Compared to many other countries, Canada has some of the highest taxes that everyday people contend with. However, it doesn’t mean you have to pay the Canada Revenue Agency (CRA) a portion of every bit of income you earn. If you use your savings smartly and invest in a Tax-Free Savings Account (TFSA), you can grow an amount as small as $7,000 into a huge nest egg that can work perfectly with any retirement plan.
Here’s a look at three TSX stocks you can consider investing in for this purpose.
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Colliers International Group
Colliers International Group (TSX: CIGI) is an $8.51 billion market capitalization company headquartered in Toronto that provides commercial real estate services to corporate and institutional clients. The company offers advisory and outsourcing services, sales brokerage, and lease brokerage through various segments, operating globally.
Colliers has been a serial acquirer of real estate services for decades and has several strong brands under its banner. The commercial real estate business is in high demand and has delivered consistently high returns for at least two decades. As of this writing, CIGI stock trades for $168.18 per share and offers a 0.25% dividend yield that you can lock into your TFSA portfolio to unlock wealth growth through long-term capital gains and dividend income.
Constellation Software
Constellation Software (TSX: CSU) is another company that engages in acquisitions but operates in an entirely different sector. The $106.86 billion market capitalization company was founded in 1995. It is technically a tech stock, but due to its focus on acquiring small- to medium-sized vertical market software companies.
Constellation acquires software companies across several verticals and industries, manages them, and helps them grow. By making already established companies even better with its capital and experience, CSU helps the businesses it owns grow, translating to more success for itself. Its low-risk business model has allowed CSU stock to deliver over 27,000% in growth through capital gains alone in the last two decades. It can be a solid bet for investors with a long-term strategy.
Topicus.com
Topicus.com (TSX:TOI) is an offshoot of CSU stock and can effectively be considered a miniature version of the company. Topicus provides vertical market software and vertical market platforms to clients in the private and public sectors. The company acquires, builds, and manages leading software companies. It focuses on specialized, high-impact, and mission-critical software solutions addressing the specific needs of clients.
Topicus has traded on the TSX since February 2021, and in that time, it has delivered 160.96% in returns through capital gains. Following a tried and tested business model similar to Constellation Software, it can be an excellent bet for investors using their TFSA to build a retirement portfolio for long-term growth. As of this writing, TOI stock trades for $163.75 and has the potential to deliver multi-bagger returns that early investors in CSU stocks enjoyed two decades ago.
Foolish takeaway
While the name suggests that the TFSA is a savings account, using it as an investment vehicle can help you generate greater returns. Provided you do not exceed annual contribution limits, any earnings from interest, dividends, or capital gains from assets in the account are safe from taxes.
Mixing it up in your self-directed TFSA portfolio with growth stocks and dividend stocks can help you generate and accrue wealth for a comfortable life during your golden years. CIGI stock, CSU stock, and TOI stock can help you set solid foundations in a TFSA for the growth-focused aspect of your TFSA portfolio.
