How I’d Structure a $50,000 TFSA for Almost Constant Income

Structuring a $50,000 Tax-Free Savings Account (TFSA) for income is one of the best ways to make your money work for you. That’s because it turns your savings into a steady paycheque arriving without taxes or stress. Instead of watching your balance sit idle, you can turn it into predictable cash flow that helps cover groceries, kids’ activities, date nights, or small financial goals – all without touching your regular budget. So, let’s get started.

Getting started

Structuring a $50,000 TFSA for consistent income starts with choosing investments that pay reliably and complement each other’s strengths. Most investors build around a core of exchange-traded funds (ETF), often a mix of covered-call funds, dividend ETFs, and balanced income ETFs. These create a steady cash stream that doesn’t depend on any single sector. A typical approach is to blend a high-yield ETF with something more stable and low-volatility, so you get both dependable payouts and long-term resilience. The goal isn’t to chase the highest yield possible, but to create a mix that pays predictably while also preserving and slowly growing your capital.

Once the core is set, investors often add a secondary layer of income-focused ETFs that pay quarterly but offer better growth. These might include Canadian high-dividend equity ETFs or broad-market dividend growers. These help offset inflation and support dividend increases over time, which can boost your income even if you reinvest only part of it. With a $50,000 TFSA, even a modest 5% to 7% yield can start producing $200 to $300 per month tax-free. That income can grow each year as your holdings raise distributions. Reinvesting a portion of those payouts early on is key to building momentum toward higher long-term income.

The final step is deciding how hands-on you want to be. Some people rebalance annually to keep things smooth. Others simply let their ETFs work in the background. Because everything grows tax-free, you aren’t penalized for shifting allocations as your needs change. With the right mix of ETFs, dividend growers, and stable income funds, a $50,000 TFSA can evolve into a dependable paycheque without touching your regular income.

Consider VDY

The Vanguard FTSE Canadian High Dividend Yield Index ETF (TSX:VDY) is a fund built to track many of the country’s biggest and most reliable dividend-paying companies. Its portfolio is heavy on banks, pipelines, telecoms, and utilities, the cornerstones of Canada’s income market. Therefore, it captures stable cash flow and long-term dividend growth in one place. Because these companies tend to grow earnings steadily and maintain strong payout histories, VDY has become a go-to ETF for investors who want simplicity, strength, and dependable distributions.

VDY’s recent distribution data shows a consistent pattern of rising payouts driven by the underlying companies’ performance. When core holdings raise dividends or report stronger-than-expected cash flow, those increases flow through to VDY’s monthly distributions. Over the past several quarters, that trend has remained positive, with the ETF maintaining a healthy yield, all while seeing net inflows as investors shift toward safer, dividend-heavy strategies during market uncertainty.

Foolish takeaway

VDY is a strong ETF to buy for consistent income inside a $50,000 TFSA. It holds some of the most dependable dividend payers in Canada and passes their earnings strength directly on to you. Its distributions are predictable, well-supported, and tend to rise over time as its underlying companies grow. If you invested $50,000 into VDY right now, here’s how that could play out in your TFSA:

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDEND TOTAL ANNUAL PAYOUTVDY$61.15817$2.03$1,658.51

All considered, VDY is the kind of anchor ETF that can keep your TFSA balanced, reliable, and growing year after year.

The post How I’d Structure a $50,000 TFSA for Almost Constant Income appeared first on The Motley Fool Canada.

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More reading

• Build a Cash-Gushing Passive-Income Portfolio With just $40,000
• Here’s the Average TFSA Balance at Age 64 in Canada
• BCE Stock: Buy, Sell, or Hold?
• The Red Flags the CRA Is Watching for Every TFSA Holder

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.