Posted by Tim Stobbs on January 23, 2015
So this week I should have finished maxing out one of our TFSA already. If you recall in December’s net worth update I pointed out I put some of that money aside. Then by Feb we should finish off the other TFSA account contribution for the other account. So where do I put the money for the other 10 months of the year?
Well you see that is actually turning into a small issue as I’m running out contribution room on where to put it. We made an effort last year to finish off as much as my RRSP contribution room as possible into my wife’s spousal RRSP. Now the only tax sheltered account contribution room we will have left is about $20,000 in my wife’s name. So I have to play around with the tax implications of her buying RRSP in her name as she doesn’t make much money per year so I’m not sure if the tax savings are really worth it. After all if we drive her income to zero with RRSP contributions, I don’t know if her basic income deduction will transfer to me…I’ve literally never tried that before. So if anyone knows, I would appreciate some advice.
So we will be back to non-registered investment accounts at some point in the year, which is just fine. Overall I expect by age 40 we should have approximately $100,000 in non-registered savings (give or take a bit). The longer term plan for the non-registered money is fairly simple, after I stop working at my day job I will drawing down the non-registered accounts first and also move what we can over to our TFSA accounts for anything that produces taxable income (like a GIC). The idea is to keep our income tax bill as low as possible so we will likely keep dividend paying companies in the taxable accounts and any cash savings will eventually end up the TFSA (even if they don’t start there).
Perhaps the only thing I’m debating in my head is where do I open up the non-registered accounts? On the one hand I like to keep our fees low and the other hand there is a certain ease of access if I put the accounts with our existing bank. So I’m curious what other people have done and why did you pick that option?