Investment Q&A

Q: Hello, can you please confirm that in LIRA account, like in RRSP account, no withholding tax will be paid on US dividend stocks. Are they important differences an investor should know about those 2 accounts. Thank you for your comments.

Q: I have US$ in my non- RRSP account but would like to buy a US stock in my RRSP account but I have no US$ so I would have to pay the currency exchange difference. Is this a good idea? The US stock I am looking at buying is UTX.
Thanks
Dolores

Q: Hello Peter and Ryan,

This is a question regarding diversification and stock allocating strategy according to different types of accounts for income tax efficiency.
From what I have read I understand in the case of a portfolio consisting of 3 accounts: RRSP, TFSA and non registered account it’s advisable for income tax efficiency to have the following strategy : high growth stocks in the TFSA account, foreign stocks in the RRSP account and dividend paying stocks in the non registered account.
In my case my RRSP has done very well and spreading a 20 stocks portfolio across the 3 accounts RRSP, TFSA and non registered account in even 5 % positions only puts 2 stocks in the fully loaded TFSA account.
Although this will generate extra trading fees I’m thinking of moving the stocks around into the right accounts and also spreading half positions 2.5 % of same stock into TFSA and RRSP in order to get more then 2 stocks in the fully loaded TFSA account for growth, diversification and tax efficiency.
Please let me now this strategy makes sense for the long term and if so which 4 to 5 stocks do you recommend from the 5I Model Portfolio or other 5I stocks that have better valuations for a TFSA account?
Thanks for a great No Conflict service and helping in achieve great returns. Ronald

Q: I read your comments on tax treatment of US ETNs with interest. I hold ETNs in both my taxable corporate investment account and in my RRSP. Am I subject to both Canadian and US taxes on the profits or do I just pay tax in Canada on the taxable account. I assume there are no taxes on gains from any stock sale in an RRSP. Thanks.

Q: Many seniors who withdraw funds from RRIFs but don't require the funds for expenses are not aware that investments need not be sold and commissions paid to fund the withdrawal, as in Donald's recent question. John Heinzl addresses this in a recent article titled "the ABCs of mandatory RRIF withdrawals" available here: http://www.theglobeandmail.com/globe-investor/investor-education/rrif-minimum-withdrawals-separating-fact-from-fiction/article19380686/#dashboard/follows/

Q: As a starting investor I had a small amount of capital in the form of an RRSP contribution and have bought equities, however I need to keep adding to my portfolio as I have only just begun investing. Thanks to your team some of my stocks have done quite well and based on the 10% limit I should be trimming positions in them but my long term goal would be to have more shares of the equities in question so would have a hard time selling shares in these companies with that goal. Yet, I do not have enough capital to buy enough of my other investments to bring these weightings back below 10%. What is a good strategy to move forward? Do you recommend small monthly contributions or save until I have a designated amount to contribute say $5000?

Q: I have a small registered account where the earnings are taxed upon withdraw. Currently it holds 100 shares of: BAD, ESL, HR.UN and STN (with only a small net gain over the six months it's been open). I have an additional $2000 to invest. What is your suggestion for about a 10 year time horizon. I don't want to take on too much risk but do very much want to increase the returns (like everyone does!) What's your suggestion?
Thanks!
PS. I love that you are biking for personal challenge and kids' cancer. I'll definitely contribute to the cause!