One of many largest benefits of utilizing a Tax-Free Financial savings Account (TFSA) is how easy it makes investing. Usually, you don’t want to fret concerning the tax therapy of your earnings. It doesn’t matter whether or not your returns come from dividends, capital beneficial properties, curiosity earnings, and even return of capital.
In case your objective is to generate a gradual stream of passive earnings, there isn’t any want to regulate for taxes or take into consideration gross versus web yields. What you see is what you get. So, in case you are aiming for one thing like $500 a month in tax-free earnings, how would you go about it?
One possibility that makes the mathematics particularly easy is the Canoe EIT Revenue Fund (TSX: EIT.UN), due to its mounted month-to-month distribution of $0.10 per share.
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What’s Canoe EIT Revenue Fund?
EIT.UN just isn’t an exchange-traded fund (ETF). It’s a closed-end fund. Meaning it doesn’t constantly problem or redeem shares like an ETF. As an alternative, it has a hard and fast pool of capital, and shares commerce in the marketplace based mostly on provide and demand.
Due to this construction, the fund can commerce at both a premium or a reduction to its web asset worth (NAV). As of April 6, 2026, the fund trades at $16.63 per unit, which is a slight low cost to its NAV of $16.87.
The portfolio itself is actively managed by Rob Taylor. It holds a concentrated mixture of roughly 50% Canadian equities and 50% U.S. equities, with a concentrate on massive, established firms.
At the moment, the fund holds 56 shares with a mean market capitalization of about $128 billion and trades at a price-to-earnings ratio of 21.6 instances.
One other essential function is leverage. The fund can borrow as much as 20% of its NAV to boost returns and earnings. Whereas this will enhance distributions, it additionally will increase danger throughout market downturns.
As for prices the fund costs a 1.1% administration price, which is excessive, however typical for an actively managed technique. With distributions reinvested web of charges however earlier than taxes, EIT.UN has returned an annualized 14.5% over the trailing 10-year interval.
How a lot do it is advisable to make investments to get $500 a month?
Keep in mind, EIT.UN pays a hard and fast month-to-month distribution of $0.10 per unit.
To generate $500 monthly, you merely divide your goal earnings by the month-to-month payout: $500 ÷ $0.10 = 5,000 items
Now multiply that by the present unit value of $16.63: 5,000 × $16.63 = $83,150
So, you would want to take a position roughly $83,150 in EIT.UN to generate $500 monthly in tax-free earnings inside a TFSA.
Keep in mind, distributions aren’t assured. Whereas the fund has an extended observe file, a bear market might end in a minimize, and your principal can fluctuate up or down. TFSA earnings is totally tax-free, making it simpler to plan round mounted month-to-month money circulate targets.
