The Tax-Free Savings Account (TFSA) is a complementary savings vehicle to the Registered Retirement Savings Plan (RRSP). However, instead of tax-deferred growth, the TFSA offers tax-free growth and withdrawals.
A TFSA is a powerful investment tool despite prescribed contribution limits. Only account holders can contribute to their own TFSA. While you can open multiple accounts, the annual contribution limit applies to combined contributions across all TFSAs.
Married couples have the advantage because they can build wealth together faster. The 2025 annual contribution limit is $7,000; therefore, it doubles to $14,000 if both spouses have a TFSA. Sole earners in a household can give money to their spouses to contribute to their TFSAs. Regardless of who earns more, the key is to max out the limits in both accounts as much as possible.
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Build a diversified stock portfolio.
Great teamwork using the TFSA can set up married couples for long-term financial success. The partners can build a diversified stock portfolio. Invest in companies from different sectors to spread or mitigate risks. One account can hold dividend stocks for passive-income streams, while the other can house growth or value stocks for capital appreciation.
Monthly income stock
Mortgage loan providers like Timbercreek Financial (TSX:TF) benefit from the Bank of Canada’s rate-cutting cycle. At $7.24 per share, its year-to-date gain is +9.99% compared to the broad market’s +6.87%. If you invest in this financial stock today, the dividend yield is 9.29%, while the payout frequency is monthly.
Suppose you maximize your 2025 TFSA limit; the $7,000 investment transforms into $54.19 in monthly tax-free income. Moreover, your TFSA balance will balloon to $17,660.54 in 10 years if you reinvest the dividends rather than withdraw them. The example illustrates the power of compounding.
Timbercreek Financial, a $614.9 million non-bank lender, provides shorter-term structured real estate financing solutions. Income-producing commercial real estate properties in prime markets with strong fundamentals secure the mortgage loans. In the first quarter (Q1) of 2025, net income rose 2.8% year over year to $14.4 million. Its CEO, Blair Tamblyn, said the healthy income level allows TF to build on its long-term track record of stable monthly dividends and deliver a premium yield to shareholders.
AI champion
Celestica (TSX:CLS) is TSX’s artificial intelligence champion and the Canadian counterpart of artificial intelligence (AI) king NVIDIA in the United States. At $166.12 per share, the tech stock has gained +121.4% in one year. Had you invested $7,000 a year ago, your money would be $15,496.27 today.
The $19.3 billion firm is known for its hardware platform and supply chain solutions. In Q1 2025, revenues increased 20% year over year to US$2.65 billion, although net earnings dipped 6.1% to US$86.2 million versus Q1 2024. Notably, free cash flow (FCF) climbed 38% to US$93.6 million from a year ago.
Due to strong quarterly results and strengthening demand, Celestica raised its revenue guidance for 2025 to US$10.85 billion. The full-year 2024 revenue was US$9.65 billion. As of this writing, the total return of CLS in three years is +1,091.68% compared to NVIDIA’s +698.75%.
Modern Canadians
The TFSA creators intended the tax-advantaged account for the modern Canadian. It has more flexibility than the RRSP. Users can save towards or meet both short-term and long-term financial goals. Couples working together to fill up their TFSAs with income-producing assets can look forward to a comfortable retirement.
