Can a dividend reinvestment plan (DRIP) and share purchase plan (SPP) be used with a TFSA?
"You can hold a wide variety of investments in your TFSA account, including stocks such as SLF. But if the stocks are being purchased via a company stock purchase plan, they are typically deposited in a regular margin account with a brokerage firm (a few companies may issue physical stock certificates but that is very rare these days). That account would not be a TFSA but you can perform what's called an ""in-kind"" transfer to move them into a TFSA that you open with either the same brokerage firm, or a different one. There will be a fee for the transfer - check with the brokerage that currently holds the stock to find out how costly that will be. Assuming the stock gained in value while you held it outside the TFSA, this transfer will result in capital gains tax that you'll have to pay when you file your taxes for the year in which the transfer occurs. The tax would be calculated by taking the value at time of transfer, minus the purchase price (or the market value at time of purchase, if your plan allowed you to buy it at a discounted price; the discounted amount will be automatically taxed by your employer). 50% of the capital gain is added to your annual income when calculating taxes owed.  Normally when you sell a stock that has lost value, you can actually get a ""capital loss"" deduction that is used to offset gains that you made in other stocks, or redeemed against capital gains tax paid in previous years, or carried forward to apply against gains in future years. However, if the stock decreased in value and you transfer it, you are not eligible to claim a capital loss. I'm not sure why you said ""TFSA for a family member"", as you cannot directly contribute to someone else's TFSA account. You can give them a gift of money or stocks, which they can deposit in their TFSA account, but that involves that extra step of gifting, and the money/stocks become their property to do with as they please. Now that I've (hopefully) answered all your questions, let me offer you some advice, as someone who also participates in an employee stock purchase plan. Holding stock in the company that you work for is a bad idea. The reason is simple: if something terrible happens to the company, their stock will plummet and at the same time they may be forced to lay off many employees. So just at the time when you lose your job and might want to sell your stock, suddenly the value of your stocks has gone way down! So you really should sell your company shares at least once a year, and then use that money to invest in your TFSA account. You also don't want to put all your eggs in one basket - you should be spreading your investment among many companies, or better yet, buy index mutual funds or ETFs which hold all the companies in a certain index. There's lots of good info about index investing available at Canadian Couch Potato. The types of investments recommended there are all possible to purchase inside a TFSA account, to shelter the growth from being taxed. EDIT: Here is an article from MoneySense that talks about transferring stocks into a TFSA. It also mentions the importance of having a diversified portfolio!"
There are some great answers on this site similar to what you asked, with either a non-jurisdictional or a US-centric focus. I would read those answers as well to give yourself more points of view on early investing. There are a few differences between Canada and the US from an investing perspective that you should also then consider, namely tax rules, healthcare, and education. I'll get Healthcare and Education out of the way quickly. Just note the difference in perspective in Canada of having government healthcare; putting money into health-savings plans or focusing on insurance as a workplace benefit is not a key motivating factor, but more a 'nice-to-have'. For education, it is more common in Canada for a student to either pay for school while working summer / part-time jobs, or at least taking on manageable levels of debt [because it is typically not quite as expensive as private colleges in the US]. There is still somewhat of a culture of saving for your child's education here, but it is not as much of a necessity as it may be in the US. From an investing perspective, I will quickly note some common [though not universal] general advice, before getting Canadian specific. I have blatantly stolen the meat of this section from Ben Miller's great answer here: Oversimplify it for me: the correct order of investing Once you have a solid financial footing, some peculiarities of Canadian investing are below. For all the tax-specific plans I'm about to mention, note that the banks do a very good job here of tricking you into believing they are complex, and that you need your hand to be held. I have gotten some criminally bad tax advice from banking reps, so at the risk of sounding prejudiced, I recommend that you learn everything you can beforehand, and only go into your bank when you already know the right answer. The 'account types' themselves just involve a few pages of paperwork to open, and the banks will often do that for free. They make up their fees in offering investment types that earn them management fees once the accounts are created. Be sure to separate the investments (stocks vs bonds etc.) vs the investment vehicles. Canada has 'Tax Free Savings Accounts', where you can contribute a certain amount of money every year, and invest in just about anything you want, from bonds to stocks to mutual funds. Any Income you earn in this account is completely tax free. You can withdraw these investments any time you want, but you can't re-contribute until