Earn $191.75 Monthly in Tax-Free Income: Earning tax-free income is a dream for many, and with a Tax-Free Savings Account (TFSA), you can turn that dream into reality. By carefully investing in dividend-paying stocks within your TFSA, you can generate a steady monthly income of $191.75 or more—all without paying taxes. In this guide, we’ll explore how to achieve this goal step by step, while also providing practical examples and advice to make this process simple and actionable.
Earn $191.75 Monthly in Tax-Free Income
| Key Data Points | Details |
|---|---|
| Monthly Income Goal | $191.75 |
| Annual Income Goal | $2,301 |
| Average Dividend Yield | 4.89% (using Exchange Income Corporation (EIF) as an example) |
| Required Investment | Approximately $47,050 |
| TFSA Contribution Limit (2025) | Cumulative limit since inception: $88,000 |
| Investment Example | Diversify across stocks like Exchange Income Corporation (EIF), Enbridge (ENB), and Fortis (FTS) |
Earning $191.75 monthly in tax-free income with your TFSA is achievable by investing strategically in dividend-paying stocks. By understanding your goals, maximizing contributions, diversifying your portfolio, and monitoring performance, you can enjoy a stable, tax-free passive income stream.
This strategy is not only tax-efficient but also provides financial independence and flexibility. Whether you’re a seasoned investor or just starting, leveraging your TFSA effectively can help you build long-term wealth and achieve your financial dreams.
What Is a TFSA?
The Tax-Free Savings Account (TFSA) is a Canadian government-initiated program designed to help individuals save money tax-free. Introduced in 2009, the TFSA allows your investments to grow without any tax implications, meaning that dividends, interest, and capital gains earned within the account are entirely yours to keep.
This makes the TFSA an ideal vehicle for generating passive income, especially through reliable, dividend-paying stocks. Whether you’re saving for retirement, a major purchase, or simply to grow wealth, the TFSA is one of the most flexible and beneficial tools available to Canadians.
Step-by-Step Guide to Earning $191.75 Monthly
Step 1: Understand Your Goal
To earn $191.75 monthly, you’ll need an annual income of $2,301. This can be achieved by investing in dividend-paying stocks that yield around 4.89% annually. Let’s break this down further:
For example:
- Annual Income Goal: $2,301
- Dividend Yield: 4.89% (example from EIF stock)
- Investment Needed: $2,301 / 0.0489 ≈ $47,050
Understanding these numbers helps you set realistic financial goals. It also highlights the importance of choosing the right investments to achieve this steady income stream.
Step 2: Maximize Your TFSA Contribution
If you’ve never contributed to a TFSA before, you may have up to $88,000 in cumulative contribution room as of 2025. This contribution room increases each year, so it’s essential to keep track of your available limit. Here’s how to make the most of it:
- Calculate Your Room: Check your available TFSA contribution room by logging into your CRA My Account.
- Contribute Regularly: Even if you can’t contribute the full amount upfront, set up automatic monthly contributions to maximize your investment power over time.
- Use Reinvestments: Reinvest dividends and earnings to accelerate your portfolio’s growth.
Step 3: Choose the Right Dividend Stocks
Investing in high-quality dividend stocks is key to generating consistent income. These stocks typically belong to stable, well-established companies with a history of regular payouts. Here are some examples to consider:
1. Exchange Income Corporation (EIF)
- Yield: ~4.89%
- Why Choose?: Diversified operations across aviation and manufacturing sectors, ensuring stability and resilience during economic fluctuations.
2. Enbridge Inc. (ENB)
- Yield: ~7%
- Why Choose?: A leader in energy infrastructure, Enbridge has a long history of reliable payouts and is a favorite among income-focused investors.
3. Fortis Inc. (FTS)
- Yield: ~3.5%
- Why Choose?: Fortis operates in the utility sector, making it one of the safest options for consistent dividends. Its record of over 50 consecutive years of dividend increases speaks to its reliability.
4. Telus Corporation (T)
- Yield: ~5.5%
- Why Choose?: As a leading telecommunications provider, Telus offers growth potential alongside dependable dividend payouts.
5. Bank of Nova Scotia (BNS)
- Yield: ~6.9%
- Why Choose?: Canadian banks are known for their stability, and BNS stands out for its higher yield and focus on international growth.
Step 4: Automate Dividend Reinvestment
Many companies offer Dividend Reinvestment Plans (DRIPs). These plans automatically reinvest your dividends into additional shares of the company. The key benefits include:
- Compounding Growth: Reinvested dividends buy more shares, which then generate their own dividends.
- Cost Efficiency: DRIPs often allow you to purchase shares without brokerage fees.
- Hands-Free Investing: Automating reinvestments removes the need for manual management.
Consider contacting your brokerage to enable DRIP for eligible stocks in your TFSA.
Step 5: Monitor and Adjust Your Portfolio
Markets change, and so do individual company performances. Regularly reviewing your investments ensures your portfolio stays aligned with your income goals. Here’s how to stay on top:
- Review Dividend Stability: Confirm that each company’s dividend payouts remain consistent.
- Track Performance: Look for signs of declining yields or financial instability.
- Rebalance When Needed: Diversify further if certain stocks become too dominant in your portfolio.
By monitoring your investments regularly, you can make informed adjustments to keep your income steady and secure.
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FAQs About Earn $191.75 Monthly in Tax-Free Income
1. What Happens If I Exceed My TFSA Contribution Limit?
Exceeding your TFSA limit results in penalties. The CRA imposes a penalty of 1% per month on the excess amount until it is withdrawn. Always verify your contribution room through your CRA account before making deposits.
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2. Are All Dividends Tax-Free in a TFSA?
Yes, dividends earned within a TFSA are tax-free for Canadian companies. However, foreign dividends (e.g., U.S. stocks) may be subject to withholding taxes. Understanding the tax implications for international investments is crucial.
3. Can I Withdraw My Money Anytime?
Yes, you can withdraw funds from your TFSA at any time without penalties. Withdrawn amounts are added back to your contribution room in the following calendar year, allowing for flexibility in managing your savings.
4. What Are the Risks of Dividend Investing?
Dividend yields can fluctuate due to market conditions, and companies may reduce or suspend payouts in challenging times. Diversifying across sectors and regularly monitoring your portfolio helps reduce these risks.
5. How Does the TFSA Compare to Other Investment Accounts?
Unlike RRSPs, which defer taxes until withdrawal, TFSAs offer tax-free growth and withdrawals. They’re particularly useful for medium- to long-term savings goals.
