For those looking to achieve financial freedom, from millennials to baby boomers to everyone in between, the TFSA is the most powerful tool that can help you get there.
With no age limitations, a range of flexibility unmatched by the RRSP, and zero taxes even on withdrawals and death, the TFSA provides investors with much to be excited about. With a cumulative allowable contribution of $63,500, the TFSA is really getting to be a very relevant and important savings vehicle that investors need to take advantage of today.
With the RRSP taxes are deferred, as we make contributions with pre-tax dollars, but with the TFSA we make contributions with after-tax dollars. So, if your marginal tax rate is lower when you withdraw the money, it’s better to defer (RRSP), but if it’s higher when you withdraw the money, it’s better to invest after-tax money and pay the taxes today (TFSA).
With the TFSA, we can withdraw the money tax-free at any time as opposed to waiting for our retirement years.
Millennials: start early and get your money working for you, with compounding returns in a tax-free environment, which will work to give you that financial freedom you are looking for sooner that you probably expect. And invest regularly, as this habit will allow your TFSA account to grow throughout the years and through the ups and downs of the market.
To help guide us, I thought it useful to consider what Brookfield Infrastructure Partners management has to say about where they are investing for growth and sustainability. The bulk of their new investments currently are in the energy and data infrastructure sectors, and this makes sense to me.
Rogers Communications (TSX:RCI.B)(NYSE:RCI), the largest wireless provider in Canada, is a case in point, as it is seeing big changes in its business and big opportunities for growth. The company is investing in new initiatives such as the commercial deployment of X1, which is aiming to transform the home entertainment, cable TV experience.
And with strong free cash flow growth of 20% in the latest quarter, a dividend increase, and a strong balance sheet, Rogers can be expected to thrive in this environment.
For shareholders, Rogers offers a stable 2.76% dividend yield and strong capital appreciation potential.
Canadian Natural has been on a long and consistent road of shareholder value creation, with dividend increases and stock price outperformance being the norms.
The company is a cash machine that continues to generate strong cash flows and income for investors, yet its stock is down 18% versus January 2018.
Taking advantage of your full TFSA room is a smart move that will pay dividends today and well into the future.
Let’s get started.
There’s something crucial you need to know about Apple’s stock today, especially if you already own it, know someone who does, or have even thought about buying it.
This revolutionary new technology involved in “Project Titan” should make any investor’s ears perk up.
But you may want to consider investing in a TSX-traded company that’s poised to have a drastically larger role in this new tech, and yet is less than 1% the size of Apple.
Discover why we’re especially excited about this tech opportunity for Canadian investors like yourself.
Fool contributor Karen Thomas owns shares of Canadian Natural Resources and CDN NATURAL RES. Brookfield Infrastructure Partners is a recommendation of Stock Advisor Canada.