If you have $10,000 in cash and a Tax-Free Savings Account (TFSA) with room to spare, you are sitting on one of the best wealth-building tools available to Canadians.
Every dollar of growth inside a TFSA, whether it originates from dividends, interest, or capital gains, stays completely out of reach of the Canada Revenue Agency.
That tax shelter is powerful, but it only works in your favour if you put the money to work. I think the smartest way to use that $10,000 right now is a simple three-part split. Here is how I would build it.
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Start with a $6,000 core in one all-in-one ETF
The biggest chunk of your money, about $6,000 or 60%, should be allocated to a single, low-cost, all-equity exchange-traded fund (ETF). My pick here is iShares Core Equity ETF Portfolio (TSX: XEQT).
XEQT gives you instant exposure to thousands of stocks across Canada, the United States, and international markets, which offers diversification. The ETF rebalances automatically, and the management fee is just 0.20%.
According to BlackRock Canada, the fund targets a 100% equity allocation and is continuously monitored to keep its regional weights on target, while keeping costs low so investors keep more of what they earn.
Add $2,000 in a proven Canadian dividend payer
The next $2,000, or 20% of your money, should go toward a dependable Canadian dividend grower. This is where compounding really shines inside a TFSA, because you can reinvest every dividend tax-free through a dividend-reinvestment plan.
Royal Bank of Canada (TSX: RY) is my top pick given it is a blue-chip TSX dividend stock with a growing payout. RBC just posted one of its strongest quarters on record, with adjusted earnings of $5.6 billion and a return on equity of 17.2%.
The bank raised its dividend by 14% year over year and expanded its share buyback program to repurchase up to 45 million shares. CEO Dave McKay explained why he is not worried about fintech competitors chipping away at RBC’s business.
He told analysts on the bank’s second-quarter (Q2) 2026 earnings call, “I don’t think customers are going to choose nonregulated financial institutions for their savings if they’re… what is the cyber risk of that institution? What is the capital base of that institution to absorb errors and fraud and operational risk?”
I see RY stock as a solid, lower-risk anchor for any TFSA.
Top with the TFSA with a high growth compounder
The final $2,000, or 20%, is your chance to swing for bigger gains. Since capital gains inside a TFSA are never taxed, it is an ideal strategy to own a stock with growth potential, even though it comes with more volatility.
My pick here is Shopify (TSX: SHOP). The company just delivered its second straight quarter with more than US$100 billion in gross merchandise value, with revenue up 34% year over year and free cash flow of US$476 million.
Shopify president Harley Finkelstein told investors on the Q1 call that AI has become “an exoskeleton for everyone at Shopify,” pointing to weekly active shops using its Sidekick assistant up 385% year over year.
We like Shopify as the growth piece of this portfolio because it is still capturing more of global ecommerce, and its early lead in AI-powered shopping through partnerships with ChatGPT and Google gives it a real edge.
This is not a stock for your whole portfolio, but a smaller stake here can meaningfully boost your long-term returns.
The Foolish takeaway
You do not need a complicated strategy to make $10,000 work hard inside a TFSA.
A simple mix of one core ETF, one dependable dividend stock, and one growth leader gives you diversification, income, and upside, all growing completely tax-free.
