If you want to maximize investment returns, the Tax-Free Savings Account (TFSA) should be a part of your strategy. You can drastically improve your returns by simply paying no tax on your gains.
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Maximize long-term returns by simply using your TFSA
When you invest inside a TFSA, you pay no tax on any of the income (capital gains, interest, and dividends) earned in the account. By paying no tax, you can save as much as 10-20% of your annual investment income. That can seriously add up over the long term.
The TFSA is a great place to put stocks that you think could compound and grow your wealth. Why? You don’t want to pay any tax on a capital gain that increased by five, 10, or 50 times.
You can’t claim capital losses in the TFSA. You need to find stocks that are relatively low risk and have a high chance of going up long-term. If you are wondering where to deploy the $7,000 contribution for 2025, here are two stocks I wouldn’t hesitate to buy now.
A real estate stock that is so much more
Colliers International Group (TSX:CIGI) is at an interesting inflection point that could make it a great long-term addition to a TFSA. Colliers is known internationally for its commercial real estate brokerage brand. While this segment is profitable, it is cyclical and subject to real estate activity.
What is less known is that Colliers is becoming a powerhouse in engineering/advisory and asset management. In fact, if these platforms continue to scale, they could become spin-out candidates on their own.
2025 will be a building year for Colliers as it invests to build out these platforms further. That could create some volatility in results (and in the stock). This could create some good opportunities to add it to your TFSA.
Right now, Colliers stock doesn’t get the full value for its quality engineering and asset management businesses. It also doesn’t get full recognition for the fact that 70% of its earnings are from recurring sources.
These businesses could really start producing in 2026. Add this stock on any dips, and it could be set for long-term growth in a TFSA.
A financial stock for a TFSA buy and hold
Another stock that could be an ideal TFSA addition is goeasy (TSX:GSY). This company has a long record of strong performance. Its stock is up 147% in the past five years and 675% in the past 10 years.
goeasy is a leading sub-prime lender in Canada. It has an established retail network across Canada. Since interest rates remain elevated, many big banks have tightened their underwriting policies. As a result, more consumers are heading to goeasy for loans.
The company delivered great results for 2024. Its loan portfolio grew 26% to $4.6 billion. Revenues increased by 22% to $1.52 billion. Adjusted net earnings per share rose by 18% to $16.71 per share.
goeasy also increased its dividend by 25% in 2024! On top of that, the company raised its three-year outlook. Overall, it was a great year, and the future looks attractive.
This TFSA stock has a nice 2.76% dividend yield. goeasy only trades for 10 times earnings. It’s a great stock to maximize TFSA growth in the years ahead.
