Passive Income: How to Make $195.13 Per Month Tax-free

Investing tax-free is like getting an extra boost for your money! When you invest in tax-free accounts, any gains, dividends, or interest you earn stay yours. No need to share with the taxman. This means your investments can grow faster over time, and when you’re ready to cash out, it’s all yours to keep. It’s one of the simplest ways to let your money work harder for you! Here’s how to get started.

Get a TFSA

The Tax-Free Savings Account (TFSA) is hands-down the best tool for creating tax-free income. It offers a lot of flexibility while letting your money grow untouched by taxes. Whether you’re investing in stocks, bonds, guaranteed investment certificates (GIC), or even exchange-traded funds (ETF), any gains you make stay completely tax-free. Plus, you can withdraw funds whenever you need, without any tax penalties. And the best part? Whatever you take out gets added back to your contribution room the next year.

It’s also incredibly easy to manage, making it perfect for long-term wealth building. You can contribute up to $7,000 a year (as of 2024), which adds up over time. And unlike other accounts, you don’t need to worry about mandatory withdrawals or taxable events. Whether you’re saving for retirement, a big purchase, or just looking for extra passive income, the TFSA gives you the ultimate control over your financial growth with the least amount of hassle!

Look into passive income

When it comes to passive income for a TFSA, it’s smart to have a mix of both returns and dividends working for you. Dividends provide a steady, reliable stream of income, like little bonuses that companies pay you just for holding their stock. These payouts can add up quickly, and when reinvested, they can help your portfolio grow even more. The great thing about dividends is that they keep coming in, even if the market has a down day, giving you some stability in your passive income.

On the flip side, returns from your investments can offer that extra boost when the market is performing well. If you’re holding onto stocks, ETFs, or other assets, you’ll benefit from both the regular dividends and the potential increase in the value of your investments over time. It’s like having two engines driving your income – one giving you consistent cash flow, and the other offering long-term growth. By combining returns and dividends, you’re creating a balanced and diversified approach to building your wealth.

Get goeasy

Goeasy (TSX:GSY) is the perfect option for creating passive income. It offers a combination of impressive earnings growth and a strong dividend yield. With a forward annual dividend rate of $4.68 and a yield of 2.6%, goeasy provides regular cash flow to investors while maintaining a payout ratio of just 27.7%. Therefore the company is comfortably paying its dividends while still reinvesting in its business. Its recent earnings reflect this strength, with quarterly earnings growth of 17.7% and revenue growth of 15.4% – thus showing that goeasy is steadily expanding its operations.

On top of that, goeasy has seen an incredible 52-week stock increase of 62.9%. And this highlights its potential for capital appreciation. Its forward price/earnings (P/E) ratio of 8.9 suggests that the stock is still attractively valued compared to its growth prospects. With strong returns on equity at 25.3% and a consistent dividend payout, goeasy offers a balanced combination of growth and income. Thus, GSY is an ideal choice for investors looking to generate passive income both through dividends and stock price appreciation.

Bottom line

So let’s say we see goeasy stock rise by just half of what it’s done in the last year by about 30%. We then add in dividends, using our $7,000 investment. Here’s what that might look like in a year from now.

Now you’ve added $177.84 in dividend income and $2,163.70 in returns. That’s total passive income of $2,341.54! Or $195.13 on a monthly basis.