The Tax-Free Savings Account (TFSA) is often thought of as a short-term savings vehicle. The tax-free withdrawals make it the perfect account to choose for funds that you’ll need in the near term. In addition, Canadians can choose from a variety of funds to hold within their TFSA.
The bottom line is that the TFSA provides flexibility for Canadians. But just because the account is tailor-made for short-term savings objectives doesn’t mean long-term savers should be overlooking their TFSA.
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TFSA opportunities for long-term savers
The beauty of the TFSA is that not only can you make tax-free withdrawals, but gains are also not taxed. Gains can include both price appreciation and passive income from dividends.
In other words, gains can compound year after year, completely tax-free. And then, when you’re ready to withdraw those funds, potentially for retirement, there’s again no tax to pay.
Of course, there are limitations to a TFSA. There are annual contributions for the account, which are lower than that of a Registered Retirement Savings Plan. So, while the TFSA does have the potential to fund your retirement, you might not be able to rely solely on the account due to its contribution limits.
In 2025, the annual contribution limit of the TFSA is $7,000. Fortunately, unused contributions can be carried over from year to year, so don’t worry if you’re behind on your TFSA savings. For any Canadian who was 18 years or older in 2009, which is when the TFSA was introduced, the total contribution limit sits at $102,000.
With all of that in mind, I’ve reviewed two TSX stocks to consider if you’re looking to maximize the returns in your TFSA. Together, the two companies can provide investors with a mix of long-term market-beating growth potential and passive income.
Stock #1: goeasy
Now’s the time to load up on this discounted growth stock. goeasy (TSX: GSY) has been on the rise over the past year and a half, yet shares remain 20% below all-time highs from 2021.
The consumer-facing financial services provider took a hit as interest rates began skyrocketing. However, with interest rate cuts already underway, this could be an opportunistic time for a long-term investor to start a position in goeasy.
Even with the 20% discount from all-time highs, goeasy is still up a market-crushing 125% over the past five years.
Stock #2: Bank of Nova Scotia
If you’re going to invest in growth stocks like goeasy, you’d be wise to own a few dependable dividend stocks like Bank of Nova Scotia (TSX: BNS).
With a market cap just shy of $100 billion, Bank of Nova Scotia can provide a portfolio with not only passive income but also a lot of dependability.
The bank certainly won’t be able to keep up with the growth rates of goeasy. But when it comes to minimizing volatility in a portfolio, Bank of Nova Scotia is a solid choice.
At today’s stock price, the bank’s dividend yield is above 5%, the highest among the Big Five.
