Hitting the million-dollar mark in a Tax-Free Savings Account (TFSA) is a goal most Canadians strive towards. According to multiple estimates, that’s a modestly healthy benchmark for a financially comfortable retirement.
Building your TFSA nest egg to this size is challenging, primarily because of the low contribution limits. Still, it’s definitely not impossible, especially if you buy the right stocks to offset the capital limitation.
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A real estate stock
When your goal is to reach a million dollars in your portfolio, robust and consistent growth potential is not just an approach but almost a necessity. FirstService (TSX: FSV) fits the bill on both accounts, and it’s also a bit discounted right now.
The stock is trading at a 6% discount from its 12-month peak. It’s overvalued, with a price-to-earnings ratio of 74, but it’s also understandable considering the rapid growth pace of the stock.
The stock has risen by 111% in the last five years and over 650% since its inception in 2015. Assuming the stock can sustain its pace or even undershoot a bit (500% in a decade), it’s still capable of 10 times growth in two decades. That’s enough to help you build a $200,000 nest egg with $20,000 capital.
The stock represents a strong business — one of the largest property management and real estate essential services companies in North America. It has a massive footprint in the U.S. and a stable consumer base.
A tech stock
Descartes Systems Group (TSX: DSG) has the distinction of being one of the most consistently growing tech stocks currently trading on the TSX. It has been going upwards at a significant pace for well over a decade and returned roughly 850% to its investors in the last decade. At this pace, it can turn $20,000 in capital in the TFSA into a giant nest egg of over $300,000 (even if it slightly misses the mark).
As a tech stock, Descartes’s primary focus is logistics. The company has developed one of the most expansive digital networks of logistics stakeholders. This is one of the fundamental strengths of the business and a primary reason the stock has been performing consistently well.
An energy stock
Another robust growth stock currently trading at a discount is TerraVest Industries (TSX: TVK). The company creates a range of specialized products for the energy sector and is emerging as a leader in home heating products.
This industrial-leaning nature of business has allowed the stock to perform quite differently than the rest of the sector. The last few years have been especially compelling in terms of stock performance.
In the last 10 years, the stock has returned over 1,700% without dividends and over 2,500% with them. That’s an annualized growth of 250%, and it’s difficult for the stock to sustain long term.
But if it can achieve less than half of that—10 times growth in a decade—it can turn your $20,000 TFSA capital into $400,000 in the next two decades. The stock is currently discounted and might even be heading for a correction, so it’s critical to time your purchase accordingly.
Foolish takeaway
Remember that these projections rely on data-driven but still best-case scenarios for these stocks. However, they also take a bit over half of a fully-stocked TFSA ($60,000) in capital. Assuming you have three decades to grow your TFSA to a million dollars, the chances of doing it with these and other stocks like these are pretty healthy.
