Million-Dollar TFSA: 1 Way to Achieve 7-Figure Wealth

You can convert your million-dollar TFSA dream into reality by staying invested and letting your investments compound tax-free.

| More on:
TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Who doesn’t want to be a millionaire? Being a millionaire might look like a dream when you start your first job, but it can become a reality while you are still young. The key to unlocking this seven-figure wealth is a Tax-Free Savings Account (TFSA). If you are in your mid-30s, you have a cumulative TFSA contribution room of $95,000. You may say that $95,000 is not even one-tenth of a million, but a stock that can give you 10 times growth in 10 years can convert this $95,000 into $1 million.

Frequent TFSA withdrawals deter seven-figure wealth

There is one condition: you should not keep withdrawing from your TFSA. As per Statistics Canada figures for the tax year 2020, average TFSA contributions were $7,572, and withdrawals were $6,713 among the 25-29 age group. What you don’t realize is that TFSA withdrawals are tax-free, irrespective of the amount. Do you want to withdraw $6,700 now or $1 million 10-12 years from now?

Once withdrawn, you will never get that TFSA contribution room back. In other words, you are not losing $6,700 but an opportunity to earn $67,000 in tax-free income. That’s the annual income of most Canadians. I cannot emphasize more why early TFSA withdrawals are a wealth eater.

How to achieve a million-dollar TFSA balance

YearTFSA Contribution20% CAGR
2024$7,000 
2025$7,000$8,400
2026$7,000$18,480
2027$7,000$30,576
2028$7,000$45,091
2029$7,000$62,509
2030$7,000$83,411
2031$7,000$108,494
2032$7,000$138,592
2033$7,000$174,711
2034$7,000$218,053
2035$7,000$270,064
2036$7,000$332,476
2037$7,000$407,371
2038$7,000$497,246
2039$7,000$605,095
2040$7,000$734,514
2041 $889,817
2042 $1,067,780
How TFSA contributions can compound your wealth at a 20% CAGR

In compounding, the $1,400 investment income earned in the first year is reinvested along with your fresh $7,000 TFSA contribution. Every year, we keep adding $7,000 to your TFSA balance ($8,400 in 2025), and by the 19th year, you could have over $1 million. At age 35, 19 years might look far. But if you start investing early, say at age 20, you will be a millionaire before you reach age 40.

That’s why they say the earlier you begin, the wealthier you will get.

Stocks for your million-dollar TFSA

Only resilient and future-growth stocks can give you a 20% CAGR return for the next 20 years. Predicting performance for 20 years is impossible. However, you can invest in stocks in which you see growth 5 to 10 years from now.

Descartes Systems

Descartes Systems (TSX:DSG) is a resilient stock that can give you a 20% CAGR for the next five to seven years. The supply chain management solutions provider benefits from the e-commerce boom and North America’s natural gas export opportunity, which could drive double-digit revenue growth till 2030. The company’s custom and compliance solutions, route mapping, and special e-commerce services could benefit from heavy trade volumes as economic growth recovers in the next three years. Its strong balance sheet and stable profits reduce its downside, and growing trade increases its upside.

It is a stock you could consider buying mid-year as it sees a seasonal rally during the holiday season because of e-commerce exposure.

Nvidia

Nvidia (NASDAQ:NVDA) remains a buy even after its superfast rally in the last two years driven by generative artificial intelligence (AI). Nvidia is at the core of GPU (graphic processing unit)-computing that can handle AI workloads. We are at the cusp of the AI revolution. So far, Nvidia has tapped the data centre opportunity. Robotics, self-driving cars and other AI at-the-edge devices are still a work in progress at Nvidia’s research centres.

As these opportunities unfold, the stock could grow your money way beyond a 20% CAGR in the next 10 years. And your TFSA extends the tax-free capital appreciation benefit to US growth stocks.

Investing in such growth stocks can fuel your seven-figure TFSA wealth in the long term.

Should you invest $1,000 in Celestica Inc. right now?

Before you buy stock in Celestica Inc., consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Celestica Inc. wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Descartes Systems Group and Nvidia. The Motley Fool has a disclosure policy

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Tech Stocks

ways to boost income
Tech Stocks

How I’d Invest $11,500 in Canadian Fintech Stocks to Revolutionize My Finances

Propel Holdings stock's recent dip could be a trading opportunity for long-term financial gains. Here's why the fintech stock is…

Read more »

Start line on the highway
Tech Stocks

Where I’d Invest $5,000 in Growth Stocks With Long-Term Potential Through 2030

DO you have $5,000 to invest to grow your wealth over the long term? These growth stocks could deliver strong…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Buy the Dip on the Return of Recession Stocks?

If a recession comes back, there are some stocks that could fair well afterwards. And this is one of the…

Read more »

data center server racks glow with light
Tech Stocks

April Opportunity: Where I’d Invest $7,000 in These 3 Tech Stocks Right Now

These tech stocks have solid growth potential and are trading at discounted valuation, providing a solid buying opportunity in April.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

If I Could Only Buy and Hold a Single U.S. Stock, This Would Be It

You don’t need 40 different stocks to build wealth. A few good ones can boost your portfolio, and this U.S.…

Read more »

cloud computing
Tech Stocks

2 Top Canadian Information Technology Stocks to Buy Right Now

These two Canadian information technology stocks are bargains amid the downturn in the broader market for long-term investors.

Read more »

A microchip in a circuit board powers artificial intelligence.
Tech Stocks

The Only 2 AI Stocks You’ll Need for Long-Term Growth

Here are two top Canadian tech stocks that could help you benefit from surging demand for AI technology and infrastructure.

Read more »

calculate and analyze stock
Tech Stocks

The Canadian Stock I’d Buy Every Time it Takes a Dip

The tariff wars have created a buy-the-dip opportunity for value investors. Here is a Canadian stock that is a buy…

Read more »