The Tax-Free Savings Account (TFSA) just increased its annual contribution to $7,000 for 2024. That brings the total contribution room to a whopping $95,000 for those who started contributing in 2009!
But what if you add in your significant other?
That would mean the pair of you have a combined total of $190,000 to invest. That’s $190,000! And what are you doing with it? Today, let’s look at how investors can put that cash to good use safely. Here are some tips to help, and how much you could start making on an annual basis.
Budget in your goals
If you’re going to start investing towards that $190,000 – or say you’re already there! – then you want to start budgeting your goals into your investment plan. There are a few steps to this.
A great method to consider is the net-zero method. This is where you assign every dollar of your net income to something on your monthly payments list. And I mean every dollar! Whether it’s going to the movies, paying bills, buying a coffee, every dollar should be assigned.
Then, you should have money left over! That money isn’t going to be spent, but invested. Ideally, it should be invested automatically through automated contributions. That way you’re treating your investments like a bill payment. Which they are! A bill payment towards your future goals.
Diversify
Now, you’ve likely already heard this from financial advisors and pretty much every investment piece of advice on the planet. Yet it bares repeating. Especially these days. Canadian investors have a serious problem getting into areas that are popular. And what’s more, investing in only Canadian companies.
This really is a significant problem. As we’ve seen over the last few years, cannabis stocks, tech stocks, ecommerce stocks, heck even utility stocks had their moment in the sun before falling. Every investor thinks they can find the next great stock, because practically everything had a shot!
That’s due in part to a strong Western economy over the last few decades. The United States and Canada have done quite well economically speaking, but that won’t last forever. I’m not saying there should be a collapse, but growth could be at a slower pace. Which is why investing internationally is also key here.
So consider it all
Now that you’re investing what you can each month and looking for diversification, it might seem like an impossible task to put all that $190,000 to good use. But luckily, there is an easy solution and that’s to invest through exchange-traded funds (ETF).
There are many out there, but if you want an easy option I would go with a stock such as the Vanguard Balanced ETF Portfolio (TSX:VBAL). VBAL invests 40% in bonds and 60% in equities. These equities are across a wide range of sectors, and also a wide range of continents! In fact, it invests heavily in other Vanguard products, providing a hugely diverse set of investments with the click of a button.
Now I’m of course not suggesting to invest $190,000 in just one ETF. But it’s a start! And a way to start working towards your long-term goals. And let’s say as just an example you started bringing in passive income through dividends at a yield of 2.37%. Here is exactly what you could bring in.
COMPANY
RECENT PRICE
NUMBER OF SHARES
DIVIDEND
TOTAL PAYOUT
FREQUENCY
PORTFOLIO TOTAL
VBAL
$29.53
6,434
$0.90
$5,790.60
quarterly
$190,000
So right away, you can create $5,790.60 in annual income! That’s without considering any growth or any fixed income. So talk to your partner and start figuring out those goals!
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
