TFSA (Tax-Free Savings Account) investors should look for names that they’d be willing to hold for five years or more. Undoubtedly, the less active you are with your long-term portfolio, the better your results may be. Indeed, you’d be quite surprised just how much of a difference it can make to take your emotions completely out of the game.
Instead of trading stocks frequently based on financial news stories that may make you either incredibly fearful or outright euphoric, it’s likely best that you play the long game rather than focusing on the quick rallies that every other new retail investor seems to care so much about. Now, don’t get me wrong: there’s nothing wrong with buying a cheap stock with the intention of selling it after it’s surpassed a level you deem as a fair value.
However, I do think that for most beginning investors, trading overcomplicates things and may lead one down the path of a profit-chasing momentum investor or, worse, a speculator. Either way, keep the trading outside of your TFSA because if you take a loss, you’ll want to offset it with a gain elsewhere. This cannot be done with losses realized within your TFSA account.
So, if you seek extremely long-term holds, consider the following two stocks while they’re relatively cheap.
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Apple
Apple (NASDAQ: AAPL) is a more than $3 trillion company that has one of the most envied ecosystems (or walled gardens) in all of tech. Even if you’re no big-tech investor, Apple is a must-own consumer products company with what it takes to continue dominating. Recently, the stock stalled out as analysts weighed early sales data for the latest iPhone 16 models. Thus far, the sales numbers aren’t indicative of any cyclical upswing.
Indeed, it’s an AI phone that will receive huge Apple Intelligence upgrades in the coming weeks and months. Though some folks may be skeptical as to whether such software updates will kick off a hardware supercycle, I do think we have to give the company (and not the analysts) the benefit of the doubt.
Why?
Apple’s managers (Tim Cook and company) are some of the best in the world, and they have everything it takes to become a force in AI. If they call the iPhone 16 a device that’s built with AI from the ground up, it’d be wise to take their word for it.
Whether it’s the iPhone 16 or a later model that marks the start of the upgrade cycle, what the bulls have been calling for remains to be seen. If you’re a long-term TFSA investor, I’d argue that it doesn’t matter if it’s this year’s phone or next year’s that hits the spot. Over the next three to five years, I’d argue that AAPL stock will likely be in a much better spot as consumers warm up to the personalized AI features coming their way!
Shopify
Shopify (TSX: SHOP) is another tech play that’s worth stashing in a TFSA for years. Like Apple, the stock has been wobbling around quite a bit over the past year. At 84.2 times trailing price-to-earnings (P/E), shares may still be on the expensive side. However, I think that $112 and change per share is a solid price at which to punch your long-term ticket.
Recently, Shopify stock found itself on the receiving end of a major upgrade from Citigroup analyst Tyler Radke. He thinks bigger gains could be in the cards over the medium term. Additionally, he sensed an “upbeat tone” from management during its commentary. I think Mr. Radke will be proven right.
I think that bodes really well for the firm as it looks to bet big on AI while looking to capture larger enterprise-scale clients.
