There are more ways than one to make your TFSA (Tax-Free Savings Account) funds work a bit harder for you. And while it’s tempting to take bigger risks for a shot at bigger gains, I’d urge TFSA investors to ask themselves what it is they’re investing for. Whether it’s to grow their wealth by a certain retirement date, or to fund a dream travel plan, educational pursuit, or something else, it’s vital to know the timeframe so that one can own the right stocks and not over-extend oneself with risk. Indeed, passive income hunters may seek swollen dividend yields while younger investors may wish to go heavier on the high-tech growth trade.
Indeed, with the AI revolution dominating the headlines for yet another year, placing a big bet on a big-tech titan certainly seems to make little sense, especially if you’re looking to inject some robust secular growth at the very core of your TFSA. In any case, the important thing is to play the long game and only buy the kinds of fantastic stocks that you’d be willing to hang onto through thick and thin. Additionally, you should aim to get a fair price or, if possible, a price of admission that entails a discount.
Though global stock markets have staged a recovery from the tariff dip experienced just a few months ago, I wouldn’t be set on smooth sailing from here on out. With geopolitical turmoil in the Middle East, markets have seen a huge uptick in volatility. As the macro headwinds and risks rise, it’s only wise to be ready to invest through increased stock market turbulence and, yes, maybe another correction and revisiting of those 52-week lows.
In any case, here are two interesting ways that TFSA investors may wish to put their latest $7,000 contribution to work as they manage through an uncertain midpoint of 2025.
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Sprott Physical Gold Trust
Gold is an asset that can come in handy if market volatility returns and the TSX Index is in for a second-half correction. Through tariff scares, the Sprott Physical Gold Trust (TSX: PHYS) closed-end fund (CEF) has been a stellar performer and an invaluable hedge against inflation, geopolitical turmoil, and tariff unknowns.
While gold prices (and shares of the PHYS) have run into a bit of resistance, I’d not be afraid to buy more on a gold breakout, as investor anxiety could stay higher for a bit longer. And while I’m not against picking up a gold mining ETF or some other bullion ETF, I do like PHYS for its relatively modest management expense ratio (0.41%). When the tides get tougher, sometimes it’s a golden opportunity to add to your precious metals exposure.
Invesco Nasdaq 100 Index ETF
The Invesco Nasdaq 100 Index ETF (TSX: QQC) also stands out as a great way to keep on betting on U.S. big tech as the AI revolution changes the working world as we know it. Indeed, the low-cost QQC is a great Canadian way to bet on the Nasdaq 100 innovators, many of which are driving the fourth industrial revolution.
With the loonie gaining a few cents versus the U.S. dollar, perhaps now is a good time to consider adding to a position in the tech-heavy index, especially if you’re overexposed to Canadian equities, which may be a bit light on AI-savvy tech. Of course, QQC and the high-tech titans are going to be profoundly volatile, so do ensure you’ve got a really long-term horizon and a tolerance for near-term pain, as tech tends to feel a bit more pain (1.1 beta, which entails a higher correlation to the American stock market) than the S&P 500 on the way down.
