Investing in stocks can be a one-time thing or regular, depending on your preference. A monthly investment of $1,000 in top buys can help you build a $100,000 Tax-Free Savings Account (TFSA) portfolio. How? The first step is to make a financial goal. Then break it down into conservative and aggressive scenarios, each having a different outcome. You could aim for a 5-10% compound annual growth rate (CAGR) in a conservative estimate and 20% in an aggressive one.
The math to convert $10,000 to $100,000 TFSA portfolio
In an aggressive estimate of a 20% CAGR return, you have to invest $1,000 per month in top growth stocks for at least five years to build a $100,000 TFSA. Look at the math below.
| Year | Investment | Investment Return @ 20% | Total Amount |
| 2023 | $12,000 | $12,000.0 | |
| 2024 | $12,000 | $2,400.0 | $26,400.0 |
| 2025 | $12,000 | $5,280.0 | $43,680.0 |
| 2026 | $12,000 | $8,736.0 | $64,416.0 |
| 2027 | $12,000 | $12,883.20 | $89,299.2 |
| 2028 | $17,859.84 | $107,159.0 |
In a conservative estimate of a 7% CAGR return, you have to invest $1,000 per month for at least seven years to build a $100,000 TFSA. Look at the math below.
| Year | Investment | Investment Return @ 7% | Total Amount |
| 2023 | $12,000 | $12,000.0 | |
| 2024 | $12,000 | $840.0 | $24,840.0 |
| 2025 | $12,000 | $1,738.8 | $38,578.8 |
| 2026 | $12,000 | $2,700.5 | $53,279.3 |
| 2027 | $12,000 | $3,729.6 | $69,008.9 |
| 2028 | $12,000 | $4,830.6 | $85,839.5 |
| 2029 | $12,000 | $6,008.8 | $103,848.3 |
How to generate a 20% CAGR TFSA portfolio
To generate a 20% CAGR portfolio, you need to invest a bigger portion in growth and high-dividend stocks. But these stocks carry risks in the short term, and some of them could backfire. Hence, it is better to diversify your portfolio across different sectors riding different secular trends to secure an average growth rate of 20%. Two tech stocks, AMD (NASDAQ:AMD) and BlackBerry (TSX:BB), hold the potential to grow at a CAGR of more than 20% in the next three to five years.
AMD stock
AMD designs computing chips for PCs, servers, and game consoles. The stock fell more than 60% in the 2022 tech bubble burst due to supply shortages, a steep decline in PC shipments, and excess graphic cards in the secondary market after the crypto bubble burst.
But this dip did not impact the secular trends AMD is tapping for the next five years. AMD grew its revenue and stock at a CAGR of 29.5% and 45.6%, respectively, in the past five years. It did so by regaining market share from Intel in PC and data centre market and tapping the next-generation game consoles. It aims to grow in the next five years by tapping an even bigger addressable market of 5G network infrastructure, data centres and cloud computing, embedded devices, and automotive.
BlackBerry stock
The stock of cybersecurity and automotive software provider BlackBerry slipped 58% in the 2022 tech stock selloff. The company saw a slowdown in cybersecurity revenue, as governments have delayed their cybersecurity contracts amid uncertainty around the recession. Moreover, supply chain issues slowed automotive production, putting BlackBerry’s QNX royalty revenue on hold. But the stock has the potential to grow 20% annually once electric vehicle demand returns. It will also benefit from its IVY-connected vehicle platform.
Balance growth with dividends
While AMD and BlackBerry have the potential to generate strong returns on the back of secular trends, they also have a downside risk. Hence, balance the risk of a growth stock with the passive and regular income of a Dividend Aristocrat like BCE (TSX:BCE). The telecom giant will also benefit from the 5G wave while offering a 5.5% average dividend yield. BCE stock currently has a dividend yield of 6.4% and is growing dividend per share at a 5% CAGR.
While BCE may not offer a 20% CAGR, it can reduce downside risk, and you can use the dividend income to invest in some high-growth stocks.
How to generate a $100,000 TFSA portfolio
The stock market is volatile. A stock may outperform or underperform due to unforeseen events, like the pandemic. You can start with the above three stocks in a 40:40:20 ratio or 30:30:40 ratio, depending on your risk appetite. These stocks may not give a 20% CAGR, but being prepared for a 10% CAGR can keep you in check with your financial goals.
