You don’t need a lot of capital in your TFSA (Tax-Free Savings Account) to grow a substantial portfolio. Inside the TFSA, all the income you earn is tax-free. As a result, you can compound your wealth so much faster than in any non-registered account.
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Even $14,000 can become a huge TFSA sum
The government doesn’t take its stake in your income. The TFSA lets you keep your returns. Even $14,000 (two years of contributions) can become a substantial sum if it is invested widely.
For example, if you could earn an average return of 10% per year for 10 years, that $14,000 could be worth $36,300. If you could increase your rate of return to 15% per annum, that $14,000 investment could be worth $56,637 in 10 years.
If you are trying to find Canadian stocks that could deliver 10-15% (or better) annual returns going forward, here are three to consider buying with $14,000 in your TFSA.
Aritzia
While retail stocks can be a little volatile, Aritzia (TSX:ATZ) has found a way to deliver exceptional returns. Its stock is up 255% in the past five years (a 28.8% compounded annual growth rate).
Aritzia’s “everyday luxury” fashion is a staple in Canada. However, it is gaining acclaim in the U.S., where its sales are rapidly scaling. Right now, Artizia has over 60 stores there, but it could easily grow to two to three times that number. That is even before contemplating international expansion.
Aritzia has a cash-rich balance sheet to fund this growth strategy. Its founder remains a major shareholder, and its CEO has been with the company for years. While the stock is not exactly cheap today, it could be a great buy for a TFSA if the company continues to execute its strategy.
VitalHub
VitalHub (TSX:VHI) is another TFSA stock that could deliver elevated future returns. This $623 million company has risen 585% in the past five years. That is a 46% compounded annual rate.
VitalHub provides software for niche segments of the healthcare industry. Its niche focus helps it avoid competition with larger software providers. It also creates substantial acquisition opportunities.
VitalHub has made over 20 acquisitions since it publicly listed in Canada. It made its largest acquisition this year. Yet, with a strong, cash-rich balance sheet, it still foresees more acquisitions in 2025.
Healthcare is an enduring industry. VitalHub helps make healthcare providers more efficient and effective. Often, once adopted, its technology is difficult to replace. As a result, VitalHub is a TFSA stock for economic resilience and growth ahead.
Descartes: A great TFSA add today
Descartes Systems Group (TSX:DSG) has been a staple technology stock in Canada. While the stock is down 15% this year, it is up 94%. It has compounded by a 14% rate in that time.
Descartes has built an exceptional software company by acquiring logistics and transport software providers around the globe. Today, it operates the largest transport network in the world.
Descartes’s solutions help shippers and logistics companies navigate changing regulations, tariffs, and rules. It helps them save time, money, and effort. It has high recurring revenues and strong profit margins.
This TFSA stock has a great balance sheet that affords plenty more acquisitions. While its stock is down, it’s an ideal time to add to a TFSA portfolio.
