According to a survey by the Royal Bank of Canada, about 58% of Canadians have a Tax-Free Savings Account (TFSA) compared to 46% of Canadians who have a Registered Retirement Savings Plan (RRSP), while a significant proportion have both.
The way a TFSA is structured and the fact that it gives you access to your savings whenever you need them instead of waiting till retirement (like with an RRSP) is why the account is popular despite its glaring limitation.
That limitation is its small contribution limit. Despite this limit, there are a few ways to get around this limit or at least make a sizable nest egg in the TFSA. However, the best thing to do is to invest in proper growth stocks. If the return potential is strong enough, it can neutralize the constraint of the small contribution room.
A healthcare stock
Healthcare businesses tend to be steady and predictable, with events like the pandemic being the exception. This is often reflected in their stock performance as well.
However, the performance pattern is naturally different when it comes to healthcare organizations like Medical Facilities (TSX:DR), which is developing a solid portfolio of surgical facilities across the United States. With such an organization, portfolio growth and the quality of the assets acquired can influence stock growth.
To date, the organization has achieved several significant milestones. This includes acquiring a substantial stake in some of the most impressive surgical facilities in three U.S. states. But now, it has also garnered the attention of investors, and the stock has surged. It has risen by 51% since the beginning of the year, and if the momentum holds, you could achieve significant growth in a relatively short amount of time.
A healthcare technology stock
Healwell AI (TSX:AIDX) offers Canadians an exciting opportunity to invest in artificial intelligence (AI) technology — i.e., by focusing on its overlap with healthcare. The company was created to leverage medical data and AI models for “decision support” for healthcare professionals. The overall scope is broad, but the company focuses on building and training AI models for specific diseases/healthcare issues.
It’s difficult to predict whether the AI bandwagon or the company’s really promising tech expertise is driving its current growth, but there is no doubt about the enormous potential of the market this company is building. This potential was one of the reasons behind its exceptional performance, which resulted in over 300% growth in the last 12 months, even though it’s currently slumping.
An energy stock
Most energy stocks in Canada offered exceptional growth opportunities to their investors in the post-pandemic market, though the momentum is waning now.
But there is at least one company that provided exceptional growth way before the temporary bullish trend and continues to do that now: TerraVest Industries (TSX:TVK). It’s a diverse manufacturer that used to make specialized equipment for the energy sector but is now emerging as a formidable player in the home heating products market.
Its organic growth has led to exceptional stock performance — over 670% in the last five years (though most of it happened in the previous couple of years). That’s an annualized growth of 134%. This kind of growth might be unsustainable for a long, but even with a few years at this pace, the stock can supercharge the development of your TFSA nest egg.
Foolish takeaway
The three companies can add compelling growth potential to your TFSA portfolio. They might help you hit your growth goals (assuming they maintain their current growth pace) in years instead of decades. But keep in mind that an essential piece of the puzzle is existing at the right time.
