I think it’s great that you point out that TFSA contributions can (and should in some cases) continue into retirement. Both for the scenario of downsizing and also if RRSP meltdown is leaving you with extra funds, the TFSA is a good place to put that money until you need it. Thanks so much!
So happy to see you shedding light on this subject! So many Canadians just have no good understanding of the power of the TFSA. It is such a huge advantage to Canadians who choose to invest within it. I have invested only in index etfs (3) and I can confirm that a Tfsa can be worth far more than 95k at this time. I personally know of a couple who have over 500k in their TFSAs. (Combined,not each) but still! Wow!
@@jmc8076 I don't have enough money invested to have to chose. Are you saying I shouln't put dividend stocks in my tfsa? I like to get income from the stocks I own. Have a few growth stocks but sold most of them to buy dividend stocks while the yields were high
William gets to 865K$ in 2057 when he is 89 years old. IF he never withdraw from the account and IF his rate of return is consistently 6.5% over 48 years. Those odds are remote at best. But then the question is: What is the point of having 865k$ in the bank when you are 89 years old? AND if he retired at 65 year old what income did he use to live?
In this example, the TSA account is large because his needs for spending are low enough that he doesn’t need to actually use the TFSA. This doesn’t mean he cannot use it. It’s just simply in this scenario we’re not planning for that.
Nice easy to understand video on the TFSA. I am near retirement and have a healthy TFSA balance. The table is a great tool to get filled in as well. Thanks!!
Thanks for the video. I fully understand the math/logic. One thing though is when you sell your home you will need to buy another (unless I am missing something), so yes if you downsize enough you will have the ability to load up your TFSA, but by just saying sell your home and all of that halved value will go into the TFSA and non-reg is a bit of a misleading thought in your example.
$7,000 a year is.... about $140 a week Cool.... so many Canadians aren't using thier TFSA's.... I started late because RRSP's scared me off... too complicated.... but I LOVE TFSA now.
😮 Use the TFSA, but also use the RRSP! (To reduce Income Taxes, in the Now!) Also use a straight Investment account! TFSA's & RRSP's can be "Simple Savings Accounts", or "Investment Accounts!" - Either "Self Directed" or "Managed!"
One lesson I've learnt from billionaires is to always put your money to work, and diversifying your investments. I'm planning to invest about $200k of my savings in stocks this year, and I know I’ll make profits.
You are right. The best approach I feel is to diversify investments by spreading investments across different asset classes like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown.
That makes sense. I’ve been using a financial market expert for two years now and I own a six-figure diversified portfolio from investing in stocks. I want to diversify more this year, though.
I really want to get in with a financial advisor this year, especially as all markets are hitting lows. I don't want to be too optimistic and end up losing everything.
Very confused as to why they were allowed to add $276,000 into the TSFA when the maximum contribution room all time is at $95,000 currently? I’m missing something.
@AaronWealthManagement i'm confused as well. The *life-time* limit is $95,00. The cumulative contribution between 2009 and 2024 or 2009 to 2050 is still $95k. Unless I'm missing something?
@@withtgds No, he is projecting that each year, the yearly contribution limit will increase every few years or so. The CURRENT lifetime limit is $95 000. Projected to 2048 it will increase - most likely -every few years, say over another $100 000 maximum room, meaning the max contribution room in 2048 will be over (projected) $270 000.
I agree,this is a bit of a stretch,average house value in canada is i think 6-7 hundred thousand.also i dont think tfsa limits are going to grow as much as we think.most retires are risk adverse the older they get.Lot of huge assumptions here!
Makes sense. Seems like you'd recommend TFSA over RRSP. I get RRSP will be taxed later, but what about contributing there first to get tax refund and then allocating that return to TFSA annually?
Entirely depends on which tax bracket you are in and if you plan on being in a higher tax bracket in the future where you can make better use of the RRSP room.
I would think that someone in their 70’s and 80’s would not be 100% equities, particularly US equities, if they are Canadian, because of the withholding tax to be paid, and the risk of lack of diversification. I might be wrong, but I would think some degree of fixed income would be advisable, not only for peace of mind, but since bonds are taxed as income, shouldn’t they go in the TFSA?
@@HamiltonRb great observation although it’s merely to point out people don’t understand how powerful compounding can be. It’s true someone in their 80,s may be more comfortable with 4%. I’ve tested the plan at 4% from age 75 and the TFSA ends at $1.2 million
@@AaronWealthManagement For example, and I would appreciate your critique of my portfolio, but I keep short term bonds in TFSA, the S&P in RRSP, Canadian stocks in my taxable account, as well as BRK.B, which doesn’t pay a dividend, so no withholding tax.
I am 69. Retired at 60. 100% in equities for the past 39 years and forever looking forward. I mean until I'm gone. 50/50 Canada/US. There's no US withholding tax in RRSP/RRIF. In non registered account no .withholding tax if you keep Berkshire Hathaway (no dividends). Pay capital gains tax and withdraw only as little as you need. Worked like a dream for me. Not going to change anything. I kept buying during 2008 and 2009. Unfortunately, I couldn't buy much during 2020 market drop because I already have lived of dividends at that time. Point is that some people are 100% in equities. No regrets.
@@robertk5441 Do you have a defined pension plan, which certainly makes a difference if you want a more aggressive equity portfolio? I am 72, live 6 months a year at my cottage and rent a condo in Mexico the other 6, and sold my principal residence for 1.2 million and have put it into a mix of stocks, stock etf’s and bond etf’s. I have no defined pension, so this is my income and would be nervous about 100% equities, but trying to find the right balance, in the most tax efficient way.
