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The bizarro world of pandemic personal finance brings us a question that gets asked very little in normal times: What to do after you’ve exhausted all the tax-sheltered savings opportunities?

“With pandemic savings, we have now maxed out our tax-free savings accounts, registered retirement savings plans and registered education savings plans,” a reader recently wrote. “What would you suggest?”

Many households were financially slammed in the pandemic. Let’s hope the ones that kept their income and had opportunities to save during lockdowns know how fortunate they are. The reader asking about investing beyond TFSAs, RRSPs and RESPs has used pandemic savings well. Maxing out all your tax-sheltered savings room is huge in today’s world of expensive housing and high debt levels.

A suggestion for a next investing step: Open a non-registered investment account and then stock it, as much as is practical, with investments with tax advantages. There’s a handy little tool to find out whether dividends or capital gains will get the lighter tax hit in your personal situation – it’s a 2021 income tax calculator from Ernst & Young (online at

At an income of $75,000, investors in most provinces would pay a lower marginal tax rate on eligible dividends (paid by corporations) than capital gains. But above $100,000, capital gains generally carry the lighter load.

Portfolio diversification takes precedence over tax-efficiency, which means you’ll want some bonds in your non-registered portfolio if you’re not highly risk-tolerant. You could also offset a risky non-registered portfolio with an extra helping of bonds or guaranteed investment certificates in your RRSP.

If capital gains are your goal for non-registered investing and you have no need or interest in dividends, then the total-return exchange-traded funds in the Horizons family are worth consideration. These ETFs pay no dividends – instead, the unit price rises and falls by a total return amount based on price changes in the underlying securities plus dividends. That means increases in value for your holdings are taxed as a capital gain.

There are total-return ETFs covering the broad Canadian, U.S. and international stock markets, plus sectors such as technology, energy and financials. Bond funds are also available in this format.

By no means should dividends be played down for non-registered investing – they’re taxed at a much more favourable rate than interest from bonds and guaranteed investment certificates. Someone with an income of $150,000 in Ontario would pay a marginal tax rate of 43.4 per cent on regular income and 25.4 per cent on dividends. Capital gains would be taxed at a marginal rate of 21.7 per cent.

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