The Tax-Free Savings Account (TFSA) is like the ultimate free pass to grow your money without the Fed taking a cut. Whether you’re racking up returns or collecting dividends, everything you earn inside your TFSA stays completely tax-free. This means you get to keep 100% of your gains, making it the perfect tool for building passive income over time. Plus, you can reinvest those earnings back into more investments, compounding your wealth faster without worrying about a tax hit! So, let’s look at how to get started.
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Start Setting It Aside
Setting aside 10% of each paycheque through automated payments is like giving your future self a gift every time you get paid. It’s easy to set up—just schedule a transfer from your chequing account to your savings or investment account on payday. This simple habit allows your savings to accumulate quickly without the temptation to spend.
Imagine doing this month after month, year after year. Even with modest paycheques, the savings can grow significantly over time, especially if you invest that money. The magic of compound growth can turn small contributions into a substantial sum down the road.
Consider Monthly Dividends
Monthly dividend stocks provide a steady cash flow, allowing you to reinvest quickly. Unlike quarterly dividends, where you have to wait longer between payouts, monthly dividends enable faster reinvestment, accelerating your growth.
The real power comes when you reinvest those dividends. Each month, you buy more shares, leading to even more dividends the following month. This creates a snowball effect, putting your passive income on autopilot and steadily working toward your financial goals.
Sienna Stock: A Great Option for Passive Income
Sienna Senior Living (TSX) is a fantastic choice for investors seeking monthly dividend income. With a solid 5.61% dividend yield, SIA offers reliable income in the stable senior living and long-term-care sector. Recent earnings show a 36.2% year-over-year increase in quarterly earnings, coupled with a 10.5% revenue growth.
What makes SIA stand out is its strong cash flow, reporting $158.78 million in operating cash flow last year. Even with a relatively high debt level, the company maintains its payouts, making it appealing for income-focused investors.
Bottom Line
Let’s say you make $60,000 per year. If you put aside 10% each month, you’ll accumulate $6,000 for the year. With SIA stock rising at a compound annual growth rate of 2.7%, your investments could flourish significantly.
Here’s a breakdown of potential returns in the first year:
| Company | Recent Price | Number of Shares | Dividend | Total Payout | Frequency | Portfolio Total |
|---|---|---|---|---|---|---|
| SIA | $16.54 | 363 | $0.94 | $341.22 | Monthly | $6,000 |
| SIA | $17.00 | 363 | $0.94 | $341.22 | Monthly | $6,171 |
In just the first year, you could see your shares increase by $171 and earn dividends of $341.22, resulting in a total passive income of $512.22!
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Embrace the potential of the TFSA and make your money work for you today!