A 19-year-old Canadian will have a $14,000 Tax-Free Savings Account (TFSA) contribution room in 2026, even if they did not open an account. The Canada Revenue Agency (CRA) automatically starts accumulating TFSA contributions for Canadian residents turning 18. Investing early and maxing out the contribution limit have several advantages. The $14,000 you invest today can actually give you a lifelong monthly income if you stay invested for 20 years. By the time you turn 40, you will have an alternate source of passive income that adjusts to economic situations.
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How to structure $14,000 in your TFSA
Passive income doesn’t always mean you invest in dividend stocks. In fact, the TFSA’s benefit of tax-free withdrawals is ideal for high-growth stocks. Any stock you feel can double your money in three to five years is worth owning through the TFSA.
Now coming to your TFSA structure, since you have an investment horizon of 20 years, allocate 80–90% of your money in the core portfolio and 10–20% in the satellite portfolio. Within your core portfolio, allocate a ratio for growth and dividend stocks and keep rebalancing it every year.
Growth stocks for your core portfolio
Your core portfolio will include stocks you can buy anytime. They are large-cap, low-risk, assured returns stocks. You can invest $11,200 (80% of $14,000) in Broadcom (NASDAQ:AVGO) and Shopify.
Broadcom is a long-term growth stock that expands organically and through acquisitions. Its management ensures the company’s communications chips stay relevant to technology upgrades. You are making a mistake by thinking of waiting as the stock is trading at its all-time high. Broadcom is riding the artificial intelligence (AI) data centre and network infrastructure wave. Every new technology upgrade will drive demand for its Ethernet switches, routers, and accelerators.
Shopify is a stock you can buy in the March–May period, as that is when it is seasonally weak.
Dividend stocks for your core portfolio
In the core ratio, you may have an allocation ratio of 50:50 or 70:30 in growth and income stocks, depending on your financial goal and risk appetite.
Suppose you allocate $11,000 to Broadcom today, and this amount increases to $20,000. In a 50:50 allocation, you will sell $10,000 worth of Broadcom shares and invest it in a dividend growth stock like Canadian Natural Resources or CT REIT (TSX:CRT.UN).
CT REIT is the real estate arm of Canadian Tire and gives you exposure to the rent the retailer pays for its stores. CT REIT has the first right of refusal to buy or develop a new Canadian Tire store. Thus, any new store gets assured occupancy, and the unit holders get assured monthly dividends. However, our goal is to have a sizeable income after 20 years.
You could consider investing in the dividend reinvestment plan (DRIP), allowing you to compound the income. CT REIT grows its dividend every year in July at an average annual rate of 3%.
Assuming a 3% rise, its 2026–27 dividend per unit would be $0.977. Assuming you invest $10,000 now, you can buy 574 units, which will pay $560 in annual dividends. This dividend will be used to buy more income-generating units. In 11 years, the DRIP can double your annual payout to $1,191.
| Year | CT REIT Dividend/Share | Investment Amount | DRIP Share Count | Total Share Count | Annual Dividend Income | Monthly Dividend Income |
| 2026-27 | $0.977 | $10,000 | 574.00 | 574.00 | $560.69 | $46.72 |
| 2027-28 | $1.006 | $18 | 31.15 | 605.15 | $608.85 | $50.74 |
| 2028-29 | $1.036 | $18 | 33.82 | 638.97 | $662.17 | $55.18 |
| 2029-30 | $1.067 | $19 | 34.85 | 673.83 | $719.23 | $59.94 |
| 2030-31 | $1.099 | $19 | 37.85 | 711.68 | $782.43 | $65.20 |
| 2031-32 | $1.132 | $20 | 39.12 | 750.80 | $850.20 | $70.85 |
| 2032-33 | $1.166 | $20 | 42.51 | 793.31 | $925.29 | $77.11 |
| 2033-34 | $1.201 | $21 | 44.06 | 837.37 | $1,005.98 | $83.83 |
| 2034-35 | $1.237 | $21 | 47.90 | 885.28 | $1,095.44 | $91.29 |
| 2035-36 | $1.275 | $22 | 49.79 | 935.07 | $1,191.76 | $99.31 |
Since Canadian dividends earned through a TFSA are tax-exempt, the returns will be higher.
Adding up your TFSA portfolio
Note that the $560 dividend income and $9,000 capital gain are only from your $14,000 initial investment. If your portfolio can replicate similar growth every two to three years, the returns could grow sevenfold in 20 years. All this from the $14,000 you invest and do not withdraw for 20 years.