So I have a TFSA that due to contribution and appreciation is just over $100,000. We are just renting at the moment we don’t even own a home but I just turned 47 years old so they have this much in the TFSA. At this age versus the timeline that you used is to my benefit, but who really has $7000 a year consistently or more to put in your TFSA ?? play around on the calculator a little bit and see what I can figure out
Better examples is to create three examples. First is some one who started before the start of the TFSA and Contributed each year their contribution room, then put it into a Principal Protected GIC for at least a year. One version the person kept their item in GICs. Another took the Interest from the first GIC into volatile unprotected funds. Next have some one who started at the half way Another who started today. No houses buy or Sell, just GIC on the Contribution Room and the Interest can be GIC/ETF/Stocks/Bonds/Mutual Funds. Thus keep the contribution funds protected and no loss on the contribution room.
TFSA are a great tool to build wealth. Every Canadian should have one. Just buy simple divided paying stock, banks, power companies, mining, groceries, mobile communications and watch it grow.
You can write CC's in your TFSA. DO THIS you just need to own shares. Basically a dividend with great % returns on the monthly 3% or more when being conservative.
The downside to this is that the 23 years they didn't contribute they miss out on time value of that money growing up until the time they sell the house
thank u for the great content. i have been re listening for so many times!. and trying to understand as i am a slow learner for finances . i finally did it myself online with my RBC, starting with $1,000 non-redeemable GIC with 3.25% interest for 6-month term. even only $1,000 (which is less than 10% of my total saving amount i have) invested, i am still nervous of losing it!!
So it does not matter how much GROWTH you have in that account, it only matters how much you CONTRIBUTE? So as long as you don't 'over contribute' you are not taxed on it. Do I understand this right?
Thanks for this video. The math doesn't lie. All things remaining constant, there is no doubt that million dollar TFSAs are very possible. The big question is, will the government stand by and let these accounts get that large without wanting a taste? I know you don't have a crystal ball, but what do you think?
i am 56 female working in health care in BC for 13 years. most my co-workers including me have little knowledge about finance!! . And i am learning from watching your videos . thank you so much thank u so much for yr video about TFSA. it gives me hope!!. i have little savings as i support my 2 teenagers nephews with their education from grade 1 in private school and all the way to university. but my husband has $100,000 invested in TFSA with 5% return annually or equivalent to $5,000 a year. i will kindly ask him not to withdraw!! and keep it in TFSA until the day he passes! and as beneficiary (if i outlive him), i will carry on as u mentioned in the video and down the road give all the money plus a house in BC to my nephews who are non-residents.!! of course they will be hit with non-resident taxes!! but well. life goes on 😊
Just a caveat, using your TFSA to actively trade will draw the ire of CRA. They will tax you at max tax rate as if you're running a holding company. The CRA has not made it clear as to what they qualify as active trading.
No it won’t. Only if you’re day trading (multiple trades daily). I know people with 200k+ in their TFSAs from trading and CRA hasn’t said anything. You’re a moron.
@@sawfiler1958 no worries if you need to rebalance or crystal gains because of market volatility. CRA goes after people who build up their TFSA balances to millions of dollars by actively trading. However, if you're lucky enough to have invested in, say, a growth stock that grew exponentially over a number of years and decided to sell / crystallize gains, that's fine.
Always enjoy these videos. This one does seem like a stretch. TFSA was introduced in 2009, the first contribution was $5000. It’s currently averaging around $7000- $7500 per year, that’s 15 years later. To forecast TFSA yearly limits of $16000 25 years from now seems optimistic. If you look at the current path forecasted out its best cast $10,500-11,000 years from now.
The math doesn’t add up at all. The TFSA column increases by thousands of dollars with zero contribution? And the comes another 275k added into it...really doesn’t make sense.
It does add up. There is no 275k being added to it. Start with 100k and increase that by 6.5% for 34 years. Realistic? No. Mathetmatically sound, 100%. 1.065^34=8.5. If you start with 100k, compound it 34 times with 6.5% interest, you end up with 850k. But he's 56 and he'll get there at the age of 90 with zero withdrawals.
Retirees who struggle to meet their basic needs are often those who couldn’t save enough during their working years to cover those needs. Retirement decisions play a significant role in this. My husband and I both spent the same number of years in civil service, but she invested through a wealth manager while I focused on a 401(k). Thanks to these choices, we’re both still earning even after retirement.
This is so true. I’m in my mid-50s now, and my wife and I were on a similar path. Two years ago, I decided to pull my money and invest with her wealth manager. While I haven’t quite caught up to her profits over the years, I’m earning more now. I’m making money even before retiring, and my retirement fund has grown significantly more than it would have with just the 401(k). Haha!
@BelindaAdam-n5gI completely understand your feelings about these firms. When I was starting out, I looked into a few freelance investors online, and you might find that helpful too. Personally, I work with Sophie Kathryn Jones, who is highly regarded for her expertise in the financial market. With extensive knowledge of portfolio diversification, she’s widely acknowledged as an authority in this field.
Your house asset valuation of $1.5 million is laughable. 75% or more will fail to have a $450,000 mortgage paid off by 50 or 60 nevermind being able to afford a $1.5 million mortgage. Not to mention.... what 90 year old needs over a million dollars? I would rather plan to retire at 60 or 65 (if I choose). I plan on having $600,000-$800,000 in my Lira, TFSA, precious metals etc... plus having the $500,000+ in home equity to live on. $1.3 million earning 10% every year ($130,000/year) is pretty damn easy to live off.
Great video. But you should redo the whole thing accounting for inflation. That TFSA account will not have the same purchase power ar the end. It needs to be bumped up every year to keep up with inflation rates.
@@petersk8 great insight and thanks for watching the video. Actually the TFSA deposits represent future increases. In the video you can see $13K annual deposits going up by $500 every 2 years
This is nonsense. You would be silly not to contribute the max to your tfsa every year. But the goal should be to spend it all by the time you are dead. At 90 why would you want 1million dollars?
