All posts by Pat McKeough

The Best High-Risk Stocks to Invest In for Aggressive Investors

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Aggressive investors looking at high-risk, aggressive stocks to invest in should only allocate a small part of their portfolios to those investments 

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There are always investment-related worries to occupy the minds of investors looking for good Canadian stocks; but focusing on high-risk, aggressive stocks to invest in just makes it worse. That applies even to “hot” investments similar to a ChatGPT stock.

It’s only natural to worry about your investments, even good Canadian stocks, whether that’s during the kind of bull market we saw in 2021, or the COVID downturn of 2020 or the current volatile market.

But being able to overcome that worry is one of the most important traits a successful investor can have. It’s especially important when investors are looking for high-risk stocks to invest in.

Anxiety recedes with investment quality, diversification and balance

You’ll find that many of your worries centre on things that are unlikely to happen; that are already largely discounted in current stock prices; and that probably won’t matter as much as you feared they would. That also applies when you’re looking for the best high-risk, aggressive stocks to invest in, like something similar to a ChatGPT-like stock or other AI star.

You get a much better return on time spent if you devote less of it to worrying about high-risk, aggressive stocks to invest in, and more of it on forming an investing strategy that focuses on good Canadian stocks, for example. Create a strategy that is built upon analyzing the quality and diversification of your investments, and the structure and balance of your portfolio.

There’s another advantage as well. A calm investor is much less likely to react in haste and make sudden decisions that could prove to be damaging in the long run such as devoting a large portion of your portfolio to a ChatGPT-like stock or another darling of momentum investors instead of focusing on good Canadian stocks.

Pink sheet stocks are the Wild West of U.S.-based stocks—and only for investors looking for high-risk stocks to invest in … with money they can afford to lose

Companies that trade on the U.S. over-the-counter market are said to trade as “pink sheet stocks,” a holdover from the days when the quotes for these stocks were printed on pink paper.

Today, OTC Markets Group (formerly Pink OTC Markets Inc.), a private company, is the main provider of pricing and financial information for the over-the-counter (OTC) securities markets.

OTC Markets Group operates a centralized information network that includes services for market makers, issuers, brokers and OTC investors. This information aims to make OTC trading more efficient and improve access to capital for OTC issuers.

Unlike good Canadian stocks, many companies that trade “pink sheets stocks” usually don’t have sufficient market caps, or enough shareholders, to meet most stock exchanges’ minimum criteria. That includes several penny stocks that purport to be the next ChatGPT stock.

Over-the-counter shares are often sporadically or inactively traded. That can make buying penny stocks and pink sheet stocks (and selling them) more difficult and expensive than shares of larger stock exchanges.

As well, over-the-counter stocks trade through “market makers,” or traders who maintain an orderly market in a particular stock by standing ready to buy or sell shares. The market maker’s job is to maintain a firm bid and ask price for their assigned securities. If a broker wants to buy a stock, but there are no offers to sell it, the market maker fills the order by selling shares from their own firm’s account. If a broker wants to sell, but no one wants to buy, the market maker buys the shares.

Over-the-counter stocks may at times seem to offer extraordinary opportunities, but this can be an expensive illusion. Most legitimate companies with substantial growth potential will want to leave the over-the-counter market as quickly as possible, and move to the major markets. This tilts the odds against you.

That’s why we’ve always stayed out of the over-the-counter market, and are likely to continue to stay out as we focus on good Canadian stocks and good U.S. stocks. There are just too many attractive buying opportunities in major markets where risk is lower and your chances of making money are much better. Continue Reading…

Safer investments for retirees: How to retire with less stress

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Overall we see safer investments for retirees as ones that focus on a long-term conservative strategy and make calculated use of RRSPs and RRIFs to boost returns

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Retirement planning is becoming more challenging for Canadians because they’re living longer and need larger retirement nest eggs.

This often manifests itself in “pre-retirement financial stress syndrome.”

That’s the malady that strikes when it dawns on you that you may not have enough money saved to be able to earn the retirement income stream you were banking on.

 

To alleviate this worry, we recommend Successful Investors base their retirement planning on a sound financial plan. Here are the four key variables that your plan should address to ensure you have sufficient retirement income:

  1. How much you expect to save prior to retirement;
  2. The return you expect on your savings;
  3. How much of that return you’ll have left after taxes;
  4. How much retirement income you’ll need once you’ve left the workforce.

Note, though, that if you’re heading into retirement and are short of money, you should move your investing in the direction of safer, more conservative investments. That’s a far better option than taking one last gamble.

