If you’ve been keeping up with your Tax-Free Savings Account (TFSA), you would’ve received $7,000 in contribution room in both 2024 and 2025.
That’s $14,000 total, and there’s a good chance 2026 will bring another $7,000 unless the government under Mark Carney decides otherwise. But once you’ve made those deposits, the real question becomes: what should you do with the money?
Leaving it in cash defeats the entire purpose. Despite the name, the TFSA isn’t just a savings account: it’s a powerful tax shelter for investing. Here’s how to actually put your contributions to work.
Dollar cost averaging works
You don’t need to invest the full $7,000 the moment it hits your account. If you’re nervous about market volatility or simply don’t have the full amount on hand yet, you can dollar cost average (DCA) throughout the year.
This means spreading your investment out over time to reduce the risk of buying at the “wrong” moment.
For example, dividing $7,000 over 12 months gives you a monthly investment of about $583. That’s a manageable amount to automate and builds the habit of consistent investing while still using your TFSA room effectively.
Don’t try to time the market
One of the biggest mistakes new investors make is sitting on cash while waiting for a better entry point. But history shows that bull markets last longer than bear markets, and missing just a few of the market’s best days can crush your long-term returns.
Once your money is in the TFSA, the goal should be to get it invested, not to try and guess short-term market moves. Remember, time spent in the market is always better than timing the market.
Pick the right investment
The best long-term TFSA strategy is to stay diversified. That means not just betting on Canadian stocks or chasing tech, but owning a broad mix across regions and sectors.
One of the easiest ways to do that is with an all-in-one exchange-traded fund (ETF) like the BMO All-Equity ETF (TSX:ZEQT).
ZEQT holds a globally diversified portfolio of 100% equities, including U.S., international and Canadian stocks. It’s low-cost with a 0.20% management expense ratio (MER), and you can seamlessly DCA into it every month without needing to rebalance or worry about portfolio construction.
It’s simple, cost-effective, diversified, and built for exactly this kind of long-term TFSA investing.
