Registered retirement savings plans aren’t the only accounts to consider when saving for retirement. The Tax-Free Savings Account (TFSA) has the potential to be a meaningful contributor to your retirement savings. What it might take, though, is time.
As the name suggests, there are tax benefits for TFSA contributions. Canadians have the luxury to withdraw funds from their TFSAs at any time, completely tax-free. Even better, any gains earned within a TFSA are also not taxed. Canadians can let their investments grow and compound year after year and withdraw the funds when they’re ready to retire, all without paying a cent of tax.
The catch is that there are limits to how much you can contribute to your TFSA. In 2025, that limit is $7,000. That being said, unused contributions can be carried over from one year to the next. This means that anyone who was aged 18 years or older in 2009, when the TFSA was introduced, would have a total contribution limit today of $102,000.
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Maximize returns in a TFSA
At an annual return rate of 5%, which is below the historical average of the Canadian stock market, a $102,000 investment could grow to a significant amount within a few decades. And that’s without even making any contributions along the way.
With that in mind, I’ve reviewed three top Canadian stocks that have all largely outperformed an average annual return rate of 5% in recent years.
If you’re looking to maximize the returns in your TFSA over the long term, these three companies should be on your radar.
Brookfield
Brookfield (TSX: BN) is a perfect pick for anyone who is just starting out their investing journey. The global asset manager can provide a portfolio with loads of diversification, as well as market-beating growth potential.
Over the past five years, Brookfield has returned more than 100%. That’s good enough for nearly doubling the returns of the S&P/TSX Composite Index.
Descartes Systems
Speaking of market-beating returns, Descartes Systems (TSX: DSG) has built an impressive track record of outperforming the market.
The tech stock has been a consistent market beater for the past two decades, largely outperforming the Canadian market’s returns. The tech stock has returned more than 100% over the past five years and is six-bagger over the past decade.
Descartes Systems might experience more volatility than a steady stock like Brookfield, but that’s the price to pay for owning a high-growth tech stock.
Bank of Nova Scotia
To balance out my basket of three companies, I’ve included a high-yielding, dependable Canadian bank.
There’s not a whole lot to get excited about this stock, at least in comparison to a tech company like Descartes Systems. But if you’re after dependable returns, Bank of Nova Scotia (TSX: BNS) is the stock for you.
Similar to its peers, Bank of Nova Scotia pays a top dividend, which is currently yielding just about 6%. In addition to that, the bank has been paying out a dividend for close to 200 consecutive years. Good luck finding another high-yielding dividend stock on the TSX with a payout streak like that.