Using a Canadian broker you don't pay tax inside your TFSA even if you invest in a US fund. I believe there is a small deduction at source for any dividend income you incur but no tax on gains. I use Questrade, hope this helps !
Yes, for dividend stocks/funds. There is a 15% dividend with-holding tax for US dividends. If it say a US stock with no dividends then you do not pay tax on capital gains in your TFSA.
Yes, the Math works out. I just have two questions. First of all, They never withdraw their TFSA until 80 if I remember right. so...how do they pay their expenses. They have other income? Second, What can they do with one million at 2050, 60ish ? one million property might only buy them a Prius. Of cause, I encourage people to do so, but the contribution amount is just too little. It looks like Canadian government design this to let people live in their bare minimum tax free live.
@@KnowledgeCurse Simple. Put someone else as a joint holder of the account and the money will be theirs. Risky though, unless you completely trust them.
I think you should start contributing to your TFSA and start compounding interest when your parents start dating, way before your existence was just a mere idea in your parent's head.
I’d like to have $1,000,000 in TFSA to draw 4% per year from, which may work now. Likely not in 20 years though. Do you have some free calculators you can refer us to?
The only money I have to contribute to the TFSA is to remove from my RRSP. I am 69 years old. Should I maximize my TFSA contribution by removing funds from my RRSP? obviously I pay Tax on the RRSP removal.
6.5 % is very conservative...most these types of explanations Averages it out. So you may not makes exactly 6.5 guaranteed each year but in a 5 year , 10 year, 20 year span your averaging that. Steady contributions (low and slow, set it and forget it) is the key. Market goes down your steady contributions buy more.
i still rather load up on my high cash value permanent life insurance, uninterrupted, so it'll still grow even when i take a loan, instead of withdrawing from tfsa
Great informative video. It's time in the market. Not timing the market. 91 years might not be a stretch for most people as life expectancy will improve over the next 30 years. I personally plan on living until over 100 & I am a male. Women will live even longer.
Hi aaron can you make an example video of withdrawals as well. Lets say my tfsa is currently at $2million. I plan to withdraw $1m this calander year. Just want to clarify for others, the next year contribution room also grows by $1m because i took out $1m.
The contribution limit does not "grow by $1M". It grows by the annual contribution room maybe $7,000 in 2025 if it stays the same as 2024. However, you're allowed to "fill the hole" you made. So next year you can put back the $1M + the $7,000
Simulation works well with consistent +6.50% pear year. Reality is very different. Over the past 20 years, the S&P 500 has experienced annual returns ranging from a low of -38% (in 2008) to a high of +38% (in 1995). It's volatile and unpredictable. I understand the approach though using averages can be very misleading. My $0.02.
I'm 54, on about $60 000 income, floating a mortgage as it is cheaper than renting, recently divorced, and all my savings went to lawyers, paying off, etc. and now having to start from almost zero savings/investments. I guess I am never going to hit anywhere close to 1 million at my age and probably retirement will be hard lol
The largest crypto movement in history is about to unfold. I'm 40 and in the same situation. My money is in my TFSA, Riding on MSTR. The company baught 9 Billion in bitcoin.... what ever bitcoin does....MSTR will x3. Good luck my friend, within 8 months, sell it all.
Didn’t you get the mono, never get married and if you do don’t get divorced. I’m 58 yrs never married zero kids three small apartment buildings and a nice pension no problems paying my bills.
Well I know someone close to me that I helped who took 30k last year and 12 months later is sitting just over 1m now in tfsa. So I guess we're qualified then right? Already started to get lots of questions from the broker but it was done extremely fast, and aggressive but it is possible. I wouldn't be surprised if the tax people (yes we know who they are here) try to change the rules and say it's a business or something like that, all while playing by their rules and trading regularly in the tfsa. I've read about this type of thing on the net before happening to very successful investores so we'll see what happens in this case. So from my view, the numbers in this video posted above are actually easy to hit if you take the time to educate yourself a bit and stop letting the bankers invest your money instead of you investing your money. (And yes I know these numbers seem unreal but they are real and we are retired age too). Think outside the box a bit and stop listening to advice from broke but loving friends or relatives. All we did was within the stock market as well.
@Codyg-ug3tf Knowing someone who has made millions doesn't mean you have millions. Our combined TFSA just clipped 400k, which is too far from 1 million.
Ok perspective here. Let’s say you received $1 million today. How would that help you? A decision made 30 years ago resulted in you having $1 million today.
@AaronWealthManagement I wonder just what I would have needed to have done over the past thirty years to have a million dollar portfolio today? One million in 1990 is equal to 2.4 in 2024 btw. I'd buy some passports and citizenship someplace and leave Canada
Invest early and invest often. Maximize the yearly contribution. Continuing during your retirement years. 😊 $1.5 million is not realistic today. (Unless you live in Toronto). $600-$800k is typical for Canadians.
A TFSA would actually be half decent *if* it was really tax-free, but instead, it is not "tax-free" as the Orwellian name implies, you can only invest after-tax income into it, which makes it not so great (yeah yeah, you won't be taxed when you cash out 30+ years later, or along the way, whoohoo). A much better strategy, is to borrow money and invest it. You will be able to invest the full amount, instead of only a significantly lower percentage of it, without a limit other than what you can borrow, the interest charged is much less than the massive taxation you are hit with on income, and you'll be able to write off the interest as a valid expense. Pay the loan off as soon as you can, and let the investment incubate, which will grow much larger than your puny TFSA will. The tax hit when you cash out will suck, but you'll till be much further ahead. Almost all the tax fee savings "benefits" like RRSP and TSFA come with a big limitation and/or disadvantage. Sure, use them if you can, but you'll have to do much more in your own way.
