The term ‘everything rally’ is being used to describe financial markets today and it’s somewhat of an exaggeration. The benchmark bond index in Canada was up only 2 per cent in the past 12 months, and several blue-chip dividend stocks continue to be shunned by investors Still, there’s a buoyancy to markets today that is clearly influencing investor behaviour. In the exchange-traded fund world, money flowed out of once-popular cash vehicles and into equity funds last month.
Bonds are one way to offset the downside for stocks. While they’ve underperformed lately, bonds are primed to fulfil their traditional role as a portfolio stabilizer if stocks tank. Having a small holding in cash can also help limit the damage if the everything rally unravels. One-year guaranteed investment certificates still offer returns of as much as 5 per cent or a bit more for one year, and even two years in limited cases.
I understand that if I transfer non-registered shares and ETFs to my TFSA, Canada Revenue considers it a deemed disposition. None of the investments in my non-registered account are in a loss position, so I understand I will have to pay 50-per-cent capital gains on the amount I have earned from these investments . I also understand that once the funds have been transferred into my TFSA, any further increase in value will not attract capital gains tax.
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