Shakyuk

Is there a Canadian equivalent to a cash ISA and an investment ISA?

Hurlabrick

TFSA = Tax Free Savings Account.

Similar to an ISA but with a few key and important differences!

Shakyuk

Ah cheers, do you know of anything for holding shares/bonds?

Shakyuk

Ah I've just researched the TFSA and it seems you can hold investments too. Cheers

Hurlabrick

Yes, so cash and unit-linked investments as far as I can make out - I think as 'racy' as you want.

TFSA's are better than ISA's as regards withdrawals and re-investments. You may recall that with ISA's if you say max out your years entitlement, once you take that money out, you cannot put it back in again against the years entitlement it corresponded to - with TFSA's you can - all of which is very interesting for me living on pension investment and savings when I get to Canada!

Shakyuk

The ISA has actually changed so the rules mean now you can freely withdraw and top up within a given year now. So long as you haven't signed up to a fixed term deal.

Shakyuk

The contribution seems small in the TFSA but then I think the ISA contribution has has got so large that it now provides a huge advantage to the wealthy. It's the equivalent of nearly 40,000 CAD

Hurlabrick

?? I make it £GBP15,240 this year, so that's $CAD 25.5k ish

not2old

that UK ISA yearly contribution limit amount of approx $25k Cdn, I don't know of anyone that has that sort of 'spare money' yearly to stick into a <1% savings account, never mind the Canadian equivalent TFSA $5500/yr

Any spare cash should be used to pay down any debt that you have, including the mortgage if you have one

Shakyuk

The budget increased the ISA limit again to £20,000 which is around $34,000 CAD.

Budget 2016: Cash ISA allowance up to £20,000 in 2017

I use my ISA allowance to invest but I don't have enough money to use all of my allowance. Through investments I generate an income ranging from £100-400 per month from dividends and bond/gilt returns, this doesn't include capital growth which has never been less than 10% per year. I think it's clear that by being able to invest £20,000/year ISA's are no longer meant for regular people to save and are now meant to be used by the rich as a means hoarding money away tax free. If as a 31 year old scummy council estate guy like me can generate 100-400 per month, then someone with some real free money maximising their allowance would be able to generate serious amounts of money if they invested intelligently, and it would all be tax free as long as it stays within the ISA wrapper.

not2old

On the basis that you are getting 5% return producing £4800/yr (£400/mth) in dividends/interest , that isn't too shabby for a "31 yr old scrummy council estate lad"

By my calculation that would be in the range of £96,000 of capital invested producing £4800/yr, or maybe I missed something & that your investment dividend/interest return is a higher rate or less & if less, then your capital invested is way over £100,000 ?

Do you also have a property with or without mortgage?

Nice, really nice... well done

Shakyuk

I do own a house with mortgage. I started investing at 21, mainly funds to begin with as I found stock picking hard and I still think it's hard now really. I probably average 250/month in dividends but some months I get 400 ish mainly when Lloyd's pay a dividend because I bought a lot of Lloyd's after the financial crisis when they were around 30p/share.
My portfolio isn't that big though. It's just because I try and invest in what I think are recovery companies and I've had a few big wins such as CVS Group and boohoo recently and Lloyd's and Next after 2008. So the yield I get now is pretty good. It's just compounding returns really.

My point was more that if a guy can achieve a few hundred quid a month in 10 years by just saving and reading then the current ISA set up is going to allow the rich to generate crazy amounts of wealth. I think these levels of tax free savings are going to massively increase the rich poor divide in the UK

not2old

shakyuk @ post #12

Being a council estate lad myself & understanding only fundamental basic arithmetic & with simple knowledge of investing, I must say you've done really well.

So, take a starting date of age 21, your dividends/investment returns are in the range of just 2%/yr, with your capital investment (posted by you earlier) are increasing 10% /yr - then an average 12%/yr compounded results in a double of the original investment (without adding any other money to it) every 6-7 years.

So by the time you are age 33 ish you'll have 3x your original investment. By the time you are 40 you could be a millionaire?

Not bad at all, very well done

Shakyuk

Thank you

I think I have been helped by a very unusual situation, most of my buying was done while the markets were recovering, the FTSE100 was less than 4000 then and it's now 7300. I personally think we're in a massive bubble now though fueled by debt and quantitative easing and so it's hard to find value these days.

Shakyuk

Because I can't find much value in the stock market right now I've been investing in peer to peer lending for the past few months as well as the stock market.
Peer to peer can get you up to 5% or so return on your investment and depending on the product that can be an repayment basis or interest and then repayment of your entire investment after a fixed date. Pretty good if you're looking for an alternative to bank interest. The average default rate in peer to peer is about 3% and you only need about 500 to start (you can actually start with less).