Yea, we need more canadian content like this to teach the next generation. I appreciate this video. I also agree with this concept I'm 34 if I stick to this method I can be well of by 60 😊
Except that $1.2M will be worth maybe $400k in 30 years and the retirement home will take most of that unless you're lucky enough to be healthy and can live unassisted.
1.2M in 1994 is about 600k today. Which is a substantial amount still. Except things don't work like that, the money stays invested, so it will inevitably always beat inflation if we rely on historical data.
Pay Attention !! Time to Upgrade The difference between professional UA-camr and basic UA-camr have a line of Thumbnail only !!! I'll do thumbnails but that's not really important but the important is it increases the CTR of your videos, I work with many youtubers and i know what a youtube channel needs.. So i offer you $2 per thumbnail . That you use multiple times on your UA-cam video .Probably this is one of the best investment i here from my clients !!
I'm already lost 5 minutes in. Showing this giant spreadsheet for William and Catherine is ultra confusing. Why not use a fictional client with less data? What about people who don't have a home to sell? Some people, like me, not the sharpest knife in the cupboard.
@@AaronWealthManagement I would suggest copying what they do. Foreign properties, foreign bank accounts, foreign businesses and whole life insurance on everyone you can in a trust. Wow isn't that what Trudeaus grandpa did.
The only problem with this example is the age of the couple. They can die the next day. They don’t have a lot of time to enjoy the millions. The money will go to the kids tax free Lol
Same, I met Elizabeth stark last year for the first time at a conference in Wilshire, after then my Life has changed for good.God bless Elizabeth stark
I think it’s great that you point out that TFSA contributions can (and should in some cases) continue into retirement. Both for the scenario of downsizing and also if RRSP meltdown is leaving you with extra funds, the TFSA is a good place to put that money until you need it. Thanks so much!
So happy to see you shedding light on this subject! So many Canadians just have no good understanding of the power of the TFSA. It is such a huge advantage to Canadians who choose to invest within it. I have invested only in index etfs (3) and I can confirm that a Tfsa can be worth far more than 95k at this time. I personally know of a couple who have over 500k in their TFSAs. (Combined,not each) but still! Wow!
@@derekcox6531 thanks for watching the video and for your comment
It's great for tax free dividends!
@@famicomnintendo
Highest taxed inside TFSA or RRSP/RRIF and lowest taxed incl Canadian dividends or cap gains in non-reg account/ taxable.
@@jmc8076 I don't have enough money invested to have to chose. Are you saying I shouln't put dividend stocks in my tfsa? I like to get income from the stocks I own. Have a few growth stocks but sold most of them to buy dividend stocks while the yields were high
may I ask which 3 etfs you chose to invest in?
William gets to 865K$ in 2057 when he is 89 years old.
IF he never withdraw from the account and
IF his rate of return is consistently 6.5% over 48 years.
Those odds are remote at best.
But then the question is:
What is the point of having 865k$ in the bank when you are 89 years old?
AND if he retired at 65 year old what income did he use to live?
In this example, the TSA account is large because his needs for spending are low enough that he doesn’t need to actually use the TFSA. This doesn’t mean he cannot use it. It’s just simply in this scenario we’re not planning for that.
What happens if the snp 500 crashes 50% ?
@@g-wagonsg-wagon3693 the usa goes bankrupt and you move to the backwoods' country and try to survive...
i'd be coughing blood by that age. i dont think i can use that money to jetski or bungee jump even if i wanted to.
Best Canadian financial planning channel on ytube! Thanks David!
Awesome video! Thank you for explaining it so clearly! Liked and subscribed now
Thank you for your comment and for subscribing.
Nice easy to understand video on the TFSA. I am near retirement and have a healthy TFSA balance.
The table is a great tool to get filled in as well. Thanks!!
Thanks for the video. I fully understand the math/logic. One thing though is when you sell your home you will need to buy another (unless I am missing something), so yes if you downsize enough you will have the ability to load up your TFSA, but by just saying sell your home and all of that halved value will go into the TFSA and non-reg is a bit of a misleading thought in your example.
$7,000 a year is.... about $140 a week
Cool.... so many Canadians aren't using thier TFSA's.... I started late because RRSP's scared me off... too complicated.... but I LOVE TFSA now.
😮 Use the TFSA, but also use the RRSP! (To reduce Income Taxes, in the Now!) Also use a straight Investment account!
TFSA's & RRSP's can be "Simple Savings Accounts", or
"Investment Accounts!" - Either "Self Directed" or "Managed!"
One lesson I've learnt from billionaires is to always put your money to work, and diversifying your investments. I'm planning to invest about $200k of my savings in stocks this year, and I know I’ll make profits.
You are right. The best approach I feel is to diversify investments by spreading investments across different asset classes like bonds, real estate, and international stocks, they can reduce the impact of a market meltdown.
That makes sense. I’ve been using a financial market expert for two years now and I own a six-figure diversified portfolio from investing in stocks. I want to diversify more this year, though.
I really want to get in with a financial advisor this year, especially as all markets are hitting lows. I don't want to be too optimistic and end up losing everything.
Her name is Annette Christine Conte can't divulge much. Most likely, the internet should have her basic info, you can research if you like
Thank you for this Pointer. It was easy to find your handler, She seems very proficient and flexible. I booked a call session with her.
Very confused as to why they were allowed to add $276,000 into the TSFA when the maximum contribution room all time is at $95,000 currently? I’m missing something.
@@Wlachancegofordividend. future increases in TFSA limits plus years they didn’t contribute plus replacing withdrawals
@AaronWealthManagement i'm confused as well. The *life-time* limit is $95,00. The cumulative contribution between 2009 and 2024 or 2009 to 2050 is still $95k. Unless I'm missing something?
