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Email this9:35 pm
January 11, 2015
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Hey Everyone,
I have done some research into how TFSA's work but I am by no means fully informed. That's why I need some advice.
Background:
I was born in 1991 (ie. I was 18 years of age in 2009) so I am assuming I am eligible for the full $36,500 maximum account limit? I am a university student and the money I am investing is all from OSAP. I shouldn't need to access it but I still want the option to withdraw at any time.
My Plan:
I am looking to invest $10,000 in a TFSA in the next week. I've been looking around and I'm interested in a TFSA with Tangerine and/or Peoples Trust. I was hoping to invest now with Tangerine, take advantage of the $50 sign-up bonus and the 2.5% interest rate until March 31, 2015 (It then goes down to 1.3%). At which point I would withdraw my money, close that account, and open a new TFSA with Peoples Trust (with 2.5% interest) in the amount of $10,000. To my understanding, I would have have contributed a total of $20,000, well below the $36,500 limit.
Am I better off opening a $100 account with tangerine to get the $50 bonus and just leave it there? Then invest the remaining $9,900 in Peoples Trust?
Can this be done legally and without any service fees?
Thanks, any additional information on TFSAs, or alternative investments that may be a better option would be welcomed.
2:46 am
October 21, 2013
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I think you're on the right track.
Why wouldn't you just transfer the TFSA directly from Tangerine to Peoples Trust? You might miss a few days' higher interest, but it's less complicated. Don't forget that you need to keep close track of how much you contributed to a TFSA, how much you took out, when you took it out, and when you redeposited it. Your contribution room stays with you for life, and you have to keep track of it all for this reason. It's a lot more straightforward to just have the money transferred directly, as there is then only the initial deposit to track.
Tangerine has sign-up bonuses of one sort or another almost all the time.
Personally I would just open the TFSA at Peoples in the first place and avoid all the issues with transfers and/or withdrawals etc. Down the road, it will make your bookkeeping a lot simpler and reduce the chance that you would accidentally overcontribute, which can be very costly. There is something counter-intuitive about the rules regarding TFSAs inasmuch as any withdrawals can't be replaced until the next calendar year. This wouldn't affect you directly as you are still under the total limit, but it could confuse you later on, especially if you should forget exactly what you did.
I don't think you can do any better than PT for a savings-type account at this time.
6:28 am
August 4, 2010
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Loonie said Why wouldn't you just transfer the TFSA directly from Tangerine to Peoples Trust? You might miss a few days' higher interest, but it's less complicated.
Tangerine is bringing in a $45 transfer fee, so the transfer (as opposed to withdrawal) option would eat up almost all of the $50 bonus.
11:15 am
October 21, 2013
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Oh, yes, good point, NorthernRaven. I forgot about that pesky new transfer-out fee.
I would still just deposit it directly to Peoples, myself.
Use the Tangerine promo or another promo for a different account. check the fine print on the promo offer, paying close attention to any minimum deposits required and which accounts are eligible. Also check whether there is a minimum amount of time you would have to keep the account open in order to get the promo money. It should say somewhere when the promo money will be deposited, and you will want to be aware of it.
11:45 am
December 23, 2011
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Splex said
Hey Everyone,
I have done some research into how TFSA's work but I am by no means fully informed. That's why I need some advice.
Background:
I was born in 1991 (ie. I was 18 years of age in 2009) so I am assuming I am eligible for the full $36,500 maximum account limit? I am a university student and the money I am investing is all from OSAP. I shouldn't need to access it but I still want the option to withdraw at any time.My Plan:
I am looking to invest $10,000 in a TFSA in the next week. I've been looking around and I'm interested in a TFSA with Tangerine and/or Peoples Trust. I was hoping to invest now with Tangerine, take advantage of the $50 sign-up bonus and the 2.5% interest rate until March 31, 2015 (It then goes down to 1.3%). At which point I would withdraw my money, close that account, and open a new TFSA with Peoples Trust (with 2.5% interest) in the amount of $10,000. To my understanding, I would have have contributed a total of $20,000, well below the $36,500 limit.Am I better off opening a $100 account with tangerine to get the $50 bonus and just leave it there? Then invest the remaining $9,900 in Peoples Trust?
