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.

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

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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Once withdrawn, you will never get that TFSA contribution room back.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
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 (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.

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

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