Trick or Treat the TFSA can do both!!!!!!!

Halloween is here ghouls n goblins.  The past weekend was spent checking the kids costumes and getting candy and decorating a little.  While I was filling a couple cauldrons to take to my workplace with treats I thought of something.

And what I thought about was about trick or treating due to it being Halloween and how I feel the TFSA can do both in a wealth building sense.  If you look at how to effectively build/grow wealth it is through 3 main themes:

              1) no or low debt/disciplined spending 

             2) saving/investing 

             3) able to weather an emergency or unplanned expense without taking on more debt

Sounds simple enough yet many people even myself have either struggled, are struggling or will struggle to achieve this.  But an idea came to mind on how to kill two birds with one stone so to speak and that is having an emergency fund/investing fund happening at the same time.  How can we achieve this by using our TFSA’s.  If you find yourself at the end of a month or pay period after all debts/expenses are paid with say $50 leftover deposit into your TFSA when this amount reaches $1000 then find a low fee ETF or solid dividend paying stock to invest it in.  And start over with keeping on putting in your $50 contributions.  But also what will start happening is you will start getting dividends from that first $1000 that can either help build up another $1000 quicker or buy back more shares to build even more dividends at the next dividend payout.

If your thinking yes but what about when I get hit with a $1000 repair bill or have to replace a hot water heater or do furnace work in my house?  Well then you sell the securities needed to cover the expense from within your TFSA.  The have your cake and eat it too part here is this your building your emergency fund while also earning more money from the dividends.  And with some research you could be getting a 3%-8% return on your money on dividends alone let alone price gain on the stock.

It goes without saying there is some risk involved as with any stock but if consulting a financial advisor or reading and learning and doing some research on your own this risk can be minimized substantially.  So instead of that $1000 sitting in a savings account maybe gaining 1% you will be growing your wealth even faster.

So hope this gives you something else to consider and think about and also………

Happy Halloween!!!!!!!!

GFW