@@withtgds No, he is projecting that each year, the yearly contribution limit will increase every few years or so. The CURRENT lifetime limit is $95 000. Projected to 2048 it will increase - most likely -every few years, say over another $100 000 maximum room, meaning the max contribution room in 2048 will be over (projected) $270 000.
I agree,this is a bit of a stretch,average house value in canada is i think 6-7 hundred thousand.also i dont think tfsa limits are going to grow as much as we think.most retires are risk adverse the older they get.Lot of huge assumptions here!
@@JohnHobbs-o3z thanks for watching. I also tested the portfolio by reducing the return to 4% at age 75 and the balance ended at $1.2 million
Makes sense. Seems like you'd recommend TFSA over RRSP. I get RRSP will be taxed later, but what about contributing there first to get tax refund and then allocating that return to TFSA annually?
Hi Gregory, I wouldn't say I favour a TFSA over an RRSP. They are both important to an individuals retirement plan.
Entirely depends on which tax bracket you are in and if you plan on being in a higher tax bracket in the future where you can make better use of the RRSP room.
I would think that someone in their 70’s and 80’s would not be 100% equities, particularly US equities, if they are Canadian, because of the withholding tax to be paid, and the risk of lack of diversification. I might be wrong, but I would think some degree of fixed income would be advisable, not only for peace of mind, but since bonds are taxed as income, shouldn’t they go in the TFSA?
@@HamiltonRb great observation although it’s merely to point out people don’t understand how powerful compounding can be. It’s true someone in their 80,s may be more comfortable with 4%. I’ve tested the plan at 4% from age 75 and the TFSA ends at $1.2 million
@@AaronWealthManagement For example, and I would appreciate your critique of my portfolio, but I keep short term bonds in TFSA, the S&P in RRSP, Canadian stocks in my taxable account, as well as BRK.B, which doesn’t pay a dividend, so no withholding tax.
I am 69. Retired at 60. 100% in equities for the past 39 years and forever looking forward. I mean until I'm gone. 50/50 Canada/US. There's no US withholding tax in RRSP/RRIF. In non registered account no .withholding tax if you keep Berkshire Hathaway (no dividends). Pay capital gains tax and withdraw only as little as you need.
Worked like a dream for me. Not going to change anything. I kept buying during 2008 and 2009. Unfortunately, I couldn't buy much during 2020 market drop because I already have lived of dividends at that time. Point is that some people are 100% in equities. No regrets.
@@robertk5441 Do you have a defined pension plan, which certainly makes a difference if you want a more aggressive equity portfolio? I am 72, live 6 months a year at my cottage and rent a condo in Mexico the other 6, and sold my principal residence for 1.2 million and have put it into a mix of stocks, stock etf’s and bond etf’s. I have no defined pension, so this is my income and would be nervous about 100% equities, but trying to find the right balance, in the most tax efficient way.
@@robertk5441well done sir. People get too caught up in withholding taxes. Just go for those capital gains.
So I have a TFSA that due to contribution and appreciation is just over $100,000. We are just renting at the moment we don’t even own a home but I just turned 47 years old so they have this much in the TFSA. At this age versus the timeline that you used is to my benefit, but who really has $7000 a year consistently or more to put in your TFSA ?? play around on the calculator a little bit and see what I can figure out
Better examples is to create three examples.
First is some one who started before the start of the TFSA and Contributed each year their contribution room, then put it into a Principal Protected GIC for at least a year. One version the person kept their item in GICs. Another took the Interest from the first GIC into volatile unprotected funds.
Next have some one who started at the half way
Another who started today.
No houses buy or Sell, just GIC on the Contribution Room and the Interest can be GIC/ETF/Stocks/Bonds/Mutual Funds. Thus keep the contribution funds protected and no loss on the contribution room.
TFSA are a great tool to build wealth. Every Canadian should have one. Just buy simple divided paying stock, banks, power companies, mining, groceries, mobile communications and watch it grow.
You can write CC's in your TFSA. DO THIS you just need to own shares. Basically a dividend with great % returns on the monthly 3% or more when being conservative.
Yep, i write covered calls every so often in my TFSA
The downside to this is that the 23 years they didn't contribute they miss out on time value of that money growing up until the time they sell the house
thank u for the great content. i have been re listening for so many times!. and trying to understand as i am a slow learner for finances . i finally did it myself online with my RBC, starting with $1,000 non-redeemable GIC with 3.25% interest for 6-month term. even only $1,000 (which is less than 10% of my total saving amount i have) invested, i am still nervous of losing it!!
You can't lose a GIC. But you're also not going to make a lot. Recommend reading the millionaire teacher to learn about the stock market
@@robert7737 thank you. i just checked it out, great reviews. i will buy its audiobook.
That was wonderful. I’m 37 and will be working on this.
So it does not matter how much GROWTH you have in that account, it only matters how much you CONTRIBUTE? So as long as you don't 'over contribute' you are not taxed on it. Do I understand this right?
Yes, provided your not day trading
@@AaronWealthManagement Not day trading. Wouldn't the growth be considered capitol gains though? (which means taxed)
@@tammy-lynnstewart5677 Not in a TAX FREE Savings Account.
Great video! What software are you using?
How exiting! Thank you for the detailed explanation!
Buy options weekly or monthly in the TFSA and grow it exponentially faster.
Thanks for this video. The math doesn't lie. All things remaining constant, there is no doubt that million dollar TFSAs are very possible. The big question is, will the government stand by and let these accounts get that large without wanting a taste? I know you don't have a crystal ball, but what do you think?
They do have a habit of coming for our money
Thank you for the explanation!
Great info. Thanks.
My only concern is the assumption here is you will be all equity (e.g. S& P500?) even in your senior years. No bonds or Gic, etc
Thanks for your comment and for watching the video. The rate of return used is around 5% in their 80's so its actually more weighted to fixed income.
