoid CMHC fees. Then we had our second child and bought a car, spending the next few years taking care of some other financial priorities before I could turn my attention back to filling up our TFSAs.
We’re a single income family and have never held any non-registered investments. There’s only so much money to go around when you’re raising a family and juggling competing financial goals.
Our financial freedom plan is to have the mortgage paid off and our RRSPs and TFSAs maxed out by 2024 (I’ll be 45).
In life there’s ‘optimal’ and then there’s realistic. We’re trying to find that balance.