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TFSA - Why Bother Anymore
December 4, 2019
5:06 am
Alexandre
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I must be one of few, but I would not mind interest rates going up, even if it will force real estate bubble to deflate.

After all, the only thing I am enjoying from house prices skyrocketing is higher property taxes, limited ability to move somewhere as price of new house even in more remote area than mine is out of my reach, and rent too high to consider selling house and living in an apartment.

This is on top of diminishing returns from Savings, due to dropping interest rates.

December 4, 2019
9:27 am
Vatox
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Alexandre said
I must be one of few, but I would not mind interest rates going up, even if it will force real estate bubble to deflate.

After all, the only thing I am enjoying from house prices skyrocketing is higher property taxes, limited ability to move somewhere as price of new house even in more remote area than mine is out of my reach, and rent too high to consider selling house and living in an apartment.

This is on top of diminishing returns from Savings, due to dropping interest rates.  

Rising interest rates would be great for us savers, but they won’t rise anytime soon as there is way too much debt in the world and that’s also weighing down the world economy, which in turn, creates low inflation. High inflation is the main reason for central banks to raise rates. As much as I think it’s a bad idea, lower rates in our near future, are more likely. I’m hoping rates just hold for now.

May 6, 2020
3:29 pm
cruzinalong
Ontario
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Alexandre said
I used to diligently deposit funds to TFSA, maximizing my contribution annually. Then, putting it to 1 year GIC to get better interest income and still not locking money for too long.
Not interested in stocks.

My GIC is about to mature. My options are:

TFSA Savings at Big Bank - 1% annual interest
TFSA GIC at Big Bank - 2.2%
TFSA Savings at CU - 2.4%
Savings account at Laurentian or B2B - 3.3%

Which means, as long as my income tax rate is less than approximately 30%, I am better off removing funds from TFSA and putting them in regular savings account.
My tax rate is well under 30%.

So, my big "thanks" to Bank of Canada for following worldwide trend of reducing interest rates in otherwise healthy economy.

I regret to inform the Government of Canada that as soon as my TFSA GIC matures, I am becoming one of those who is "unwise not to top up their TFSA."

Perhaps, when interest rates improve, or banks stop offering unfavorable rates to TFSA and RRSP accounts, or it is time for me to apply for OAS/GIS - I might reconsider.

(Note that it is written on December 1, 2019, and dependent on low interest rates of that period) .  

I'm with you. I have very little in TFSA. I do have some friends that max it out. Better for lots of people to stand clear. Everybody is UNIQUE.

May 6, 2020
3:49 pm
Save2Retire@55
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This not using TFSA and instead a Normal Saving account means, you know of a place where their normal HISA is at least 30% (Considering income tax of 30%) higher than the TFSA. I am not aware of any.

I still maximize my TFSA, RRSP, and put aside the extra in HISA.

PS. I haven't done RRSP and RESP yet this year. Hoping we get some better rates in the future.

May 6, 2020
5:54 pm
cruzinalong
Ontario
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Save2Retire@55 said
This not using TFSA and instead a Normal Saving account means, you know of a place where their normal HISA is at least 30% (Considering income tax of 30%) higher than the TFSA. I am not aware of any.

I still maximize my TFSA, RRSP, and put aside the extra in HISA.

PS. I haven't done RRSP and RESP yet this year. Hoping we get some better rates in the future.  

You are doing fine. You can take money out of your HISA later and contribute to RRSP and RESP. The deadline for RRSP is 60 days into 2021. I do not know the deadlines for RESP. Enjoy the day.

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