A TD Bank survey found that most Gen Zs and millennials are using a Tax-Free Savings Account (TFSA) to park their money for later use. They are not investing that money, and one of the reasons is that they don’t know where to invest, and some assume they don’t have sufficient funds to invest. This article will clear that confusion and help you make the right TFSA investment choice for a dependable cash payment.
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Clearing the confusion around savings vs. investing in a TFSA
We get that confusion, that is, why many Canadians mistake a TFSA for a bank savings account. But a TFSA is actually an account for long-term investing. Not just any investments, but those that give high capital growth and high yield. This is because whatever income or capital gain you earn in the TFSA, you don’t have to report it to the Canada Revenue Agency (CRA).
The limitation is that there is a contribution limit, which you can check in your My CRA Account. For 2026, you can invest $7,000. And remember, if you withdraw the money, it won’t be added to your contribution room until the next tax year.
That’s because the TFSA contribution is updated only once a year, and that is on January 1. Suppose you invest $7,000 and withdraw $5,000 in 2026. If you reinvest $5,000, that will be counted as an overcontribution. You will have to wait until January 1, 2027 for that $5,000 to be updated in your contribution room. Thus, we said at the start of the article that a TFSA is a long-term investment account.
An ideal TFSA pick for cash payments
If you are looking to earn a fixed amount every month, SmartCentres REIT (TSX: SRU.UN) is an ideal TFSA pick for its 6.9% yield. The REIT earns money from rental income, and its largest tenant is Walmart. Walmart is not just a grocer but also an anchor that attracts other retailers and households.
SmartCenters has a pretty significant intensification program ongoing to convert its shopping centres to city centres, which have everything from offices to shops, residents, and storage rooms. These city centres are strategically located at the crossroads to make them accessible to shoppers in a wider circumference.
From a dividend standpoint, 23% of the rental income from Walmart creates a dependable cash flow. The Walmart-anchored stores are also essential retail tenants, and most of their tenants have high creditworthiness. Over the last 21 years, SmartCentres has never slashed its dividend. It has grown dividends in 10 out of those 21 years.
How to maximize cash payments from the 6.9% yield
You need not limit your TFSA cash payments to the 6.9% yield. If you don’t need those cash payments urgently, you can use those monthly payouts to buy more dividend stocks or more units of SmartCenters REIT.
Suppose you invest $5,000 in SmartCenters REIT, you can earn $28.67 in monthly dividends. There are several REITs and energy stocks, like Freehold Royalties, available under $25, which you can keep buying. That way, you can compound your returns.
Investor takeaway
The TFSA is not just a savings account — it’s a tax‑free investment vehicle. By choosing dependable dividend stocks like SmartCentres REIT, you can generate monthly income, reinvest for compounding, and maximize your wealth over time. For Gen Zs and millennials, using the TFSA wisely can bridge the gap between savings and true financial independence
