Business & Investment

Three TFSA Tips to Remember in 2021

The Government of Canada has announced that it will limit its annual contribution limit for tax-exempt savings accounts (TFSA) to $ 6,000 in 2021. This has increased the cumulative limit to $ 75,500. TFSA was launched in January 2009. This account provides great flexibility for Canadian investors. In addition, it gives investors the opportunity to devour tax-exempt capital growth and income.

Today, I would like to take a look at three top TFSA tips that Canadians should remember in 2021. Let’s dive.

Don’t leave everything in cash!

At the end of last year I Interesting trends It appeared during the COVID-19 pandemic because it is related to the Canadian TFSA. Canada’s economic situation has deteriorated, but savings have strengthened. This may be natural, as leisure activities are torpedoed by restrictions and blockades.

Unfortunately, the extra cash increase has not been carried out by many investors. This has been a problem since the inception of TFSA. Many investors simply use these as savings accounts. It should change in 2021.

Canadians with additional savings in 2021 should consider the following stocks: Maple Leaf Foods (TSX: MFI).. Maple Leaf shares fell 9.4% in 2021 as of the afternoon trading on January 29th. Stocks are still up 1.5% from the previous year. Maple Leaf put together a strong third quarter in 2020 against the backdrop of improved sales in key protein groups. We achieved 6.2% total sales growth in the third quarter of 2020.

The RSI for Maple Leaf shares was 29 at the end. This puts maple leaf in the technically oversold territory. TFSA investors need to be proactive in getting this promising dividend stock that offers great value.

Beware of TFSA’s excessive contribution

All Canadians should consider actively contributing to the TFSA and Registered Retirement Savings Plan (RRSP). However, you also need to make sure that you are not making excessive contributions. This should be noted in TFSA. When withdrawing cash from TFSA, you must wait until the next calendar year before the donation limit is reset.

For example, suppose you capped TFSA at $ 75,500 in early January. Then you needed some cash for a new purchase and you withdrew $ 5,000 today. You’ll have to wait until 2022 to get that $ 5,000 back into TFSA. Otherwise, you will have to pay a penalty.

Beware of US dividend stocks

TFSA is a phenomenal growth tool, especially for young investors with a long-term perspective. But it’s also an effective way to eat up your income. In the summer of 2020, we discussed why TFSA investors should pursue Top dividend stock favorite Embridge And Fortis..

However, Canadians should be careful if they are looking at TFSA’s US dividend stocks. If US-based stocks pay dividends, the US National Revenue Service will apply tax withholding to stocks that generate income that can be as high as 30%. Instead, you should consider targeting Canadian dividend stocks with TFSA.

Here are 10 stocks to keep in your TFSA …

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Stupid contributor Ambrose O’Callahan FORTIS INC. I own a stake in. MotleyFool owns and recommends a stake in Enbridge. Motley Fool recommends FORTIS INC.

Three TFSA Tips to Remember in 2021 Three TFSA Tips to Remember in 2021

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