I want to invest & earn without paying taxes or interest?

Question

I thought the whole purpose of investing was to get good returns & profit from the experience? Everything I have seen seems to indicate that in the end you will end up with only what you put in...I have a little bit of money I'd like to invest without having to pay tax on the interest. I have lost part of my original down payment on a house due to not being able to carry it through the tough times...what can I do to get back on track & begin to invest wisely?

Answer 1

DREAM ON

Answer 2

Starting in 2009, the Federal Government will allow you to invest in something called a Tax Free Savings Account (TFSA). You will be allowed to contribute up to $5,000 in each calendar year to the TFSA, and the gains and interest would not be subject to any income tax... ever.

The other side of the coin is that if you lose money, you would not be able to claim any kind credit for the loss.

Editting as requested: Once you establish the TFSA, you have to decide what kind of investments you want to hold in it. You can hold mutual funds, stocks, GIC, and basically anything else you would regularly be able to hold in an RRSP, as long as you are at arm's length from the investment.

Hope that helps.

Answer 3

The purpose of investing is to make good returns/profits.   In Canada you are only taxed on 1/2 of any gains.  

Why would you not expect to pay taxes on your gains ?

If you want gains without taxes the only way is to not trigger the gains.  There are certain Mutual funds that are designed to not distribute gains until you actually sell the funds.

BTW, If you just stash your cash then I can guarantee you that your $$ will not grow.

To answer your last comment.  The Government plan is to allow you to have a TFSA.  It's savings as to allow you to save money tax free.  In the account you can hold investments like in your RRSP, or Investment Account (Stock Mutal Funds CD etc etc).  The income generated will grow tax free.  The only limit is the 5K/year contribution amount.