TFSA Couples: How to Maximize Your Investment Safely!

The Tax-Free Savings Account (TFSA) just increased its annual contribution to $7,000 for 2024. That brings the total contribution room to a whopping $95,000 for those who started contributing in 2009!

But what if you add in your significant other?

That would mean the pair of you have a combined total of $190,000 to invest. That’s $190,000! And what are you doing with it? Today, let’s look at how investors can put that cash to good use safely. Here are some tips to help, and how much you could start making on an annual basis.

Budget in your goals

If you’re going to start investing towards that $190,000 – or say you’re already there! – then you want to start budgeting your goals into your investment plan. There are a few steps to this.

A great method to consider is the net-zero method. This is where you assign every dollar of your net income to something on your monthly payments list. And I mean every dollar! Whether it’s going to the movies, paying bills, buying a coffee, every dollar should be assigned.

Then, you should have money left over! That money isn’t going to be spent, but invested. Ideally, it should be invested automatically through automated contributions. That way you’re treating your investments like a bill payment. Which they are! A bill payment towards your future goals.

Diversify

Now, you’ve likely already heard this from financial advisors and pretty much every investment piece of advice on the planet. Yet it bares repeating. Especially these days. Canadian investors have a serious problem getting into areas that are popular. And what’s more, investing in only Canadian companies.

This really is a significant problem. As we’ve seen over the last few years, cannabis stocks, tech stocks, ecommerce stocks, heck even utility stocks had their moment in the sun before falling. Every investor thinks they can find the next great stock, because practically everything had a shot!

That’s due in part to a strong Western economy over the last few decades. The United States and Canada have done quite well economically speaking, but that won’t last forever. I’m not saying there should be a collapse, but growth could be at a slower pace. Which is why investing internationally is also key here.

So consider it all

Now that you’re investing what you can each month and looking for diversification, it might seem like an impossible task to put all that $190,000 to good use. But luckily, there is an easy solution and that’s to invest through exchange-traded funds (ETF).

There are many out there, but if you want an easy option I would go with a stock such as the Vanguard Balanced ETF Portfolio (TSX:VBAL). VBAL invests 40% in bonds and 60% in equities. These equities are across a wide range of sectors, and also a wide range of continents! In fact, it invests heavily in other Vanguard products, providing a hugely diverse set of investments with the click of a button.

Now I’m of course not suggesting to invest $190,000 in just one ETF. But it’s a start! And a way to start working towards your long-term goals. And let’s say as just an example you started bringing in passive income through dividends at a yield of 2.37%. Here is exactly what you could bring in.

So right away, you can create $5,790.60 in annual income! That’s without considering any growth or any fixed income. So talk to your partner and start figuring out those goals!