One of the most important aspects when investing is to consider your fiscal situation when you make choices, it’s also one of the aspects that is too often ignored. Over the years, knowledge of fiscal rules and laws has become increasingly crucial when making investment decisions. This subject will be discussed by Mike in a few articles I’m sure but this introduction will certainly be helpful.
We will present 3 important aspects to be considered in your investments:
1-RRSP or 401 account: This is certainly the most obvious. There is no logic in investing outside of your retirement account unless you have capped your maximum allowable amount that will be tax free. It might even be done through a loan to invest tax-free. It’s a fact that a few products or strategies cannot be used in such accounts but it’s difficult to argue the fact that until you have capped your RRSP account, there is no reason for you to invest in an account that will not provide a tax shelter.
2-Tax free products: Some investments such as municipal bonds present obvious fiscal, it’s very important to get information about the different fiscal features of investments you are considering. Imagine you are considering taking a 6% municipal tax-free bond or perhaps a 8% corporate bond. Well if you are paying over 25% of taxes, the municipal bond will actually be a better investment for you.
3-Taking your losses at appropriate time: For all investments located in accounts that you pay taxes on (so usually any non-retirement account), any “realised” investment income will be included with all of the money you earned during the year. The contrary is also true. So for example, you might want to sell of a losing trade in a year where you made a considerable amount of money in order to diminish the amount of taxes you will be paying. As you are moving towards the end of a year, this factor can become very important in deciding of the timing of your trade…
Il devient donc trÃ¨s avantageux de considÃ©rer l’aspect fiscal dans le processus de dÃ©cision de vente d’une action par exemple. Si une action que vous dÃ©tenez a eu une hausse importante, vous voudrez idÃ©alement attendre un peu plus longtemps (les autres facteurs Ã©tant identiques) avant de vendre, surtout si vous approchez la fin de l’annÃ©e. De faÃ§on contraire, si vous avez fait un mauvais investissement et pourrez prendre une perte en capital, vous devriez tenter de vendre ce titre dans une annÃ©e qui a Ã©tÃ© trÃ¨s bonne, cela permettra de diminuer les impÃ´ts que vous payerez dans cette annÃ©e fiscale…
C’est donc tout pour le moment mais nous aurons plus d’infos sous peu.
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