Wednesday, 22 February 2012

TFSA Position Transfer

Since the new year started, I haven't made any moves in terms of investing. However, I transferred my positions in CLF and SLF into my TFSA. My SLF is currently on a DRIP so I'll be receiving shares every quarter instead of cash. This is great because since it's in my TFSA, it would take too long to amass enough funds to purchase more shares on my own because there is a limit to the amount of cash I can add to the portfolio. I plan to eventually get CLF to DRIP as well, continuing with the line of thinking that I have with SLF. Right now the interest (interest because CLF is a government bond ETF, not the stock of a public company) received from CLF will just sit there and collect dust (not what I want to be collecting) instead of helping me with the power of compounding. This is the opportunity cost that I have to pay (at least until I can get more funds into the account and have more money to work with).

Transferring my position resulted in a negligible amount of capital gains in CLF but a substantial amount of capital loss in SLF which I can't use to deduct capital gains taxes. I could have simply sold my shares and moved the funds over to the TFSA to repurchase, resulting in the the capital loss becoming deductible, but then I would have to wait 30 days before repurchasing the shares or it would be considered a superficial loss and would not be eligible. Who knows where the stock could be in a month? Besides, I'm already sitting on the sidelines with some funds; I don't need more money collecting a pittance in a savings account.

-the Paperboy

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