Wednesday, January 15, 2014

Plan for 2014 TFSA Contribution

Ever since the start of the year, I've been trying to figure out what companies' stock to invest in with my 2014 Tax-Free Savings Account ("TFSA") contribution. Initially, my plan was just to top up my investments in TD Bank, Inter Pipeline Ltd, and Canadian Apartment Properties REIT...all of which I currently hold in my TFSA, along with Rogers Communications and National Bank of Canada. Over the past couple weeks, any stock that I've thought of adding to my TFSA has risen to the points where I think it's fairly or over valued.

Thus my new plan - use this year's $5.5K contribution and cash proceeds of dividends/distributions to create a small hedge fund to take advantage of what I perceive to be over-reactions in the market. I used a similar strategy during 2012/early 2013 to buy beat-down dividend growth companies like Western Union, Microsoft, Cisco Systems and Telus...but never sold them. Quite frankly, I already pay enough taxes, so taking advantage of market over-reactions in my TFSA is an appealing prospect. Plus, I can even look at over-reactions in US and other foreign markets, as capital gains won't be taxed. The goal will be to sell the investments made with these funds within a month, so I can avoid with-holding taxes on any dividends.

This style of investment is very different from my normal buy-and-hold solid dividend growth companies, but I'm really looking forward to seeing the results in 2014.

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