Canadian 🇨🇦 Investment Thread: Now that there are methods available for non-accredited investors to get exposure to #Bitcoin in registered savings accounts, I often hear people debate the merits of investing in a TFSA vs RRSP. A TFSA allows you to invest after-tax dollars...
...while gains are untaxed at withdrawl. An RRSP allows you to invest pre-tax dollars but the gains are taxed at withdrawl when you retire. The traditional thinking is that one's investment income will be less when they retire, placing them in a lower tax bracket. In this way...
...the investor benefits from compounding interest during their work years (high tax bracket) while withdrawing at retirement (low tax bracket). Better for the investor, right? Well it depends on your long-term outlook for #Bitcoin . If you believe that #Bitcoin is highly...
...undervalued -- and you're right! -- then you could wind-up in a situation where the gains you've made pushes you up into a higher income tax bracket than the one you're in right now! Remember: you don't have to withdraw everything all at once in a single tax year, but...
...what if your gains are so great that even spreading them out over 20 tax years still leaves you in a higher tax bracket? Again, this really all depends on how undervalued you think #Bitcoin is today. On the other hand, a TFSA allows you to invest after tax dollars...
...which means taking the tax hit today at your current income tax bracket, and then enjoying unbounded gains tax free! Of course, there is a cap on how much you can place in a TFSA. At the upper-bound around 70K right now, while traditionally growing by about 5-6K per year...
...so what would I do as a #Bitcoin Bull Bull Bull? Max-out your TFSA first, then decide if you want to take the tax hit in an unregistered account vs deferral until retirement in an RRSP for the remainder. But obviously, my preference would be real #Bitcoin rather than...
... $QBTC given the fat NAV premium, but as a Canadian there just aren't that many options. Hoping that premium volatility eventually levels-out or other investment vehicles that offer more naked exposure to #Bitcoin become available. Thank you.
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