Moving into “too safe” investments for retirees can sharply cut your long-term returns

This applies as well to “risk-reducing strategies,” of which there are many. One of the most common is the urge to “go into cash” (also known as “taking money off the table”) when you foresee a market downturn. Like all risk-reducing strategies, this one can seemingly work from time to time, by getting you out of the market before a drop. But it’s even more effective at ensuring that you are out of the market when prices are shooting upward.

In the stock market, downturns do come along from time to time. But they are far less common than fears of downturns, which are virtually non-stop.

Editor’s Note: Last chance to register for today’s free AI investing webinar, hosted by The Successful Investor and Findependence Hub. The webinar begins today at 11:30 a.m. EDT and will cover practical ways to approach investing in A.I. stocks while keeping risk in mind. We shared the full details in our Canada Day blog post last week, with a reminder on July 4. If you would like to attend, you can still register here.

Pat McKeough has been one of Canada’s most respected investment advisors for over three decades. He is the founder and senior editor of TSI Network and the founder of Successful Investor Wealth Management. He is also the author of several acclaimed investment books. This article was published on June 4, 2026 and is republished on Findependence Hub with permission.

Myths about Dividend Stocks in RRSP vs TFSA: Busted

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Dividend investors love rules of thumb. Rules are comforting, like a warm blanket. Unfortunately, some of the most popular rules around dividend stocks in RRSP vs TFSA are only partly true.

The cost is usually quiet. You rarely see a dramatic mistake on a single statement. Instead, you get small leaks that compound: a bit of withholding tax you cannot recover, a little extra taxable income later than you expected, and a placement decision that is hard to unwind without triggering tax.

Here is a myth-by-myth cleanup, with practical takeaways you can apply without needing a spreadsheet the size of Manitoba.

Myth #1: TFSA is Always Best for Dividends

Why it sticks: a TFSA is tax-free in Canada, so it sounds like the obvious place for any income.

The reality is more nuanced. A TFSA is often an excellent home for dividend income, but not every dividend behaves the same way once cross-border tax rules enter the room.

What’s true (and what’s not):

A TFSA is great for many dividend investors, especially when flexibility matters. The part that breaks is the word “always.”

The key exception: U.S. dividends in a TFSA

U.S. dividends paid into a TFSA commonly face 15% U.S. withholding tax, and the TFSA usually does not let you recover that amount. The Canada U.S. tax treaty generally treats RRSP and RRIF type plans differently than a TFSA for this purpose.

This is the classic U.S. dividend withholding tax TFSA vs RRSP issue. It is not theoretical. It shows up as less cash hitting your account.

When a TFSA is often best for dividends

A TFSA is often a strong home for:

  • Canadian dividend payers (TSX stocks and many Canadian-listed dividend ETFs), since there is no U.S. withholding problem on Canadian dividends
  • investors who value tax-free withdrawals and flexibility later
  • people who want retirement income planning that does not add to taxable income

Takeaway: A TFSA is fantastic, but it is not automatically best for every dividend source.

Myth #2: U.S. Withholding gets Refunded in a TFSA

Why it persists: investors remember that in a taxable account, foreign withholding can sometimes be offset with a foreign tax credit, so they assume the TFSA works the same way.

Reality: inside a TFSA, the U.S. withholding is generally not recoverable because you cannot claim the foreign tax credit there.

RRSP vs TFSA: the simple $100 dividend example

Using round numbers:

  • U.S. dividend in TFSA: $100 declared, $85 received (15% withheld, typically unrecoverable)
  • U.S. dividend in RRSP: $100 declared, $100 received (treaty relief commonly applies when held properly)

That 15% gap is not a one-time annoyance. If you reinvest and hold for years, it compounds.

Takeaway: if you hold U.S. dividend payers inside a TFSA, plan for some permanent leakage.

Myth #3: DRIPs are Taxed inside RRSP/TFSA

Why people think this: in non-registered accounts, reinvested dividends are still taxable each year, so it feels like reinvestment must create a tax event everywhere.

Reality: registered accounts are designed so you do not report income annually.

  • TFSA: investment income and growth in the account are tax-free
  • RRSP/RRIF: investment income is tax-deferred, and withdrawals are taxed as income later

So a DRIP inside an RRSP or TFSA does not trigger annual Canadian tax reporting.

One practical record-keeping note

In taxable accounts, adjusted cost base tracking matters, especially with DRIPs.
Inside RRSP and TFSA accounts, adjusted cost base tracking is generally not required for Canadian tax reporting because you are not reporting gains each year.

Takeaway: DRIP taxes are a taxable-account headache, not a registered-account one.

Myth #4: RRSP Withdrawals are “Lightly Taxed,” just like TFSA

Why it trips people up: the RRSP deduction at contribution time is memorable, so people assume the withdrawal has special treatment too.