January 1st of next year. ie: you invest $5k today in stocks held in a TFSA, and they grow to $6k. You withdraw $6k in July. No tax is involved. On January 1st next year, you can re-contribute a new $6K, and also any additional amounts added to your total limit annually. TFSA's are good for short-term liquid investments. If you don't know for sure when you'll need the money, putting it in a TFSA saves you some tax, but doesn't commit you to any specific plan of action. Registered Retirement Savings Plans allow you to contribute money based on your employment income accrued over your lifetime in Canada. The contributions are deducted from your taxable income in the year you make them. When you withdraw money from your RRSP, the amount you withdraw gets added as additional income in that year. ie: you invest $5k today in stocks held in an RRSP, and get a $5k deduction from your taxable income this year. The investments grow to $6k. You withdraw $6k next year. Your taxable income increases by $6k [note that if the investments were held 'normally' {outside of an RRSP}, you would have a taxable gain of only 50% of the total gain; but withdrawing the amount from your RRSP makes the gain 100% taxable]. On January 1st next year, you CANNOT recontribute this amount. Once withdrawn, it cannot be recontributed [except for below items]. RRSP's are good for long-term investing for retirement. There are a few factors at play here: (1) you get an immediate tax deduction, thus increasing the original size of investment by deferring tax to the withdrawal date; (2) your investments compound tax-free [you only pay tax at the end when you withdraw, not annually on earnings]; and (3) many people expect that they will have a lower tax-rate when they retire, than they do today. Some warnings about RRSP's: (1) They are less liquid than TFSA's; you can't put money in, take it out, and put it in again. In general, when you take it out, it's out, and therefore useless unless you leave it in for a long time; (2) Income gets re-characterized to be fully taxable [no dividend tax credits, no reduced capital gains tax rate]; and (3) There is no guarantee that your tax rate on retirement will be less than today. If you contribute only when your tax rate is in the top bracket, then this is a good bet, but even still, in 30 years, tax rates might rise by 20% [who knows?], meaning you could end up paying more tax on the back-end, than you saved in the short term. Home Buyer Plan RRSP withdrawals My single favourite piece of advice for young Canadians is this: if you contribute to an RRSP at least 3 months before you make a down payment on your first house, you can withdraw up to $25k from your RRSP without paying tax! to use for the down payment. Then over the next ~10 years, you need to recontribute money back to your RRSP, and you will ultimately be taxed when you finally take the money out at retirement. This means that contributing up to 25k to an RRSP can multiply your savings available for a down payment, by the amount of your tax rate. So if you make ~60k, you'll save ~35% on your 25k deposited, turning your down payment into $33,750. Getting immediate access to the tax savings while also having access to the cash for a downpayment, makes the Home Buyer Plan a solid way to make the most out of your RRSP, as long as one of your near-term goals is to own your own home. Registered Pension Plans are even less liquid than RRSPs. Tax-wise, they basically work the same: you get a deduction in the year you contribute, and are taxed when you withdraw. The big difference is that there are rules on when you are allowed to withdraw: only in retirement [barring specific circumstances]. Typically your employer's matching program (if you have one) will be inside of an RPP. Note that RPP's and RRSP's reduce your taxes on your employment paycheques immediately, if you contribute through a work program. That means you get the tax savings during the year, instead of all at once a year later on April 30th. *Note that I have attempted at all times to keep my advice current with applicable tax legislation, but I do not guarantee accuracy. Research these things yourself because I may have missed something relevant to your situation, I may be just plain wrong, and tax law may have changed since I wrote this to when you read it. There are more than a few ideas here. Assuming you are in the U.S., here are a few approaches: First, DRIPs: Dividend Reinvestment Plans. DRIP Investing: How To Actually Invest Only A Hundred Dollars Per Month notes:  I have received many requests from readers that want to invest in   individual stocks, but only have the available funds to put aside $50   to $100 into a particular company. For these investors, keeping costs   to a minimum is absolutely crucial. I have often made allusions and   references to DRIP Investing, but I have never offered an explanation   as to how to logistically set up DRIP accounts. Today, I will attempt   to do that. A second option, Sharebuilder, is a broker that will allow for fractional shares. A third option are mutual funds. Though, these often will have minimums but may be waived in some cases if you sign up with an automatic investment plan.  List of mutual fund companies to research. Something else to consider here is what kind of account do you want to have?  