A TD Bank poll showed that most Gen Zs and millennials are putting their money in a Tax-Free Savings Account (TFSA) to save it for later. They are not putting that money to work because they don’t know where to put it, and some think they don’t have enough money to invest. This article will clear up any confusion and help you choose the best TFSA investment for a reliable cash payment.
Getting rid of the confusion between saving and investing in a TFSA
We understand the confusion, which is why a lot of Canadians think a TFSA is a bank savings account. But a TFSA is really a long-term investment account. Not just any investments, but ones that grow your money quickly and pay you a lot of interest. This is because you don’t have to tell the Canada Revenue Agency (CRA) about any income or capital gains you make in the TFSA.
The only problem is that there is a limit on how much you can contribute, which you can see in your My CRA Account. You can put $7,000 into an investment for 2026. Also, don’t forget that if you take the money out, it won’t count toward your contribution room until the next tax year.
That’s because the TFSA contribution is only changed once a year, on January 1. If you put in $7,000 and take out $5,000 in 2026, what would happen? If you put $5,000 back into the account, that will be an overcontribution. You won’t be able to use that $5,000 in your contribution room until January 1, 2027. So, as we said at the beginning of the article, a TFSA is an account for long-term investments.
A great TFSA choice for cash payments
SmartCenters is working on a big program to turn its shopping malls into city centers, which have everything from offices to shops, homes, and storage rooms. These city centers are located at the crossroads on purpose so that more people can easily get to them.
From a dividend point of view, 23% of Walmart’s rental income makes for a steady cash flow. The stores that are anchored by Walmart are also important retail tenants, and most of their tenants have good credit. SmartCentres has never cut its dividend in the last 21 years. It has raised dividends in 10 of those 21 years.
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How to get the most money out of the 6.9% yield
You don’t have to limit your TFSA cash payments to the 6.9% yield. You can use those monthly payments to buy more dividend stocks or more units of SmartCenters REIT if you don’t need the cash right away.
If you put $5,000 into SmartCenters REIT, you could get $28.67 in dividends every month. You can keep buying REITs and energy stocks, like Freehold Royalties, that cost less than $25. This way, you can make your returns grow.
What investors should know
The TFSA is more than just a savings account; it’s also a way to invest without paying taxes. You can make money every month, reinvest it to grow your wealth, and build your wealth over time by choosing reliable dividend stocks like SmartCentres REIT. Using the TFSA wisely can help Gen Zs and millennials go from saving money to being truly financially free.
