Foolish Beginners: 1 Stock Pick to Buy Now for a $6,000 TFSA

Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) stock looks cheap as shares regain their footing.

| More on:
a person looks out a window into a cityscape

Image source: Getty Images

Beginner investors looking to make their first ever TFSA (Tax-Free Savings Account) contributions of $6,000 should do so rather than waiting for the market’s next move. Indeed, there are plenty of risks still on the table, even though it seems like this market has shrugged off recession fears and worries that rates could rise considerably faster and higher than originally thought.

At the end of the day, you don’t want to fight the Federal Reserve (the Fed) or the Bank of Canada (BoC). Instead of chasing or waiting for the perfect moment, it’s a wise idea to be a buyer now and gradually over time, so you can average out a pretty decent cost basis. Dollar-cost averaging (DCA) is nothing new. It’s a way to help yourself get used to the downs that tend to surprise many market newcomers.

TFSA Investors: Tune out the short-term noise by playing the long-term game

Remember, by investing for the long run, you’re committing to being there through up days and down. Trying to avoid the slides in markets is not a good endeavour. Holding through bumps in the road and topping up during the hardest of times tends to be a better strategy. The buyer’s mindset is hard to achieve through bear markets and corrections unless you gain the experience of bathing in the bloodbath on Wall or Bay Street. It’s not easy, but it can be learned through experience.

Indeed, the 2020 stock market meltdown and 2022 sell-off are fresh in the minds of many beginner investors. Though the rough start to the decade is off-putting for many new TFSA investors, I’d argue that it’s far better to view the rough patches as a fresh slate for new capital before the next bull market has a chance to charge.

Once the next bull has its run, you’re going to want to run with that bull and not be left behind at the gate, waiting for the next so-called “perfect” time. At the end of the day, there’s no “perfect” time to be an investor. You’ve got to find yourself a time where the risk/reward is solid and be ready to average in and willing to get your feet wet.

BAM rallies ahead of big changes

Currently, I’m a fan of Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) stock, which recently came off some stellar quarterly results that saw profits dip 39% as a result of various factors, including elevated interest expenses. Despite the weakness, shares have held their own incredibly well, thanks in part to a looming spin-off and robust revenues.

In a prior piece, I highlighted the potential for Brookfield to unlock value via the spinning off of its flagship asset management business. Undoubtedly, Brookfield is a tad heavy on assets versus some of its peers in the alternative asset space. Yesterday, management shed more light on a potential transition that’d see today’s Brookfield spin-off into two entities: Brookfield Asset Management and Brookfield Corp.

Indeed, investors and the rest of the market look excited about the move that will see former Bank of Canada governor Mark Carney take a seat at the newly formed firm.

Bottom line

Post-spin-off, Brookfield’s new asset-management firm will be asset-light and could find itself commanding a premium multiple. In any case, Brookfield stock is out of its rut and could have room to run before its most significant transition to date.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Asset Management Inc. CL.A LV.

More on Stocks for Beginners

Gas pipelines
Stocks for Beginners

3 Reasons to Buy Enbridge Stock Like There’s No Tomorrow

Enbridge (TSX:ENB) is a superb long-term option. Here's why you should buy Enbridge stock right now and hold it for…

Read more »

growing plant shoots on stacked coins
Stocks for Beginners

1 Copper Stock to Buy as Copper Prices Shine

The price of copper continues to climb, and more copper production is on the way for this top stock up…

Read more »

Business success with growing, rising charts and businessman in background
Stocks for Beginners

2 Top TSX Growth Stocks to Buy Today and Hold for 10 Years

Are you looking for top-performing TSX stocks to hold for a decade? and goeasy could really pay off for…

Read more »

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

This Dividend Stock Just Jumped 10%! Time to Buy?

This dividend stock is way up after being included in a major index, making it a prime time to pick…

Read more »

Pile of Canadian dollar bills in various denominations
Stocks for Beginners

Up 94% in 2024! 3 Reasons Celestica Stock Is (Still) a Screaming Buy Today

Here are the top three reasons that could help Celestica stock continue soaring in the long run.

Read more »

sale discount best price
Stocks for Beginners

Time to Pounce: 1 Phenomenal TSX Stock That Hasn’t Been This Cheap in a While 

Buying the dip of a phenomenal cyclical stock could generate fantastic returns. Here is a cheap TSX stock in its…

Read more »

financial freedom sign
Stocks for Beginners

Could This Undervalued Stock Make You a Millionaire One Day? 

The TSX has good millionaire-maker stocks if you wait. This futuristic stock might look undervalued once you see its growth…

Read more »

Aerial view of a wind farm
Energy Stocks

Brookfield Renewable Stock Climbs Higher: Time to Buy?

Brookfield Renewable stock (TSX:BEP.UN) continues to climb, but remains below the $40 mark. But that share price looks in view.

Read more »