Reality, stated plainly: RRSP withdrawals are taxed as ordinary income. They do not come out as dividends, and you do not get the dividend tax credit on the way out.

This matters for dividend-focused RRSP portfolios because the income can stack on top of CPP, OAS, and other retirement income sources.

Two income-planning issues that surprise dividend investors 

  1. RRIF minimum withdrawals can force taxable income once you convert, and the minimum usually rises with age.
  2. Higher taxable income can increase OAS recovery tax risk. TFSA withdrawals do not add to taxable income, but RRSP and RRIF withdrawals do.

Bottom line for dividend investors:

  • RRSP: tax-deferred growth now, taxable income later.
  • TFSA: tax-free growth and tax-free withdrawals.

Takeaway: the account wrapper changes the after-tax experience, even if the underlying holdings look the same.

Myth #5: All Dividend ETFs face the same Withholding

Why it sounds reasonable: an ETF is “just a wrapper,” so withholding must be the same everywhere.

Reality: withholding can vary based on: Continue Reading…

Why Secular Trends beat Market Indicators

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Forget about market indicators–picking up on secular trends is a much better way to spot top stocks

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Investors sometimes ask how I learned about investing and the stock market. The answer is that I started early, read a lot, and learned how to write so that readers understand what I’m saying.

I got started as a teenager, with a part-time job for an investment writer. My job was to gather and organize information on public companies and the economy. This called for a lot of reading, but I was always an avid reader.

Learning how to write easy-to-read material is also a plus. After all, you have to understand information to be able to explain it to others.

During my first full-time decade in the investing business, I learned that many factors influence market trends. Naturally, I tried to learn about or create market indicators that could tell me how these factors could help my investing. Gradually it dawned on me that most market indicators turn out to reflect the fact that random events tend to occur in bunches.

Some of these bunches are big enough and last long enough that you can mistake them for sure signs that the market is headed in a particular direction.

The four-year U.S. Presidential Election indicator is different. It’s the most valuable market indicator I know of because it takes advantage of recurring cycles in the U.S. Presidential Election cycle. It’s still far from perfect. However, you might say that every few years, it gives investors a helpful nudge in the right direction.

The four-year rule is of little interest to many investors, particularly those who are new to the game. They lack the patience for it. Over the years, I’ve talked to many young investors who seem more interested in short-term trading than in our long-term Successful Investor approach.

From their point of view, they don’t need to obsess about risk because they don’t have enough investment capital to worry about losses. They say they’ll switch to our approach when they’ve made a windfall in something that works out as they hoped. When they have more money to risk, they’ll be more careful with it.

The trouble is that since they disregard risk, they may never acquire the gains they hope for. All too often, they get sucked into one bad investment after another. These include short-term trading (particularly in so-called meme stocks), dabbling in stock options or IPOs or SPACs or cryptocurrencies or NFTs. Dabblers fail to see that the big gains in these opportunities go to those who sell them to the investing public.

Secular trends beat market indicators

In the 1980s, I lost interest in market indicators and began to focus on secular trends. These are economic trends that last longer (sometimes much longer) than the typical prosperity/recession cycle.

Back then, for instance, goldbugs were sure that federal deficit spending was responsible for the high inflation of the period. It seemed to me that they were paying too little attention to the economic changes going on, particularly the impact of the baby boomers’ entry into the workforce. When employers hired boomers, it raised costs, since these newcomers needed training (particularly women who were going to work in higher numbers than previously). Continue Reading…

Arbitrage in the Stock Market is your Friend, Especially with an AI Assist

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If you are Canadian and you buy or sell U.S. stocks, you need to remember that arbitrage in the stock market is your friend, all the more so when it has an assist from AI, or Artificial Intelligence.

Arbitrage is the simultaneous purchase and sale of an asset in different markets, to exploit tiny differences in prices. We take advantage of it for our Portfolio Management clients whenever we can, to cut their trading costs. Here’s how it works:

If we’re selling a Canadian stock for a client and plan to use the proceeds to buy a U.S. stock, we offer the Canadian stock (on a Canadian or U.S. exchange) for sale in U.S. funds. When we want to sell a U.S. stock to buy Canadian, we reverse the order and offer the U.S. stock for sale in Canadian funds.

Now that you can buy and sell in either currency on both sides of the border, arbitrageurs (also known as “arbs” — traders who buy and sell in two different currencies simultaneously) constantly monitor trading activity to spot slight differences in one currency versus the other. When they spot any such difference, they simultaneously buy the stock where it’s cheaper and sell it where it’s more expensive, eking out a tiny profit on the difference.

This trading activity serves to cut cross-border share-price differences to the point where they are, for practical purposes, negligible. This makes the markets more liquid. It cuts trading costs for everybody. Continue Reading…