– Profits aren’t taxed at all within an RRSP. You only pay tax on any money
you withdraw from the plan (or from a subsequent RRIF). Those withdrawals
are taxed at your marginal rate at the time you withdraw. For the TFSA, yes
you can contribute the $10,000 again, as long as you don’t do so in the
same calendar year. The $10,000 withdrawal will be added to your
contribution room in the year following your withdrawal.
– Can you advise on emergency funds? It would be nice to have about $10,000
stowed away; however, I don’t like the idea of keeping it in cash. What are
your thoughts on keeping it invested in a few large caps or ETFs with good
downside protection? If a major emergency occurred, like a major market
pullback, and I needed funds, would this be too risky? If so, what would
you advise? – Aaron
– The key word here is “emergency.” That means you need the money
immediately, so it must be highly liquid and risk-free. That translates
into cash. Even the most carefully constructed stock/ETF portfolio is not
immune from a market crash. Look what happened in 2008. Everything in the
market went down, including the blue chips. I understand you don’t want to
hold cash. But if it’s a true emergency you need the funds for, you’ll want
your money in cash or cash equivalent.
is one of Canada’s best-known personal finance commentators and
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© 2018 by The Fund Library. All rights reserved.
The foregoing is for general information purposes only and is the opinion
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specific personalized advice including, without limitation, investment,
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own financial advisor before making investment decisions.
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