The TFSA (Tax-Free Savings Account) contribution limit increased by $7,000 in 2026. That is the third consecutive year that the TFSA has risen by $7,000. Every opportunity you can take to invest tax-free is an opportunity that should be taken.
The TFSA is the best place to hold stocks that you expect to grow and multiply. The TFSA is the place where you want your biggest gains to occur because you don’t want to pay any tax on those large wins.
Turning your $7,000 TFSA contribution into $70,000 is no easy task. However, it is possible if you pick your investments right and you give them ample time to compound.
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A top Canadian stock that turned $7,000 into $70,000
Dollarama (TSX: DOL) is a great example. This stock is up 1,020% since November 2014. Its stock has compounded by a 22.9% annualized rate. It would have taken just under 12 years to turn $7,000 into $70,000.
The thing is, Dollarama wasn’t a small business in 2014. It had a market cap of $9 billion. You just had to see that Dollarama’s essential and affordable merchandise was gaining traction across Canada. Really, you just had to go into a store to buy a chocolate bar and notice that you always came out with a bagful of other stuff as well.
In 2014, Dollarama had 874 stores, which was no small portfolio. Today, it has 2,129 stores in Canada. That doesn’t include its joint venture in Central America and its recently acquired discount store portfolio in Australia.
Dollarama as an investment was right in front of many Canadian investor’s noses. It wasn’t a small company in 2014. Yet, investors could still have earned a very attractive 10X return.
This stock could be a TFSA 10X one day
If you are looking for a stock that could be the next Dollarama, you have to look at Aritzia (TSX: ATZ). This stock is up 321% in the past five years and 440% in the past 10 years. Yet, it is still early in its growth trajectory.
Today, it has a market cap of $16 billion. It has 67 boutiques in Canada and 76 boutiques in the United States. The U.S. still presents a significant growth opportunity. It could more than double its current store count there.
The great thing is that as it scales its boutique count and boutique size, it sees a corresponding increase in digital sales as well. In its recent quarter, retail revenue grew by 39%, and digital sales grew by 55%! Digital sales now make up close to 30% of sales.
Investments in its distribution and fulfilment capacity have really paid off for investors. Aritzia is generating strong cash flows. It now sits with $471 million of cash on its balance sheet.
This will provide Aritzia ample fuel for further growth in the United States. It also provides an opportunity for international expansion, which is largely untapped so far.
Just like Dollarama, Aritzia is on its way to delivering a potential 10X return. This stock can be volatile based on economic activity, so you will have to put it in your TFSA and hold on for the ride.
However, like Dollarama, Aritzia has a great track record of execution. Find high-quality businesses like this, hold on for the ride, and watch your TFSA contribution multiply with time.
