Tax Free Savings Account -Go open one!!

[Reef Pilot]

Originally Posted by Reef_Geek

is this how it works with TFSA trading accounts?

Yes. Let's say that now you have 25.5K available in your new TFSA. You open up a trading account, and buy a stock for 20K. You were really lucky, and it doubles. Now you have 45.5K tax free room in you TFSA.

Of course, it can go the other way, too. If your 20K stock buy turned into a 10K sell, your TFSA room just dropped down to 15.5K.

But like I said for frequent trading, it is great (just like an RRSP account) where you don't have to declare all your cap gains (or losses), like you do in your regular taxable trading account. I use my taxable accounts more for longer term investments, and dividend stocks. Makes things a lot easier at tax time when you don't have so many transactions to enter in your computer (and all those avg cost calcs along the way).

And unlike RRSP's you don't get taxed when you take money out of a TFSA. So they are great for taking money out occasionally when you need it, and you don't get taxed for it. Then you just put it back, when you have more savings again.