Which Investment Goes In Which Account


Hello everyone,

Today I’ll be talking about how I plan my investments – in which account do I put which investment? I’m pretty new to the stock market, so I actually only currently have a TFSA set up for investing, but just applied today for a non-registered account to make investments from. Out of the three different Canadian accounts (TFSA, RRSP & non-registered), there are different strategies one may employ based on the different tax sheltering effects each account holds; which can add up to A LOT of money remaining in your pocket, instead of the government’s, over your investment career!

Let’s start with the Tax-Free Savings Account (TFSA), my all-time favourite. Investments you make in a TFSA will not be taxed on capital gains at all whether you invest in Canadian or US equities. Dividends you receive from Canadian equities will not be taxed, however there is a withholding tax on US equities (30% unless you fill out an IRS form to reduce it to 15%). In this case, my favourite thing to do with a TFSA is to invest in income-generating assets, stocks with good dividends, that, ideally, increase consistently over time. However, I am a big fan of real-estate investment trusts (REITs), and my TFSA is composed primarily of these, as you can see on my Portfolio page. These provide me with high-yield and (so far) some good capital gains. I prefer these for myself because of my limited contribution room as a 21 year old. I’d rather invest in some high-yield income assets that are relatively safe and have decent room for appreciation.

Investments in my Registered Retirement Savings Plan (RRSP) will not be taxed for as long as they remain in the account, but once they are withdrawn they are subject to full taxation. I’m sure you can see why I like the TFSA so much more. What is great about the RRSP though is, your US equities’ dividends do not have US withholding tax on them in this account! Therefore, your US dividends can grow tax-sheltered until you withdraw them (and there are ways you can use these tax-sheltered dividends to make you more money as your RRSP grows). Because of this reason, I plan to place all of my US income-generating equities in this account,  so that my US dividend income will not be taxed and I can use it to invest further. I would play it safer with my RRSP and invest in proven US blue-chip dividend-growth stocks.

With a non-registered account, you have no tax shelter whatsoever. Personally, I would use this account for even more passive income generation (obviously), but I’m not so happy with being taxed on my dividend income and capital gains (in Canada we’re only taxed on half of our gain though). Although this is the place where I’d probably put a little bit more speculation since it’s not an account I’m dedicating to retirement. Canada also offers a dividend tax credit. In here, I would probably put more REITs and more dividend-growing stocks, probably Canadian, however.

About Me


Hello readers,

I’ll just briefly introduce myself so you all have a sense of where I’m coming from as you read on and understand how anyone – regardless of age or income – can begin to assemble their very own passive income stream. I hope you’re as excited as I am about passive income.

Well, I’m a 21 year old Canadian living in Montreal. So, first off, you know we have Tax-free Savings Accounts (TFSAs), similar to the Roth IRA for the Americans; and Registered Retirement Savings Plans (RRSPs). I’m a web software developer, specializing in PHP / JS. I dabble in app development on the side and have built a few websites. However, this is my first blog ever.

I live with my parents and have not gone to university yet. In Quebec, we have this very unnecessary in-between from high school to university called cegep – where you get a diploma called a DEC, so I ended up getting a DEC in Computer Science (A 3-year career program) and got to work right after that. However, I plan on attending university once I’ve completed a few more required math courses (damn Calculus).

I plan to release mobile apps (starting with Android) as soon as possible to develop further passive income, but the time for that will come as life is pretty busy lately.

I absolutely love learning and reading (especially about finance and investing) – currently I am tackling “The Intelligent Investor”, and will not stop reading any time soon as knowledge is absolutely power.

I plan to retire on passive income, primarily with dividends, but also with any other form of passive income I am able to generate. I will create a dividend investment machine which will pay me monthly while I sleep, watch TV, or take my dog for a walk. I’m very young and thus have the powerful effect of compounding on my side and will make as much use of it as I can. I’m overjoyed to have discovered as much as I have at the ripe age of 21 rather than 40 (even though that still isn’t too late!). The specific details of this will all be revealed as time goes on.

Well, enough about me (for now), tell me a bit about you guys and your passive income attempts or goals. I’ll talk to you guys soon, I’ll explain a bit of my strategy next – starting with (as a Canadian), which accounts are most suitable for which investments – TFSA rules differ from RRSP rules which differ from non-registered accounts. More on that soon, take care all!

Financial Independence

The Journey Toward Financial Independence


Hello for the first time, readers.

I created this web site / blog so that I could enlighten an audience about a magical thing called financial independence, and display my journey towards it.

I only discovered financial independence this January, and since I’ve put my first dollar into the stock market – it’s nearly all I can think about. Just imagine: you can do anything you want, whenever you want, and you are still getting paid! I am devoted to extending myself to grasp as much passive income as I possibly can, at the young age of 21. Passive income can come from all sorts of things; from investing, to programming and advertising apps, to freelancing web sites, to writing blogs – the possibilities are endless and abundant!

However, in this blog, I plan to focus primarily on dividend investing. Those two words alone fill my soul with glee.

I will be posting up my monthly dividend payouts, as well as any other sort of passive income stream I may be able to muster along my journey. You’ll also get a glimpse into my head on my purchases being made in the stock market – why I do it and what I see coming from it. I may also post my expenses and a couple of other things so people can see how anyone can take part in building a passive income stream. It’s something that starts off slow – like a seed – and blossoms into the most beautiful flower, which will happen to pay for your retirement WITHOUT dipping into your funds or savings. You keep all your money (it will fluctuate in the market, mind you) AND make more (the company’s will pay you for investing with them)!

Stay tuned guys, in my next post I’ll introduce myself and we’ll take it from there!


Finance Blogs


My publishings on dividendbeginner.com references an opinion and is for information or entertainment purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice. I am not responsible for any decisions you make concerning finances, taxes, or investments. You must perform your own research and always take caution when extending capital.