The TFSA is a significant tool that Canadian investors have, which many are taking advantage of. Being able to save and contribute a substantial amount of cash each year and put it toward finding the best Canadian stocks to buy on the TSX today is truly significant.
However, many still underestimate just how significant the TFSA is and how much it can help you to compound your income over the long haul.
Taxes are a major consideration that many investors have to take into account. In addition, over the long run, taxes eat away at your total return and, therefore, how fast you can compound your money.
For example, $25,000 invested today that grows at a compounded annual growth rate (CAGR) of 7% for 30 years would be a little over $190,000.
Meanwhile, that same $25,000 growing at a 10% CAGR for 30 years would result in over $436,000 — more than double the return you would earn at a 7% CAGR.
So, the more you can maximize your returns, the faster you can grow your capital. Therefore, finding the best Canadian stocks to buy on the TSX and utilizing the TFSA are two of the simplest ways to achieve this.
And if you’re looking for stocks to buy now, here are two of the best ideas to consider now.
One of the best Canadian stocks to buy on the TSX today
One of the best Canadian stocks to buy on the TSX today is a gold stock like B2Gold (TSX: BTO)(NYSE:BTG)
Gold is something that many investors like to have exposure to at all times, usually a small portion of their portfolio, such as 5%. And with gold stocks having several tailwinds in addition to several high-quality stocks on the TSX today, they’re some of the best Canadian stocks to buy in this environment.
B2Gold is a great investment because, on top of providing investors with exposure to gold prices, a safe-haven asset, it also returns an attractive amount of passive income to investors.
The fact that it’s a low-cost producer means that B2Gold is consistently earning a tonne of cash. And because it has little debt, much of that cash can be paid back to investors.
If you’re looking to buy high-quality Canadian stocks for your TFSA that you can hold for years, B2Gold is one of the best companies to consider on the TSX today.
One of the best recovery stocks to buy right now
If you’re bullish on a recovery in travel due to all the pent-up demand, one of the best stocks on the TSX to buy in your TFSA today is American Hotel Income Properties REIT (TSX: HOT.UN).
Investors have been focused on airlines when looking for recovery stocks, but American Hotel Income Properties could offer an even better opportunity.
The REIT has roughly the same opportunity to see an increase from travellers and vacationers as airlines do. And because many of its hotels are premium branded, and all are located across the United States, the REIT has an opportunity to see a quick and significant recovery.
It’s already seen operations pick up, and, in addition to leisure travel, business travel could soon pick up again. Furthermore, the REIT also pays an attractive dividend, which currently yields 5.4% and was recently reinstated after being suspended for the pandemic.
If you’re looking for a high-potential stock to add to your TFSA, American Hotel Income Properties REIT is one of the best stocks to buy on the TSX today.