Prof. Scott Cederburg’s bond vs equity study on rational reminder or Google his studies.
When reinvesting the dividends inside TFSA , does that count towards the TFSA contribution limit??
I understand, and now I need a time machine to go back and do that :)
Me too!
Where do they live after they put all the equity in the TFSA and RRSP
Thank you this helps and i just subscried
Thanks for watching, subscribing and for your comment.
i am 56 female working in health care in BC for 13 years. most my co-workers including me have little knowledge about finance!! . And i am learning from watching your videos . thank you so much
thank u so much for yr video about TFSA. it gives me hope!!. i have little savings as i support my 2 teenagers nephews with their education from grade 1 in private school and all the way to university. but my husband has $100,000 invested in TFSA with 5% return annually or equivalent to $5,000 a year. i will kindly ask him not to withdraw!! and keep it in TFSA until the day he passes! and as beneficiary (if i outlive him), i will carry on as u mentioned in the video and down the road give all the money plus a house in BC to my nephews who are non-residents.!! of course they will be hit with non-resident taxes!! but well. life goes on 😊
Big thx to all workers on our health care system. Not sure how you do it.
Just a caveat, using your TFSA to actively trade will draw the ire of CRA. They will tax you at max tax rate as if you're running a holding company. The CRA has not made it clear as to what they qualify as active trading.
I believe the CRA will tax your TFSA earnings if you're using it for Day Trading.
Yep. It has happened to someone I know.
No it won’t. Only if you’re day trading (multiple trades daily). I know people with 200k+ in their TFSAs from trading and CRA hasn’t said anything. You’re a moron.
So if I'm not trading every day I will be safe. Once in a while I might make two trades in on week.
@@sawfiler1958 no worries if you need to rebalance or crystal gains because of market volatility. CRA goes after people who build up their TFSA balances to millions of dollars by actively trading. However, if you're lucky enough to have invested in, say, a growth stock that grew exponentially over a number of years and decided to sell / crystallize gains, that's fine.
Always enjoy these videos. This one does seem like a stretch. TFSA was introduced in 2009, the first contribution was $5000. It’s currently averaging around $7000- $7500 per year, that’s 15 years later. To forecast TFSA yearly limits of $16000 25 years from now seems optimistic. If you look at the current path forecasted out its best cast $10,500-11,000 years from now.
I designed a sheet to do this forecast: Limit will be 11,500 in 25 years at 2% CPI. Will need 3.5% CPI to make it to 16,000 in 25 years
And where do you get the money after retirement at 67? Is it from the same tfsa account that you saved?
Not sure I understand your question. Your Non-registered or simply put the money your not using to fund your lifestyle is deposited to your TFSA
It's all about finding the most valuable investments.
What if we just invest in GIC's...
@@manishipec can you expand your question. You can invest in GICs if you want
Then you will lose purchasing power over the years and stay poor.
The math doesn’t add up at all. The TFSA column increases by thousands of dollars with zero contribution? And the comes another 275k added into it...really doesn’t make sense.
It does add up. There is no 275k being added to it. Start with 100k and increase that by 6.5% for 34 years. Realistic? No. Mathetmatically sound, 100%. 1.065^34=8.5. If you start with 100k, compound it 34 times with 6.5% interest, you end up with 850k. But he's 56 and he'll get there at the age of 90 with zero withdrawals.
Retirees who struggle to meet their basic needs are often those who couldn’t save enough during their working years to cover those needs. Retirement decisions play a significant role in this. My husband and I both spent the same number of years in civil service, but she invested through a wealth manager while I focused on a 401(k). Thanks to these choices, we’re both still earning even after retirement.
This is so true. I’m in my mid-50s now, and my wife and I were on a similar path. Two years ago, I decided to pull my money and invest with her wealth manager. While I haven’t quite caught up to her profits over the years, I’m earning more now. I’m making money even before retiring, and my retirement fund has grown significantly more than it would have with just the 401(k). Haha!
@BelindaAdam-n5gI completely understand your feelings about these firms. When I was starting out, I looked into a few freelance investors online, and you might find that helpful too. Personally, I work with Sophie Kathryn Jones, who is highly regarded for her expertise in the financial market. With extensive knowledge of portfolio diversification, she’s widely acknowledged as an authority in this field.
Amazing video. That just blew my mind
It's $95k so far but it's started 15yrs ago. ~$5k a year addition compounded.... so simple
6.50% every year?
Nice video, but a bit misleading assuming everyone has a million dollar home to sell. I think it would be nice to see a video with just TFSA money.
Scenario was perfect for me. Guess you just need to rework the numbers for your situation
Your house asset valuation of $1.5 million is laughable. 75% or more will fail to have a $450,000 mortgage paid off by 50 or 60 nevermind being able to afford a $1.5 million mortgage. Not to mention.... what 90 year old needs over a million dollars? I would rather plan to retire at 60 or 65 (if I choose). I plan on having $600,000-$800,000 in my Lira, TFSA, precious metals etc... plus having the $500,000+ in home equity to live on. $1.3 million earning 10% every year ($130,000/year) is pretty damn easy to live off.
Great video. But you should redo the whole thing accounting for inflation. That TFSA account will not have the same purchase power ar the end. It needs to be bumped up every year to keep up with inflation rates.
@@petersk8 great insight and thanks for watching the video. Actually the TFSA deposits represent future increases. In the video you can see $13K annual deposits going up by $500 every 2 years
This is nonsense. You would be silly not to contribute the max to your tfsa every year. But the goal should be to spend it all by the time you are dead. At 90 why would you want 1million dollars?
This example illustrates the funds needed to meet their expense goal and anything in excess of their spending is deposited to their TFSA.
Retirement homes are expensive.. need to save for it 😂
Are u not understanding that things go up in price?
I have children.