There can be accounts for specific purposes like education, e.g. a college or university fund, or a retirement plan. 529 Plans exist for college savings that may be worth noting so be aware of which kinds of accounts may make sense for what you want here. "You do not have to pay tax on any earnings inside a TFSA. Quoting Wikipedia's article, ""Investment income, including capital gains and dividends, earned in a TFSA is not taxed, even when withdrawn."" This is backed up by the official TFSA government site, http://www.tfsa.gc.ca/, which states, ""Investment income earned in a TFSA is tax-free."" This makes the TFSA an appropriate vehicle to store investments which produce dividends. For example, if you invest $5500 and receive a total of $500 in dividends this year, you will not pay tax on that $500, either in this tax year or even subsequently, when you withdraw money out of your TFSA. Of course, TFSAs aren't meant to be used for regular withdrawals. If you are planning on investing $5500 this year and withdrawing the dividends, I'd urge you to be careful and consider if this is actually the best sort of savings vehicle for you. But that's really just a general warning, nothing specific to dividends. It is possible to do this. Indeed, withdrawing $500 in dividends this year will increase your available contribution room in the next tax year (not in this tax year). For example, you contribute $5500 at the beginning of this year. By the end of November, you have accumulated $500 in dividends. You withdraw these in December. In the following tax year, you can recontribute this $500 in addition to the standard $5500 contribution room. So, you could contribute $6000. Just be careful with your calculations; I messed mine up and ended up paying a rather substantial penalty for my overcontribution." Some brokerages will allow you to enroll your account in a dividend reinvestment plan -- TD Ameritrade and I think Schwab for example. The way the plan works is that they would take your $4 and give you whatever fractional share of the ETF it is worth on the payment date. There are no fees associated with this purchase (or at least there are in the programs I've seen -- if you have to pay a fee, look for another brokerage). You may also be able to enroll specific securities instead of the entire account into dividend reinvestment. Call your brokerage to see what they offer. @JoeTaxpayer gave a great response to your first question. Here are some thoughts on the other two... 2) Transaction fees for mutual funds are tied to the class of shares you're buying and will be the same no matter where you buy them. A-shares have a front-end 'load' (the fee charged), and the lowest expenses, and can be liquidated without any fees. B-shares have no up-front load, but come with a 4-7 year period where they will charge you a fee to liquidate (technically called Contingent Deferred Sales Charge, CDSC), and slightly higher management fees, after which they often will convert to A-shares. C-shares have the highest management fees, and usually a 12- to 18-month period where they will charge a small percentage fee if you liquidate. There are lots of other share classes available, but they are tied to special accounts such as managed accounts and 401-K plans. Not all companies offer all share classes. C-shares are intended for shorter timeframes, eg 2-5 years. A and B shares work best for longer times. Use a B share if you're sure you won't need to take the money out until after the fee period ends. Most fund companies will allow you to exchange funds within the same fund family without charging the CDSC. EDIT: No-load funds don't charge a fee in or out (usually). They are a great option if they are available to you. Most self-service brokerages offer them. Few full-service brokerages offer them. The advantage of a brokerage versus personal accounts at each fund is the brokerage gives you a single view of things and a single statement, and buying and selling is easy and convenient. 3) High turnover rates in bond funds... depending on how actively the portfolio is managed, the fund company may deliver returns as a mix of both interest and capital gains, and the management expenses may be high with a lot of churn in the underlying portfolio. Bond values fall as interest rates rise, so (at least in the USA) be prepared to see the share values of the fund fall in the next few years. The biggest risk of a bond fund is that there is no maturity date, so there is no point in time that you have an assurance that your original investment will be returned to you. I'm pretty sure you can't do what you are asking, for exactly the reason you say - you would get a double tax deduction. The only way to get money out of an RRSP is to withdraw it and take the tax hit, whatever the reason for the withdrawl. From my own personal experience, you cannot trade spreads in RRSP or TFSA accounts in Canada. You can only buy options (buy a call or buy a put) or you can sell calls against your stock (covered call selling). You will not be able to sell naked options, or trade any type of spread or combo (calendars, condors, etc). I am not sure why these are the rules, but they are at least where I trade those accounts. I was going to comment on the commission-free ETF answer, which I agree with, but I don't have enough reputation. TD Ameritrade has a list of commission-free ETFs and has no minimum deposit required to open an account. Another idea is to keep gifts in cash until a certain threshold is reached. For instance, $100 for birthday, $100 for Christmas, $100 for next birthday, $100 for next Christmas, now execute the trade. Sharebuilder has $4 scheduled trades, so you'd be at about 1% overhead for that. If other people give money, you'll reach the threshold faster of course. For what it's worth, I do something similar for my 2 nieces. I combined their account and prepay Christmas plus birthday, so I do 1 trade a year. I have my account at Sharebuilder because my idea predated the commission-free ETFs that are now pretty popular. I should really transfer the account... hm.