Can this be done legally and without any service fees?
Thanks, any additional information on TFSAs, or alternative investments that may be a better option would be welcomed.
You are on the right track for sure. Have you considered making a little more on the interest?
See here for rates.
http://www.globeinvestor.com/s.....ndicator=N
If you have a "plan" for the next 10 years....consider half to PT as long as they dont keep dropping and the other half in a five year GIC every year. In 5 years you would have a 5 year ladder in place and then start another 5.
11:55 am
January 30, 2009
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Splex, I think what you were hoping was to have the bonus money from Tangerine deposited to your tax free account. This does not happen as the bonus money goes into your regular savings account. So, if you intend to take advantage of the bonus offer, why not deposit the $9900 at Peoples now, and the $100 into a Tangerine Regular Savings Account for the bonus. When you've left the $100 in Tangerine for the required time, you can transfer it to Peoples.
With this method, you won't run into any issues of transfer fees, and it will be easy to keep track of what you have contributed to your TFSA as there will be no withdrawals. I've also sent you my Orange code in case you need it for the bonus.
2:49 pm
February 17, 2013
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Put a 100 into Tangerine for the bonus and just forget about it. Don't even bother opening a TFSA with them. Put the rest in PT and forget about it. There is too much trouble transferring and it takes weeks of lost interest and fees on top of that for your cash to get transferred. If it was my choice, knowing what I know now after dealing with Tang for years now, I would not even bother with them. Their gimmicks are designed to attract your cash, but after the promo their rates are not competitive any more. The bonus cash they give you to sign up will be more than made up by the 1.2% difference in rates between Peoples and Tang on your money once the promo is over. Just my 2 cents. Kudos for starting to save. Wish I had your attitude when I was your age.
5:29 pm
October 21, 2013
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I think James has summarized it very well, and I agree.
6:09 pm
January 11, 2015
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Thanks everyone for your input. Very helpful. I have decided to put $100 into Tangerine and then dump the rest into PT. Might even dabble a little bit into stocks but that's going to take me more time to consider :P. If you have any suggestions for getting my foot into that door let me know. I think I'll start a simulation with investopedia for now.
9:55 pm
October 21, 2013
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Spiex, you said that you wanted to be able to access your money at any time. With this in mind, you should avoid the stock market completely for now. The stock market is a long-term approach. The risk of shorter-term loss of capital is significant.
You can probably learn a lot though by using simulators. I think RBC has one too; not sure.
With TFSA money in particular, if you are in the stock market, you have to be careful that you do not buy and sell too often, as you run the risk of CRA deciding that you are a "trader", which bears significant penalties. See earlier thread on this topic. https://www.highinterestsavings.ca/forum/tax-free-savings-accounts/cra-targeting-successful-tfsa-investors/ The definition of "too often" is vague, and might be difficult for a newbie to discern.
8:53 am
December 23, 2011
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Loonie said
Spiex, you said that you wanted to be able to access your money at any time. With this in mind, you should avoid the stock market completely for now. The stock market is a long-term approach. The risk of shorter-term loss of capital is significant.
You can probably learn a lot though by using simulators. I think RBC has one too; not sure.With TFSA money in particular, if you are in the stock market, you have to be careful that you do not buy and sell too often, as you run the risk of CRA deciding that you are a "trader", which bears significant penalties. See earlier thread on this topic. https://www.highinterestsavings.ca/forum/tax-free-savings-accounts/cra-targeting-successful-tfsa-investors/ The definition of "too often" is vague, and might be difficult for a newbie to discern.
Loonie....if he did use the market for long term.....it is a good time to buy as prices have declined due to the lower price per barrel of oil.
12:33 pm
October 21, 2013
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True, but he said in his initial post that he wanted to be able to access it.
Markets, especially Cdn markets, can go lower, as oil has not bottomed out yet, and he can't afford the risk if he wants to be able to access the money. Markets can ALWAYS go lower for that matter!
Maybe he can afford stocks with next year's OSAP.
[What is the matter with OSAP (Ontario Student Assistance Programme), that they are able to provide money to students who say they don't expect to need it??]. Most students seem to run short of funds rather than have too much.
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