Posted by Tim Stobbs on April 18, 2013
The TSX drops off a cliff in the last few days and how do I react? I’m happy. No, I didn’t hit my head recently, but thanks for being concerned about my mental health.
So why am I happy? Well we had been sitting on a bit of cash to start building up my wife and my TFSA accounts, so now we have started some trades and everything went on sale. So I went to our taxable accounts and pull any extra cash from those and moved it over with some regular savings to the TFSA to start some trading.
Before I get into details I should likely do a quick review on our plan for our TFSA accounts. The long term ideal from these accounts is to have ~$6000/year in dividends and/or interest. To ensure we are diversified we should aim for no more than $500/year from any one company. The target companies are based on my monthly bills since by their business model mean long term customers with repeat business such as telecommunications (internet, cable, etc), power and water utilities, banks (mortgages), and real estate investment trusts or REIT (rentals). I think you get the idea.
My wife was up first and pick up some shares of D.UN which is a commercial REIT. I haven’t made up my mind on what I’m buying yet. I’m still tossing between Northland Power (NPI) or Algonquin Power & Utilities (AQN). I already own some AQN, but I could add to it, but Northland looks interesting, but I’m a bit concerned about their expansion plans and their cash flow.
The other idea I have running around my head yesterday was should we just sell off all our taxable accounts and move all the money into our TFSAs (I’m aware this will trigger some tax issues, but we both have some previous losses that can off set the gains). The only reason this looks useful is the taxable accounts are at Royal Bank and getting too many fees and we don’t have any plans to add anything to them in the next few years. Our focus be using up our TFSA contribution room first, then RRSP and then finally taxable accounts.
In some ways, paying off the mortgage was so much easier. You had a lot less decisions to make every few months, so I’m following the market closer than I have for years. Oh well, hi ho silver, trading away. Anyone else buying out there?