The Registered Retirement Savings Plan (RRSP) isn’t the only Canadian savings account to consider when it comes to long-term savings goals. While the annual contribution limits may be lower than that of the RRSP, the Tax-Free Savings Account (TFSA) should not be overlooked by long-term investors looking to maximize returns.
Dating back to its introduction in 2009, the total TFSA contribution limit is now $88,000, as long as you were 18 years or older in 2009. Fortunately, unused annual contributions can be carried over from year to year.
When it comes to choosing the types of funds to add to a TFSA, Canadians have a few choices. For short-term savings goals, cash may be the preferred asset to hold. But for those with a time horizon of five years or longer before they’ll need to withdraw their funds, investing in the Canadian stock market could be a wise idea.
Maximizing returns in a TFSA
Cash sitting within a TFSA is great for short-term goals, because there’s no volatility. You’ll may be losing value slowly due to inflation, but there won’t be any change to the value of the cash itself.
Stocks, however, come with daily volatility. The upside is the potential to earn a positive return. And compounded over time, those returns can turn into a significant amount. Even better, those gains can compound completely tax free, and, once again, no tax is paid when withdrawing those funds.
With that in mind, I’ve reviewed two top Canadian stocks for long-term investors to consider picking up shares of today. I’m a satisfied shareholder of one of these two TSX stocks already and will be looking at adding the other to my portfolio while these bargain prices last.
TSX stock #1: Brookfield Renewable Partners
Anyone that’s bullish on the growth of the renewable energy space should seriously consider putting their money to work today. After a massive run in 2020, the entire sector has been on the decline since early 2021. As a result, there’s no shortage of high-quality renewable energy stocks on the TSX trading at a discount right now.
As a current Brookfield Renewable Partners (TSX:BEP.UN) shareholder, I’ll likely be adding to my position at least once more before the end of the year. Shares are down about 30% from all-time highs but are up 10% over the past six months. And that’s not even including the company’s impressive 4% dividend yield, either.
If you’re looking for a top renewable energy stock with loads of growth potential and an international presence, Brookfield Renewable Partners is the company for you.
TSX stock #2: goeasy
Speaking of screaming discounts on the TSX, goeasy (TSX:GSY) is an under-the-radar growth stock that deserves serious consideration today.
Shares are down close to 50% from all-time highs set in late 2021. Still, the growth stock is up a market-crushing 150% over the past five years. In comparison, the S&P/TSX Composite Index has returned less than 30%.
The high-interest-rate environment has understandably hurt demand for the consumer-facing loan provider. But over the long term, goeasy is not a stock I’d want to bet against.
TFSA investors with time on their side will not want to miss out on this rare buying opportunity.
