There have been a number of articles about the possibility of the Harper government increasing the TFSA’s contribution limit to $10,000 in 2015. Today the Canadian government announced 2015 indexation adjustment for personal income tax, benefit amounts, and the annual dollar limit for Tax-Free Savings Accounts (TFSAs). Contrary to popular beliefs, the 2015 TFSA contribution limit will remain the same as 2014 at $5,500.
I was a little bit disappointed to see that the amount will remain the same. A $10,000 TFSA contribution per person, it would completely change the landscape when it comes to determining which one is more beneficial, RRSP or TFSA. (It would be TFSA if you can maximize the contribution limit each year!). At the same time, I’m glad that the government is continuing with the TFSA program. At $5,5500 contribution limit per individual, that is still quite a bit of money to purchase high quality dividend stocks. I for one will be looking to add to our existing REITs position with our 2015 TFSA money. Mrs. T and I will be able to contribute a total of $11,000. If we were to use all the money and purchase the top 4 holding from Vanguard’s Canadian Capped REIT Index ETF (VRE):
RionCan (REI.UN) 5.22% yield
H&R REITs (HR.UN) 6.06% yield
Canadian REIT (REF.UN) 3.64% yield
Dream Office (D.UN) 8.33% yield
It would produce an annual dividend of $639.38 (ignoring trading commissions and assuming partial share purchases). If I were to take the more conservative approach and invest in a variety of Canadian dividend stocks with an estimated conservative yield of 3%, we would get $330 in annual dividend. Both are pretty good numbers if you ask me!
I haven’t decided what will be our stock purchasing strategy for the 2015 TFSA money yet. I will probably purchase some REITs and some low yield but high dividend growth stocks to further diversify our portfolio.
For now we will be saving as much money as possible so we will have $11,000 to deposit into our TFSA on Jan 1st, 2015 and make some purchases in early January.
Fellow Canadian readers, what do you plan to do with your 2015 TFSA contribution room?