Category Archives: TFSA

And in Reply…

My last post about knowing when you’re able to retire based on your dividend income elicited some good questions and counter-points from Robb at Boomer and Echo. The answers I have would have involved a rather long response in the comment section, so I decided to reply in a new post. For the record, here is what Robb said:

I used to think this way, how­ever I don’t think it’s real­is­tic to live off div­i­dends and never touch your cap­i­tal in retire­ment. First of all, any RRSP sav­ings will even­tu­ally be con­verted into an RRIF and face stiff with­drawal rates. Sec­ond, what if you want (or need) excess cap­i­tal in one year to pay for a car, new roof, large vaca­tion, etc.? You’d prob­a­bly look to sell off some stock to access the cap­i­tal. Finally, there’s the poten­tial to work longer than needed in order to reach a tar­get div­i­dend income stream. It’d take a mil­lion dol­lars in cap­i­tal to spin off $35,000 to $40,000 in div­i­dends. Why wouldn’t you want to tap into that mil­lion dollars?

In response, I say this: Continue reading And in Reply…

Dividend Investing Makes Retirement Threshold Obvious

Dividend investors know exactly when they can retire.
Dividend investors know exactly when they can retire.

I’m sure it’s just coincidence, but I’ve come across a lot of “When do you know you’re ready to retire?” articles the last little while. — EDIT: Just this morning, Robb at Boomer and Echo has written a post on this very topic. — After reading a few of these, it struck me that I had never really considered the question of when I would reach my (financial) retirement threshold. It’s not just because retirement is so far away, or because I haven’t taken the time to make a specific goal. The reason is because, as a dividend investor, the answer is so obvious that almost no thought is needed.

Continue reading Dividend Investing Makes Retirement Threshold Obvious

Canadian Tax Rates for Investment Income

What you need to know about Canadian tax rates for investment income
What you need to know about Canadian tax rates for investment income

As anybody North of the 49th will tell you, there are certain aspects of being Canadian that we all revel in.

Paying tax is not one of them.

With tax season just passed, it seems like a good time to take a look at the various ways the government pries your investment return dollars out of your wallet.

When I was first getting into investing, I invested a lot of money into a Mortgage Investment Corporation. It provided quite good monthly returns, and I can still remember being pretty pleased with myself that the investment was throwing off almost $500 a month. Tax time brought a cold shower, a slap in the face, and a wakeup call all rolled into one. Unlike taxes paid on working income, investment taxes are all paid once annually, at tax time. At this point, I don’t remember exactly what the tax hit was, but for a person of my modest income, it was substantial. Coincidentally, it was about that time that I became aware of a fact that has had a major impact on my investing practices since then.

Continue reading Canadian Tax Rates for Investment Income