Wednesday, October 15, 2014

Tax Free Savings Plan still in black

When I sold my Morgan Roadster I put $15,000 from the sale into a tax free savings plan for my wife. I promptly bought 500 shares of D.UN, now known as Dream Office REIT. The remaining cash I later moved into a TD Investment Savings Account: TDB8150.

Now, in a little less than a year, her plan looks like this: a $39.71 loss on the REIT holdings but an overall gain of $899.92 for the total plan. My wife's TFSP remains up 6 percent in a falling market.

How is this possible? Simple. D.UN pays $93.33 every month. In ten months she has made $933.30 on D.UN alone.

Do I think this plan will remain in the black? In this collapsing market, I have my fears but I know that almost $2000 is sitting in oh-so-safe cash and this is enough money cover one month's income shortfall. My wife an I are retired and our retirement income needs an infusion of about $2000 each money to balance our books.

If the the markets descent into bear territory, my wife and I will probably be bold and put that money to work in the market rather than tapping it for day to day expenses. Whatever we buy will a dividend paying stock.

And D.UN is not alone in the Canadian REIT world at having offered a relatively safe haven for one's investment dollar. A few months ago I picked up 1300 shares of Chartwell Retirement Residences REIT. Today that holding is still in the black by $572 or up by 4.21 percent.

Chartwell doesn't pay what Dream does but it does deliver a nice monthly dividend. I see $58.50 each month from this investment.

I find that in a shrinking market holding equities like D.UN and CSH.UN help me weather the financial storm. And I am very curious to see how my American ETF, REM, based on mREITs, will hold up with this downturn. Today REM is still up about 5 percent from my entry point and is yielding more than 13 percent annually.

As long as my dividends are not slashed, life will continue unaffected by the market turmoil.

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