Fully Contributed

Today I finally did something I was meaning to do since January 1st 2012. I recently transferred my position in CIBC over to my TFSA account and now it's collecting me dividends tax-free. With that transfer and all the other transfers I already made, I had leftover contribution room of $459.96 - not quite enough to buy another holding.

I didn't want that room to go to waste (although it would be carried over to the next year) so I just topped off the rest in a TFSA savings account. It took me 4 months but I've finally fully contributed to my TFSA. Now all I have to do it set up my DRIPs because the amount of money that would accumulate in the account would not be enough for me to buy shares manually and I'd rather have my money reinvested as soon as possible than to have it sit there for a year until I can pump in another $5000.

Next goal for my TFSA? Eventually I would like to get all of my positions in the TFSA DRIPing so that I can set them on autopilot and while they collect more shares for me, I can focus on the non-registered account. When it gets to the point where what I'm getting back in dividends is substantial, I'll turn the DRIP off and consciously decide when and where to put the funds (I like to call it "manual DRIPing"). No strict deadline for this one because of the annual $5000 contribution limit, but I can speed things up by increasing my positions in companies I already own rather than transferring stock over from my non-registered account. The only issue with that is I need to find some cash so I guess we'll see how much of that I have when December rolls around.

Slowly but surely, I'm putting the pieces of the money-generating puzzle together, and I'm positive that in the long run this dividend approach will reward me.

-the Paperboy

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

Tax-Free Saving Accounts

Awhile back I talked about which vehicles I would use for certain investments. One of the key accounts to my plan is the Tax Free Saving Account (TFSA). We all hate paying taxes so today I want to go into a little more detail about TFSAs and why you should take advantage of them.