Invest correctly to avoid taxes - MoneySense

Invest correctly to avoid taxes

Knowing where to keep your investments can boost returns.

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Many investors focus on straight returns when choosing where to put their money, but there is another aspect you should keep in mind when building your portfolio: tax efficiency.

The key is to remember that capital gains and stock dividends enjoy tax breaks, while interest payments from bonds GICs don’t. So keep any bonds or GICs you own in your RRSP.

If you run out of contribution room, your stocks and stock-based mutual funds can remain outside your RRSP without inflicting too much damage.

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