12-Year Blueprint: How to Build a $1 Million TFSA Portfolio by 2037

Here’s how disciplined Canadian investors can use the TFSA to build long-term wealth over the next 12 years.

| More on:
dividend growth for passive income

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

Do you want to join the TFSA (Tax-Free Savings Account) millionaire club by 2037? While a million-dollar TFSA balance might sound like a far-fetched dream, the math tells a different story.

With the current cumulative TFSA contribution room of $102,000 and a decade of strategic investing ahead, this ambitious goal is well within reach for disciplined Canadian investors. The secret lies not in complex trading strategies or market timing but in harnessing the twin powers of tax-free growth and carefully selected stocks and exchange-traded funds.

By focusing on quality companies with substantial competitive advantages and letting time work its magic, turning your TFSA into a seven-figure portfolio could be a game-changing reality by 2037. So, let’s break down how you can build this wealth-generating machine starting today.

Build a TFSA portfolio worth $1 million

Investing in asset classes that help you beat inflation consistently is the key to building long-term wealth. Equities is one such asset class that has consistently delivered inflation-beating returns over time. For instance, the S&P 500 index has returned 10% annually over the past six decades, which is quite exceptional.

However, investing in quality growth stocks and holding them over time should help you generate outsized gains and beat the broader indices, such as the S&P 500.

So, let’s assume you invest the maximum TFSA contribution limit of $102,000 in growth stocks that return 20% annually. You also invest $7,000 each year (the TFSA contribution limit in the last two years) in low-cost index funds that track the S&P 500 index for the next 12 years.

If the S&P 500 index continues to offer an annual return of 10%, your ETF balance would be worth $149,690. Interestingly, if your equity portfolio delivers a 20% return over the next 12 years, your individual stock balance would be worth $909,442, which means the cumulative portfolio will balloon to $1.05 million.

Hold quality growth stocks in a TFSA

Canadian investors with a long-term horizon should consider gaining exposure to growth stocks such as Shopify (TSX:SHOP). Now, the key driver of a company’s stock price is revenue and earnings growth.

Created with Highcharts 11.4.3Shopify PriceZoom1M3M6MYTD1Y5Y10YALL2 Jun 20156 Jan 2025Zoom ▾201620172018201920202021202220232024202520162016201820182020202020222022202420240www.fool.ca

Shopify has increased its sales from US$105 million in 2014 to US$8.2 billion in the last 12 months. Moreover, its operating margin has improved to 13.1% from a negative margin of 20.6% in this period. Shopify stock went public in 2015 and has since returned 5,140% to shareholders over the past decade, indicating a compounded annual growth rate of 48.6%.

Basically, investing $5,000 in Shopify stock soon after its initial public offering would be worth more than $250,000 today. Interestingly, despite its stellar performance, Shopify stock is still down 23.5% from all-time highs.

Identifying a portfolio of profitable growth stocks as part of expanding addressable markets is essential, which should eventually translate to market-beating returns over a decade.

The Foolish takeaway

Investors should understand that generating 20% returns is difficult, even for the most seasoned investors. Further, around 80% of fund managers on Wall Street have failed to beat the underlying index, showcasing the complexities of investing in equities.

However, it is evident that even a single stock such as Shopify can help investors accelerate their wealth-building journey in a few years. The key is to remain patient and stay invested to benefit from the power of compounding.

Should you invest $1,000 in Shopify right now?

Before you buy stock in Shopify, 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 Shopify 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 Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. 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

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

How I’d Allocate $10,000 to AI Stocks in Today’s Market

Shopify (TSX:SHOP) is one of Canada's most compelling AI stocks.

Read more »

Canada day banner background design of flag
Tech Stocks

The Top Canadian Stock to Buy With $5,000 in 2025

There are few Canadian stocks out there that offer the outlook of this tech stock, bound for more growth.

Read more »

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 »