The TFSA (Tax-Free Savings Account) is an incredible asset Canadians should maximize more actively. Canadians stand to save thousands of potential tax dollars by simply investing through their TFSA.
You don’t pay tax on any investment income earned in the account, and you don’t pay any tax when you withdraw your gains. It’s the best registered account for flexibility and maximum tax benefit.
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$7,000 of extra room to compound tax-free in your TFSA!
The good news is that the amount you can contribute to your TFSA is set to increase in 2025. The Canada Revenue Agency (CRA) just announced that the TFSA contribution limit will increase by $7,000 in 2025.
If you were 18 years of age and a Canadian resident in 2009, you can now contribute an accumulated total of $102,000. Even at a moderate market rate of return (like 7%), $102,000 could be worth more than $200,000 in as little as 10 years.
Without any tax liability, the money earned is yours! The best part is you could withdraw it all, spend your gains, contribute the $102,000 the next year, and start the process all over again.
If you are looking to maximize your returns with new $7,000 contribution space in 2025, here are three stocks that would be an ideal fit for a TFSA.
An industrial stock that could be a good long-term performer
TFI International (TSX: TFII) has been an excellent long-term compounder of investors capital. Its stock is up 387% in the past five years and 626% in the past 10 years.
This TFSA stock is a transport and logistics provider across North America. Recent major acquisitions have expanded its presence across the United States. This is a somewhat helpful offset in the face of some of the rising tariff tensions across North America.
TFI has created a lot of value by consolidating transport providers and implementing its low-cost operating model. With a highly invested chief executive officer and a smart management team, long-term investors are in good hands with this stock.
A quality software stock
Another Canadian stock to buy with the $7,000 contribution is Topicus.com (TSXV: TOI). If you don’t want to spend $4,700 to buy Constellation Software, Topicus.com is a great alternative.
Topicus has a playbook that is very similar to Constellation. It buys vertical market software businesses, optimizes them to generate cash, and then reinvests the cash into more accretive businesses.
The major difference is that Topicus focuses primarily on European markets. Likewise, Topicus has a slightly higher organic growth rate due to a larger focus on software development.
With a strong cash generation and a focus on smart capital allocation, this is an ideal long-term stock to hold in a TFSA.
A TFSA stock for income, growth, and value
goeasy (TSX: GSY) is a TFSA stock for a combination of income, value, and growth. While the stock is only up 2% this year, it has compounded shareholder total annual returns by 22% over the past five years and 25% over the past 10 years.
While its non-prime loans are made to a riskier consumer segment, goeasy has demonstrated prudent balance sheet management and cautious underwriting. The company has delivered strong earnings per share growth through some pretty volatile economic times.
It continues to expand its product categories in vehicle lending, point of sales, and home equity. It also has plans to build out a reward-focused credit card product for the non-prime segment.
goeasy still has a substantial total addressable market that could provide mid-teens growth for years ahead. This stock yields 2.9% right now. It also trades for an attractive value of less than 10 times earnings.
