You don’t need a hundred thousand dollars to be a Tax-Free Savings Account (TFSA) millionaire. When the Canada Revenue Agency (CRA) introduced the TFSA in 2009, it gave the same contribution limit to every Canadian 18 years and above. Whether you were 18 or 38 back in 2009, whether you earned $50,000 or $250,000, as long as you were a Canadian resident, you got the same contribution limit of $5,000. Anyone who has been maxing out on their TFSA contribution since 2009 now has $109,000, even if they left the money idle in the account.
While everyone started with the same $5,000, the 2024 TFSA statistics showed that Canadians had a maximum average TFSA balance of $90,302, and this was among those earning $250,000 and above. Only a few became TFSA millionaires, despite the CRA not allowing trading or investing in crypto.
Source: Getty Images
What TFSA millionaires understand that most Canadian investors don’t
What is it that TFSA millionaires did differently? It’s not like they could invest more than the contribution limit. Unlike a Registered Retirement Savings Plan (RRSP), whose contribution limit is tied to your taxable income up to a maximum limit, the annual TFSA contribution limit is the same for everyone above 18.
TFSA millionaires invest in growth stocks
TFSA millionaires invested to generate wealth through growth stocks. Growth comes from companies that can scale their operations efficiently. Tech companies can do so smoothly. Even if one doesn’t know which stock to invest in, buying a tech ETF, like the iShares NASDAQ 100 Index ETF (CAD-Hedged) (TSX: XQQ), can help you get exposure to all tech trends. The ETF replicates the top 100 stocks on the Nasdaq by market cap.
Whether it is cloud computing, a semiconductor supply shortage, crypto boom, e-commerce and digitization, or the artificial intelligence (AI) revolution, the ETF gives you exposure to the entire tech supply chain. It has yielded a 20% average annual return in the last 10 years. This means that a $10,000 investment 10 years ago is now $56,239.
While an ETF is a great start, you can gradually invest in stocks of companies whose products or services you use. You don’t need deep knowledge to invest in some of the most obvious stocks like the Royal Bank of Canada or Shopify. These businesses keep growing steadily. Their business is so integrated into the economy that demand is no longer a concern. All they have to do is manage costs.
TFSA millionaires stayed invested and did not withdraw
TFSA millionaires invest in the most obvious stocks for the long term and do not withdraw. Had you invested $6,000 each in Royal Bank of Canada and Shopify stock in July 2021 and July 2022, your portfolio value would be $37,266 today, excluding dividends.
| Stock | Purchase price | Purchase date | Invested amount | Number of shares purchased | Stock price July 2026 | Investment value |
| XQQ | $12.42 | Jul-16 | $10,000 | 805 | $69.850 | $56,239.73 |
| RY | $127.54 | Jul-21 | $6,000 | 47 | $304.000 | $14,288.00 |
| SHOP | $44.61 | Jul-22 | $6,000 | 134 | $171.480 | $22,978.32 |
| Total | $22,000 | $93,506.05 |
From the above table, you can see how growth stocks increase your investment value through share price appreciation. A $22,000 investment converted into a $93,500 portfolio by staying invested.
You could consider building a core-and-satellite portfolio within a TFSA. The core portfolio can make up 80–90% of your investments. In this, you invest in no-brainer growth and dividend stocks and ETFs that are likely to grow in the long term. The satellite portfolio can be for opportunistic high-risk stocks where you invest the money you are willing to lose.
In this segment, you could consider buying Hive Digital Technologies and Ballard Power Systems at a share price below $4. You can sell the stock when it reaches $8 or $9. These are mid-cap stocks that do not have high trading volume and see bouts of momentum during earnings releases. Thus, the $8 rally will be the bull momentum and a perfect time to book profits.
Investing tip
The TFSA is not just any savings account. It can generate more value than any other registered account can. Use the contribution room to compound returns tax-free.
