Just dropping by to give a genuine piece of advice for my fellow Canadians!
I've enjoyed a nice bottle of wine tonight and had the sudden urge to mention this huge mistake I see way too often working in wealth management for one of the big Canadian Banks.
This is mostly directed to young and novice investors who have made massive gains in the recent green rush within their self directed TFSAs. Never withdraw more than the current maximum allowed contribution limit!!!
On several occasions lately I've seen 20 something year olds who hit big with risky investments, such as using a 20K personal line of credit to buy stocks like APH and OGI one year ago to see their TFSA account equity grow to as much as $230,000 today(I shit you not!!!), sell their shares, and make a full withdrawal. If only they knew they will never be able to put that amount back in to their TFSA.
I'm sure a lot of you are reading this saying this is obvious but I don't care about what you have to say because I am drunk. Hopefully this can benefit at least one person!
If this person is you and you want unbiased free advice one the options you have, it will be my pleasure.
As a rule of thumb though, never withdraw more than the current allowed contribution (currently 46,500), and look for high quality dividend paying stocks for what ever is left over. In the example I gave before, he should have withdrew 20K to pay back his line of credit, paid off any other debts up to a maximum combined amount of 46,500, and if any of that was left over I would suggest strippers and co.... sorry about that. Industry standards.
But seriously, assuming 46,500 withdrawal that guy would have been left with 183,500 in his account. Spread out into blue chip stocks, he would have benefited from minimum 4% annual dividend income TAX FREE. That's 7,340$ per year or $611 monthly... with a near 100% guarantee. TAX FREE. Could have used that toward roughly a 150K mortgage. Or he could have opted for DRIP (dividend reinvestment plan) and watched his quarterly dividends grow exponentially.
If you are still reading my heart-filled iHub rant to help fellow Canadian in, you clearly have nothing better to do on this cold Saturday morning. But on the other hand here I am getting more intoxicated with every sentence.
Anyways, the above example is a dream type scenario. Most won't have the luck to choose such a stock, the balls to take such a risk, and the discipline to not take profits early. At the end of the day, don't withdraw more than the contribution maximum unless you absolutely need it!
Cheers,
MarketShark
AI
