Tuesday, November 8, 2011
Getting the RSP money out
For instance, I own Royal Bank inside my RSP. Recently it has been selling at levels lower than my book price. Result: I'm buying more RY but this time I'm buying it inside my TFSA. When RY climbs, possibly as much as ten dollars or more, I'll sell an amount of RY inside my RSP equal to what I own outside my RSP. This will bring my portfolio allotment back in line.
I end up with a lot of cash in my RSP to be removed in order to live. Numerically, I retain all the shares of Royal Bank I started with, but some shares are now outside of my RSP, my overall book price has dropped, and my allotment is dead-on. All dividends are still available for covering living expenses but they are no longer all being taxed. Nice.