Personal Finance

Some People's Trust, TFSA related investing questions

  • Last Updated:
  • Nov 14th, 2014 7:49 am
Tags:
None
Sr. Member
Dec 26, 2011
909 posts
896 upvotes

Some People's Trust, TFSA related investing questions

Is there any drawbacks of using People's Trust for a TFSA? This is assuming you are not yet ready to enter into any more hands on investments, and just want somewhere to safe to put money?

I believe People's Trust has no TFSA transfer out fees?

For example if I do more research over the next few months and year, I have the complete flexibility to move over to something like Questrade and self direct?

Also if one were to opt for an investment portfolio not entirely in equities, let's say 50/50 equity and income split, from a taxation stand point I'm assuming that it'd be beneficial to have as much of the income portion within your TFSA as possible? Since the tax hit from capital gains on equity is less?

You can recontribute any amount you withdraw from your TFSA the following year? (essentially the amount you withdraw is added to your contribution limit? so any gains are accounted for?)
4 replies
Member
Mar 14, 2010
283 posts
144 upvotes
Toronto
arandomguy wrote: Is there any drawbacks of using People's Trust for a TFSA? This is assuming you are not yet ready to enter into any more hands on investments, and just want somewhere to safe to put money?
PTs deposits are covered by CDIC up to $100,000. So, safe.
I believe People's Trust has no TFSA transfer out fees?
Correct.
For example if I do more research over the next few months and year, I have the complete flexibility to move over to something like Questrade and self direct?
Who knows whether they will charge a transfer fee in the future? Tangerine has imposed a $45 transfer fee beginning in January after promising "no changes" when Scotia took over ING and changed it. PT's track record has been good, so far, though. 3% interest on its TFSA account since the beginning of TFSAs. That's better than a 5 year GIC. Sure beats the other online banks, most of which pay less AND charge transfer fees.
Also if one were to opt for an investment portfolio not entirely in equities, let's say 50/50 equity and income split, from a taxation stand point I'm assuming that it'd be beneficial to have as much of the income portion within your TFSA as possible? Since the tax hit from capital gains on equity is less?

You can recontribute any amount you withdraw from your TFSA the following year? (essentially the amount you withdraw is added to your contribution limit? so any gains are accounted for?)
TFSAs are not designed to draw income from. If that's your intention, just keep your money in an ordinary HISA.

You're kidding yourself if you think you're "saving" when you deposit it but fully intend to take it out later in the year. The difference in interest you earned won't amount to a hill of beans if you are making withdrawals. Also, it is easier than you think to fall afoul of the CRA rules re TFSA.

Saving money means investing it and letting it grow, whether in equities or savings accounts/GICs. If you are already eyeing this money for withdrawals, then you need to rethink. Perhaps you are not yet ready to save. Start with putting some cash away every month in a HISA. Whatever you haven't spent by the end of one year, put in a TFSA. Focus on reducing your expenditures so you do not have to touch your HISA. In other words, budget and stick to it. At the end of the year you will be much better able to determine what is a sustainable rate of monthly savings you can make from your income. The following year, you can then direct that amount into a TFSA knowing you will not need to draw from it.
Sr. Member
Dec 26, 2011
909 posts
896 upvotes
Still in the beginning of my research so it's like due to using the wrong terms.

When I said income I meant investments where all the gains would be classified as income (eg. a GIC) which I believe is taxable at a higher rate than gains from say investments in equities like stocks (assuming no dividends) which are capital gains?

Like say, as a simple dumb example, I want to split 80k into 40k in GICs and 40k in stocks (which pay 0 dividends to simplify, so the only gains would be capital gains) and I have a 40k TFSA limit. Is it better then to put the 40k GICs under the TFSA and the 40k stocks outside for tax purposes? The reverse? Or does it not have any affect?

The second part regarding the withdrawals was just to figure out how the contribution limit worked. Also if it were an available method to avoid direct transfer fees (assuming if applicable) by simply withdrawing in December, and contributing in January with no loss to the actual net contribution amount.
pickles02 wrote: Who knows whether they will charge a transfer fee in the future? Tangerine has imposed a $45 transfer fee beginning in January after promising "no changes" when Scotia took over ING and changed it. PT's track record has been good, so far, though. 3% interest on its TFSA account since the beginning of TFSAs. That's better than a 5 year GIC. Sure beats the other online banks, most of which pay less AND charge transfer fees.
That's fine, policies and rates can always change of course. But just wondering if this was the best action for now and if i missed any possible issues.
Member
Mar 14, 2010
283 posts
144 upvotes
Toronto
I suggest you do some reading on TFSAs, investing in stocks, developing a financial plan and asset allocation. A good place to begin is http://www.finiki.org/wiki/Main_Page. If you have any questions about what you read, raise them here: http://www.financialwisdomforum.org/forum/index.php

The questions you raise are not simply answered (although some will try!). The answers depend on your age, amount of money to be invested annually, your risk profile, your level of financial knowledge, your life goals (marriage or home purchase anticipated?. Tax implications are only one concern and must be dealt with in view of your financial plan. The website I linked to will give you the info you need to read and digest to help you develop a plan. The forum I linked to gives you a place to ask questions after you've done this preliminary reading/research.
Sr. Member
Dec 26, 2011
909 posts
896 upvotes
Thanks, that was my longer term plan to research in terms of longer term investing. So the reading material will help.

For right now though would first utilizing my available TFSA room and putting it into People's Trust is a good temporary and no issue first step? I don't want to get into too much specifics but it is a sizable amount, so having 2% taxable vs 3% non taxable is a significant difference. This amount also has no near future use (even emergency use) other than for savings.

Top

Thread Information

There is currently 1 user viewing this thread. (0 members and 1 guest)