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A down year for investing means upside potential ahead in 2023 and beyond.

Your tax-free savings account is an ideal way to exploit the opportunities ahead. TFSAs offer the supremely attractive benefit of allowing you to generate gains and then withdraw your money without paying any tax. The flexibility of TFSAs allows you to use up the $6,000 in contribution room for 2022 in the few remaining trading days this year, or carry it forward to next year and beyond. The contribution limit for 2023 is $6,500.

Here are four ideas for your TFSA that play off of financial market developments in 2022:

Suggestion #1: A 5-per-cent GIC

Rising interest rates were bad for stocks and bonds in 2022, but they pushed up returns from low-risk guaranteed investment certificates. The tax hit on GICs held in non-registered accounts is harsh because interest is treated as regular income. In a TFSA, you keep all your GIC income. Don’t delay if you want a GIC yielding 5 per cent. GICs with terms of one through five years were available as of late this week, but from a slowly declining number of alternative banks.

#2: A 6-per-cent dividend stock

TFSAs work well if you want to generate tax-free dividend income, and if you’re a total-return investor who wants both dividends and strong capital gains. The stock market pullback in December has created opportunities for both types of investors. Consider Bank of Nova Scotia (BNS-T), which had a dividend yield of 6.3 per cent late this week and a one-year loss of 24.8 per cent. High yield, plus a candidate for a bounceback. Other 6 per cent blue chips included Enbridge Inc. (ENB-T), TC Energy Corp. (TRP-T), Canadian Imperial Bank of Commerce (CM-T), BCE Inc. (BCE-T) and Power Corp. of Canada (POW-T).

#3: A 4.6-per-cent parking spot for cash

Cash-equivalent exchange traded funds hold bank deposits that provide an after-fee return of about 4.6 per cent these days. If the Bank of Canada raises its overnight rate again next year, the increase will be reflected in the return of these ETFs. These funds are a good way to earn an acceptable low-risk return on money in a TFSA while you plot your next big move. Again, the tax-free structure of TFSAs means you keep all the interest you earn.

#4: An asset allocation ETF

Both stocks and bonds had a rough time in 2022. Exploit a rebound for both of these portfolio-building pillars with an asset allocation ETF that offers a completely diversified portfolio in a single purchase. There are asset allocation ETFs for investors of all types – from young investors willing to embrace stock market risk to retirees seeking balance or a conservative approach. The difference between these funds is the emphasis on stocks versus bonds.

-- Rob Carrick

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Stocks to ponder

Short sales on the TSX: What bearish investors are betting against

As Santa Claus prepares his eco-friendly, reindeer-powered sled to deliver gifts to investors this week, what companies are the grinches – short sellers and their minions – targeting in December? Larry MacDonald takes a look.

The Rundown

How well were you paying attention to the markets in 2022?

It was a bad year for financial markets. It was an excellent year for financial drama. From surging inflation and collapsing crypto exchanges to the “moron premium” and misbehaving gazillionaires, 2022 dented portfolios and shattered assumptions. How closely did you follow the people and forces that shaped this dramatic, painful, farcical period? Take this quiz to find out.

The year in Canadian markets: stocks and bonds both tumbled in ‘perfect storm’

Investors had few places to hide this year. The pressure is unlikely to let up heading into 2023. The U.S. Federal Reserve has suggested interest rates may continue to rise and further hikes from the Bank of Canada are on the table, too. Investors face the possibility of a recession and what that will mean for corporate profits already being squeezed by rising costs, writes Craig Wong of the Canadian Press.

How 2022 shocked, rocked and rolled global markets

Trillions of dollars wiped off world stocks, bond market tantrums, whip-sawing currency and commodities and the collapse of a few crypto empires - 2022 has been perhaps the most turbulent year investors have ever seen, and for good reason. Marc Jones of Reuters reviews the year.

Others (for subscribers)

Friday’s analyst upgrades and downgrades

Number crunch: Tax-loss selling makes these eight dividend stocks look like even bigger bargains

Thursday’s analyst upgrades and downgrades

Short sellers gain nearly $304-billion after tumble in U.S. stocks

The secret to FTX’s ‘massive, years-long fraud’: A made-up crypto asset whose price was allegedly manipulated

Others (for everyone)

Indian stocks top Asian markets, strong economic growth fuels hope

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Compiled by Globe Investor Staff