Last year was a volatile one for the Canadian market. In fact, globally it was the same volatile situation. This year so far doesn’t look too much better. Although we’re seeing a rebound from the market crash of March 2020, there is word that future market crashes are on the way.
Yet without doing a lot of trading, my Tax-Free Savings Account (TFSA) investments still managed to make an average return of 20%. I didn’t jump in on the market crash. I didn’t buy up risky stocks. I stayed the course with what I had. I’m not talking about a gain of 20% from the March 2020 crash either. I mean January 2020 to January 2021, plus 20%.
Now of course, my TFSA investments aren’t perfect, so I’m going to dig into what I bought and why. I’m also going to touch on what I had that isn’t doing that well. And of course, what’s next for my TFSA investment portfolio that you can learn from.
The winners
I bought a few fairly new stocks that managed to do really well in 2020. There are three themes to pick up amongst my TFSA investments. First, there’s e-commerce. I own heavy hitters like Shopify Inc (TSX:SHOP)(NYSE:SHOP) that managed to soar even during the downturn, mainly because of the pandemic and increase in e-commerce demand. While some people took the cash, I’ve been holding tight and not regretting a second. Shopify is likely to continue growing even with a few dips, and so far my TFSA investment has made 200%!
Other pandemic-related stocks I bought pre-pandemic were Goodfood Market Corp and healthcare stocks like Viemed Healthcare Inc and NorthWest Healthcare Properties REIT. These are service industries that will be around throughout the pandemic, each seeing a huge boost in revenue as other industries fell. Each grew substantially this year, with Goodfood the standout. My stock has almost tripled as of writing with lots of room to grow.
The losers
Of course, as I mentioned, my TFSA investments weren’t perfect. There are two main areas that didn’t fair all that well in 2020, but I’m still holding those ones. Those are banking stocks and energy stocks. My banking stocks have rebounded, it’s true, but are merely at pre-crash levels. I’m not seeing the gains I once had. But of course these are long-term holds that I’ll definitely be watching for decades, not just a year.
Then there are energy stocks. Here is where it gets tricky. Enbridge (TSX:ENB)(NYSE:ENB) for example is still down compared to where it was only a few years ago. With the rumoured cancellation of the Keystone XL pipeline, granted not an Enbridge project, the company was further affected. As the Biden administration enters the United States White House with a focus on green energy, these companies may be ones I look to ditch in the near future. But right now they continue to have a sweet dividend.
What’s next?
Here’s the real toss-up. On the one hand, my cannabis stocks in my TFSA investments did quite poorly in 2020, it’s true. Cannabis for the most part is still way down from where it was pre-legalization in Canada back in 2018. Production was already struggling, and the virus almost ground that to a halt for most companies.
But there’s a glimmer of hope that I’m being careful about. More states legalized the use of recreational marijuana during the November U.S. election. President Joe Biden’s administration plans to decriminalize cannabis as well. Companies that have a solid footprint in the U.S. may see enormous gains very shortly. It’s why I plan on holding onto stocks like Canopy Growth Corp, and even buying more of it should a dip occur.
Bottom line
The overall theme that I keep for my TFSA investments is finding long-term holds. Even cannabis creates a long-term option, as Canopy Growth should be around for decades if it launches itself as the leader of the pack. Banks, healthcare and e-commerce are all industries that are here to stay, pandemic or not. So finding stocks like these that can keep my funds growing is exactly what I plan on doing this year, and every year.
