Should my emergency fund go in a high-interest savings account or a TFSA?

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A roundup of investment ideas for active investors

In an ideal state of personal finance, you have a tax-free savings account filled with investments and a separate savings account for your emergency fund.

Ideally, yes. But many people have plenty of unused TFSA room that can accommodate some investments and savings. Having savings in the TFSA means you keep all the interest you’re paid instead of giving up a big chunk in taxes. Remember, interest is taxed like regular income in non-registered accounts, unlike dividends and capital gains.

One thing to be aware of right now with all savings accounts, TFSA and otherwise, is that rates are edging lower. Expect each drop in the Bank of Canada’s overnight rate to be reflected in savings rates.This is the Globe Investor newsletter, published three times each week.

However, unlike many of its retail-focused peers, including RioCan REIT and H&R REIT , SmartCentres did not cut its payout during the pandemic. “While still elevated and notably higher than its peer group average, we believe such an improvement should alleviate much of the concerns investors had over the sustainability of the distribution,” Dean Wilkinson, an analyst with CIBC World Markets, said in a recent note to clients.

On SmartCentres’ first-quarter conference call, chief executive officer Mitchell Goldhar signalled that the REIT is open to using its land portfolio strategically. “We will execute on some limited capital recycling in unutilized lands to assist with debt reduction and development costs funding, the pace of which would depend on the market,” Mr. Goldhar said.

 

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