The TFSA (Tax-Free Savings Account) is ideal for holding stocks that you wish to compound and grow over years and decades. If you expect a big gain in the future from your investments, you don’t want to pay any tax on that gain. The TFSA protects you from all forms of income tax.
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You want to hold your best upside ideas inside your TFSA
When you don’t pay income tax, your capital can compound significantly faster than if you had to pay it. You can’t claim any tax losses on losers in the TFSA, so you want to hold stocks that you expect will rise over time. You want to find the sweet spot between moderate risk and a high chance of long-term upside.
If you are looking for some ideas for your TFSA, here are two TSX stocks I plan to hold for years (maybe even decades) inside my TFSA.
WSP: A long-term compounder with more growth ahead
WSP Global (TSX:WSP) has been a great long-term compounder for TFSA shareholders. Its stock is up 104% in the past five years and 475% in the past 10 years.
WSP has become a global leader in engineering and advisory services. Factors like aging infrastructure, climate change, electrification, and AI are spurring substantial demand for its services. Over the past five years, revenues have compounded by a 15% annual rate and earnings per share have compounded by a 24% annual rate.
WSP has grown by consolidating smaller engineering firms around the world. It just announced a US$3.3 billion transaction to acquire TRC, which will make it the largest engineering firm in the U.S. The transaction is expected to be immediately accretive and will help propel further growth for the coming years ahead.
WSP is a well-managed business. The engineering sector is still very fragmented, so it continues to have a wide consolidation opportunity. The stock is down 2% for 2025, despite delivering strong results. Its valuation is attractive, and it looks like a good time to add this stock to a TFSA.
Mainstreet: A high quality real estate compounder
Mainstreet Equity (TSX:MEQ) is one of the best performing real estate stocks on the TSX. Despite its stock declining 10% in 2025, it is up 125% in the past five years and 504% in the past 10 years.
Unlike real estate investment trusts, Mainstreet retains its rental earnings and reinvests it into acquiring inner-city, low-rise apartments across Western Canada. These aren’t the fanciest assets. However, they are affordable, and they cater to a wide economic population. Through property improvements and better management, it can improve property returns over time.
Over the past 10 years, revenues have risen by a 10% compounded annual growth rate (CAGR) and funds from operation (FFO) per unit have risen by a 13% CAGR.
Today, Mainstreet’s stock trades just off its lowest valuation since mid-2021. It’s an attractive time to add this quality, owner-led compounding stock to your TFSA.
The TFSA Foolish takeaway
Stocks that have won in the past are very likely to keep doing so in the future. You may have to be a bit patient. However, adding high quality compounders (like WSP and Mainstreet) on pullbacks is a great strategy to boost long-term TFSA returns.