Agree!!! super silly, who cares how much money you have at age 90 the end of the road!!
Could you please explain that do we need to pay tax if we use our TFSA to invest in US stocks like VOO ?! Greatly appreciated 🙏
Using a Canadian broker you don't pay tax inside your TFSA even if you invest in a US fund. I believe there is a small deduction at source for any dividend income you incur but no tax on gains. I use Questrade, hope this helps !
Yes, for dividend stocks/funds. There is a 15% dividend with-holding tax for US dividends. If it say a US stock with no dividends then you do not pay tax on capital gains in your TFSA.
You don't pay tax. They just automatically take 15% of the dividends away. But who cares, you don't buy VOO for dividends, you buy it for growth.
Yes, the Math works out. I just have two questions. First of all, They never withdraw their TFSA until 80 if I remember right. so...how do they pay their expenses. They have other income? Second, What can they do with one million at 2050, 60ish ? one million property might only buy them a Prius. Of cause, I encourage people to do so, but the contribution amount is just too little. It looks like Canadian government design this to let people live in their bare minimum tax free live.
Compound interest is key!!
Why just do it until just 90? If you do it until 200 years old, wont' I be even richer?
I was thinking the same. He should be teaching estate planning to transfer this wealth tax free
@@KnowledgeCurse Simple. Put someone else as a joint holder of the account and the money will be theirs. Risky though, unless you completely trust them.
No, read the TFSA restrictions. You have to pull it all out when you reach 195 years old.
I think you should start contributing to your TFSA and start compounding interest when your parents start dating, way before your existence was just a mere idea in your parent's head.
You should also subtract fees to be fair n maybe 3% inflation.I wish more people understood how powerful this account is.
I’d like to have $1,000,000 in TFSA to draw 4% per year from, which may work now. Likely not in 20 years though. Do you have some free calculators you can refer us to?
Try www.getsmarteraboutmoney.ca/calculators/
The only money I have to contribute to the TFSA is to remove from my RRSP. I am 69 years old. Should I maximize my TFSA contribution by removing funds from my RRSP? obviously I pay Tax on the RRSP removal.
I wouldn’t withdrawal just to fill up your TFSA. An RRSP meltdown is designed to not leave money in your RRSP when you pass.
I think the real flaw in here is that in a conservative account you can’t expect to get 6.5% return
6.5 % is very conservative...most these types of explanations Averages it out. So you may not makes exactly 6.5 guaranteed each year but in a 5 year , 10 year, 20 year span your averaging that. Steady contributions (low and slow, set it and forget it) is the key. Market goes down your steady contributions buy more.
Quite simple and affordable in retirement. Beautiful !
I have over 100,000 due to growth in a TFSA and thinking of opening up another TFSA
You'd be thinking your way into prison 🤣
@ you can have more than one from different banks or investment companies ….
@@cindy7764
True. Max total for all added must be current yr limit per CRA.
Awesome, sometimes simple stuff is not simple.
Nice contents
i still rather load up on my high cash value permanent life insurance, uninterrupted, so it'll still grow even when i take a loan, instead of withdrawing from tfsa
Whole life insurance is a terrible product.
Great informative video. It's time in the market. Not timing the market. 91 years might not be a stretch for most people as life expectancy will improve over the next 30 years. I personally plan on living until over 100 & I am a male. Women will live even longer.
Hi aaron can you make an example video of withdrawals as well. Lets say my tfsa is currently at $2million. I plan to withdraw $1m this calander year. Just want to clarify for others, the next year contribution room also grows by $1m because i took out $1m.
The contribution limit does not "grow by $1M". It grows by the annual contribution room maybe $7,000 in 2025 if it stays the same as 2024. However, you're allowed to "fill the hole" you made. So next year you can put back the $1M + the $7,000
I have already well past 1M in my TFSA by investing in the stock market, so it is possible.
how old are you
Bravo. Not far behind you. Let’s not forget it was Harper that introduced this mechanism.
@@robt9043 Trudeau sucks sooo much
You must be a genius ramping your tfsa to 1M!
You going to regret this if you get cut
It is more than possible my tfsa is worth 883 K$ .
Simulation works well with consistent +6.50% pear year. Reality is very different. Over the past 20 years, the S&P 500 has experienced annual returns ranging from a low of -38% (in 2008) to a high of +38% (in 1995). It's volatile and unpredictable. I understand the approach though using averages can be very misleading. My $0.02.
S&P 500 has averaged between 8-10% over the last 30 years taking into consideration the bull and bear markets.
I'm 54, on about $60 000 income, floating a mortgage as it is cheaper than renting, recently divorced, and all my savings went to lawyers, paying off, etc. and now having to start from almost zero savings/investments. I guess I am never going to hit anywhere close to 1 million at my age and probably retirement will be hard lol
The largest crypto movement in history is about to unfold. I'm 40 and in the same situation. My money is in my TFSA, Riding on MSTR.
The company baught 9 Billion in bitcoin.... what ever bitcoin does....MSTR will x3.
Good luck my friend, within 8 months, sell it all.
Didn’t you get the mono, never get married and if you do don’t get divorced. I’m 58 yrs never married zero kids three small apartment buildings and a nice pension no problems paying my bills.
@@jeffkukkee good job man, I'd sell it in April before the Vegas Bitcoin conference in May. Maybe rebuy in the summer for another leg up in the fall.
The only person who is qualified on this topic is the person who has $1000000 in his or her TFSA account. Don't listen to the unqualified.
