Tax-Free Savings Account (TFSA) users who became millionaires did so not because of pure luck. It was reported that two of the 352 successful account holders even had $40 million in their TFSA. Fortunately, the top secrets of these self-made millionaires were revealed.
Source: Getty Images
Max out yearly contribution limits
A clear advantage, or head start, is being able to max out the yearly contribution limits. It’s mind-boggling to know that the TFSA is only 16 years old since its introduction in 2009, yet more than 300 individuals crossed the seven-figure threshold. For 2026, the cumulative limit has increased from $102,000 to $109,000.
The common trait among TFSA millionaires is consistent, regular contributions. You can catch up if you fail in one year, as unused contribution rooms carry over to the following year.
Focus on income-producing assets
The TFSA is a wealth-building investment vehicle, not a regular savings account. Hence, future millionaires will not store cash in it but rather invest in income-producing assets, particularly Canadian dividend stocks. Keeping idle cash defeats the tax-free money growth feature of the TFSA.
Note that all earnings inside the account are tax-free. Thus, avoid holding U.S.-listed stocks as well. You have to pay a 15% foreign withholding tax. Other eligible or qualified domestic investments include bonds, mutual funds, Guaranteed Investment Certificates (GICs), and exchange-traded funds (ETFs).
Long-term mindset
No one becomes a TFSA millionaire overnight. The time horizon is always long term, decades even, to take advantage of the power of compounding. Dividend stocks are highly recommended because you can reinvest dividends four to 12 times for quarterly and monthly payouts, respectively.
TFSA candidate
TFSA millionaires used a “buy and hold strategy,” which means the chosen stock investment is for the long term and can endure market fluctuations. InPlay Oil (TSX:IPO) is a small-cap stock, but it has rewarded investors with substantial gains over the last five years. At $12.77 per share, the five-year return is +676.2%. The current dividend yield is 8.54%, along with monthly payouts.
The $355.5 million company owns petroleum and natural gas properties and produces crude oil, natural gas, and natural gas liquids (NGLs). InPlay Oil has a comprehensive hedging program in place to mitigate downside risk and provide protection against current market volatility.
InPlay aims to build a sustainable, long-term oil and natural gas company. The strategic plan involves acquiring low-decline, high-operating-netback producing properties with drilling development and enhanced oil recovery potential. Undeveloped lands with exploration and development upside are also under consideration.
Management’s primary objective is to deliver strong, sustainable free adjusted funds flow for many years ahead. IPO started paying dividends in November 2022 and has never missed a monthly payment since.
Given the current share price and yield, a $109,000 investment equivalent to the TFSA cumulative total will compound to $1,039,435 in 26.5 years. The example shows the power of compounding and tax-free money growth in a TFSA.
Be a millionaire
Do you aspire to become a millionaire, too? The $1 million goal is achievable with disciplined investing, patience, and a long-term mindset. InPlay Oil is just one of the many suitable TFSA dividend stocks.
