- A TFSA is a tax-free savings account, offering potential for long-term growth.
- As of January 1st, 2025 The CRA is increasing the total amount Canadians can contribute to their TSFA by and additional C$7K.
- You can also use your TFSA to invest in precious metals like gold and silver.
- You can gain cryptocurrency exposure in your TFSA
The Tax-Free Savings Account (TFSA) is one of the most powerful investment tools available in Canada. Since any income or capital gains earned in a TFSA are tax-free, it offers great potential for long-term growth.
As well, as of January 1st, 2025 The Canada Revenue Agency is increasing the total amount Canadians can contribute to their TSFA by and additional C$7K. So for someone who has never contributed to a TSFA and was at least 18 years of age in 2009, the total contribution room is C$102K.
Here are some of the best ways to invest your TFSA, depending on your financial goals, risk tolerance, and time horizon.
Stocks and Equities
Stocks and Equities
This is good for: High-growth potential, long-term investors
Investing in individual stocks or equity-focused ETFs is one of the most popular ways to leverage a TFSA.
Since any capital gains from stock appreciation and dividends are tax-free, you can maximize your growth over time.
If you’re looking for high-risk, high-reward investments, individual stocks in growth sectors like technology, healthcare, or clean energy might be a good choice. Some investors may even choose to invest in dividend-paying stocks, which generate steady income (also tax-free in a TFSA).
Some examples:
Tech stocks – : Apple, Tesla, or smaller growth stocks
Dividend stocks -: Canadian banks (RBC, TD), utilities, or telecoms
ETF Option – Vanguard S&P 500 ETF or iShares TSX 60 ETF
Exchange-Traded Funds (ETF’s)
Another option is Exchange-Traded Funds (ETFs). These are good for diversification, lower risk and passive investors.
ETFs are an excellent option for TFSA investments because they offer diversification – exposure to multiple stocks or assets – at a relatively low cost. By investing in ETFs, you can track major indices (like the S&P 500,TSX Composite, or Global Markets and reduce the individual stock risk.
There are ETFs that focus on sector-specific investments (e.g., technology, energy, healthcare) or broad-market ETFs that offer exposure to hundreds of companies.
Some examples:
Vanguard S&P 500 ETF and for global diversification
BMO Low Volatility Canadian Equity ETF For a defensive, low-volatility approach to Canadian stocks
Bonds and Fixed-Income Investments
This is great for conservative investors looking for stability and regular income. Investing in bonds or bond ETFs within your TFSA is a more conservative approach, which might appeal to those closer to retirement or with a low tolerance for risk.
Interest earned from bonds within a TFSA is tax-free, so they can be a useful tool to earn income without paying taxes on the interest.
Some examples .of Bond ETFs:
iShares Canadian Government Bond Index ETF
BMO Mid Term US Investment Grade Corporate Bond ETF
Some other options include real Estate Investment Trusts (REITs), as they often pay monthly or quarterly dividends.
Precious Metals
As well with the price of gold rising you can also use your TFSA to invest in precious metals like gold and silver. This is a best for a hedge against inflation. You can invest in physical precious metals in ETFs or funds that track precious metals.
Some examples;
iShares Gold Trust ETF
SPDR Gold Shares ETF
Cryptocurrencies
And finally cryptocurrencies can be a good option for high risk speculative investors. There are some crypto-focused ETFs and funds in Canada that allow you to gain exposure to the crypto market through your TFSA without directly holding the coins.
Some examples :
Purpose Bitcoin ETF
Evolve Ethereum ETF,
Final tips for TFSA investing:
Diversify Your Portfolio – The power of a TFSA lies in its ability to shelter returns from taxes, so it’s important to use this tax-free growth opportunity wisely. Diversifying across asset classes such as stocks, bonds, ETFs, REITs, can help you reduce risk and increase the chances of long-term success.
Long-Term Growth Focus – Since TFSA withdrawals are tax-free, it’s best to treat the account as a long-term investment vehicle.
Avoid Over-Contributing – stay within the annual contribution limits to avoid penalties.
Consider Your Time Horizon and Risk Tolerance – The best investments for your TFSA will depend on your age, financial goals, and risk tolerance.
Make sure to Contact a financial advisor for guidance.
Be sure to stay up to date on all the latest stock market news at Stockhouse.com.
Join the discussion: Find out what everybody’s saying about uranium, oil and gas, precious metal stocks and more by checking out Stockhouse’s stock forums and message boards.
The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here.