Well I know someone close to me that I helped who took 30k last year and 12 months later is sitting just over 1m now in tfsa. So I guess we're qualified then right? Already started to get lots of questions from the broker but it was done extremely fast, and aggressive but it is possible. I wouldn't be surprised if the tax people (yes we know who they are here) try to change the rules and say it's a business or something like that, all while playing by their rules and trading regularly in the tfsa. I've read about this type of thing on the net before happening to very successful investores so we'll see what happens in this case. So from my view, the numbers in this video posted above are actually easy to hit if you take the time to educate yourself a bit and stop letting the bankers invest your money instead of you investing your money. (And yes I know these numbers seem unreal but they are real and we are retired age too). Think outside the box a bit and stop listening to advice from broke but loving friends or relatives. All we did was within the stock market as well.
@Codyg-ug3tf Knowing someone who has made millions doesn't mean you have millions. Our combined TFSA just clipped 400k, which is too far from 1 million.
What will a million Canadian dollars get us in thirty years?
More than having nothing saved.
@@SeekingVirtueA Of course. I just hope they stop printing money
If you live in Toronto that will probably pay for the average parking spot in the average condo that costs $10 Million dollars.
Ok perspective here. Let’s say you received $1 million today. How would that help you? A decision made 30 years ago resulted in you having $1 million today.
@AaronWealthManagement I wonder just what I would have needed to have done over the past thirty years to have a million dollar portfolio today? One million in 1990 is equal to 2.4 in 2024 btw. I'd buy some passports and citizenship someplace and leave Canada
Make 100,000 at 35 to 1 million by age 50 without dumping a large lumpsum into the tfsa
What good is $1.1 million when I’m 86 years old?? 🤔
You'll be the richest guy in the cemetery if in a small town!
@ lol 😂
Legacy for grand/kids, bursa/ scholarship for those who can’t afford college or many charities or orgs who will use the funds to help others.
I started 2016, my contribution starts 2010 , I am above $200K
Invest early and invest often.
Maximize the yearly contribution.
Continuing during your retirement years.
😊
$1.5 million is not realistic today. (Unless you live in Toronto). $600-$800k is typical for Canadians.
1.5m is very realistic for many areas of Canada including where I live
@@Yielar1 Twice the average price. 🙈
“ In August 2024, the national benchmark home price, which measures the price of a “typical” home, was $717,800”
I am so sad I didn’t know this 5 years ago
What are you investing in?
A TFSA would actually be half decent *if* it was really tax-free, but instead, it is not "tax-free" as the Orwellian name implies, you can only invest after-tax income into it, which makes it not so great (yeah yeah, you won't be taxed when you cash out 30+ years later, or along the way, whoohoo). A much better strategy, is to borrow money and invest it. You will be able to invest the full amount, instead of only a significantly lower percentage of it, without a limit other than what you can borrow, the interest charged is much less than the massive taxation you are hit with on income, and you'll be able to write off the interest as a valid expense. Pay the loan off as soon as you can, and let the investment incubate, which will grow much larger than your puny TFSA will. The tax hit when you cash out will suck, but you'll till be much further ahead. Almost all the tax fee savings "benefits" like RRSP and TSFA come with a big limitation and/or disadvantage. Sure, use them if you can, but you'll have to do much more in your own way.
Yea, we need more canadian content like this to teach the next generation. I appreciate this video. I also agree with this concept I'm 34 if I stick to this method I can be well of by 60 😊
I'm 50 and have $50,000 in my TFSA. I think I am too late! Lmao
Except that $1.2M will be worth maybe $400k in 30 years and the retirement home will take most of that unless you're lucky enough to be healthy and can live unassisted.
Or just withdraw it and gift it to a family member and show the government u have no money and they pay for ur assisted living :)
1.2M in 1994 is about 600k today. Which is a substantial amount still. Except things don't work like that, the money stays invested, so it will inevitably always beat inflation if we rely on historical data.
Pay Attention !! Time to Upgrade
The difference between professional UA-camr and basic UA-camr have a line of Thumbnail only !!!
I'll do thumbnails but that's not really important but the important is it increases the CTR of your videos, I work with many youtubers and i know what a youtube channel needs..
So i offer you $2 per thumbnail . That you use multiple times on your UA-cam video .Probably this is one of the best investment i here from my clients !!
Simple. Buy Bitcoin. I did in March of 2020, and am now laughing to the bank.
Have 100k to put into it.
I'm already lost 5 minutes in. Showing this giant spreadsheet for William and Catherine is ultra confusing. Why not use a fictional client with less data? What about people who don't have a home to sell? Some people, like me, not the sharpest knife in the cupboard.
Iam very poor so many pooor plz help me on God help u and love u plz helpme
And so what, after 80 having so much money is more of a head ache then anything else
Man, that was a waste of my time.
lol
Well that was useless.
This is a horrible idea to allow the government access to 1 mil of your wealth.
@@johnmcdonald1300 where do you keep your money? If it’s in a traditional investment the government knows about it.
@@AaronWealthManagement I would suggest copying what they do. Foreign properties, foreign bank accounts, foreign businesses and whole life insurance on everyone you can in a trust. Wow isn't that what Trudeaus grandpa did.
Money even gold now is rarely hidden for long.
The only problem with this example is the age of the couple. They can die the next day. They don’t have a lot of time to enjoy the millions. The money will go to the kids tax free Lol
LOL, retirement is 65 not 90, who cares if you have a million at 90 years old
No point , we are American soon
Thank you Lord Jesus for the gift of life and blessings to me and my family $14,120.47 weekly profit Our lord Jesus have lifted up my Life!!!🙏❤️❤️
I'm 37 and have been looking for ways to be successful, please how??
Sure, the investment-advisor that guides me is..
Elizabeth stark
Same, I met Elizabeth stark last year for the first time at a conference in Wilshire, after then my Life has changed for good.God bless Elizabeth stark
Her services is the best, I got a brand new Lambo last week and paid off my mortgage loan thanks to her wonderful services!
Yes then be taxed as Trudeau does not like to see that much money in your TFSA! It has already been done.