Turning 50 is a major retirement checkpoint. While there’s still more than a decade until retirement, the timeline is real enough to cause some urgency. That urgency is enough for some investors to question how the average Canadian TFSA balance stacks up.
Fortunately, age 50 still leaves a long runway for growth. Consistent contributions, reinvested dividends and the right combination of investments can all continue building that portfolio well into an investor’s 60s.
To boost that average Canadian TFSA, all investors need are the right investments to buy today and hold for the long term.
Fortunately, there are plenty of great options to choose from, including this trio.
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A railway built for long-term compounding
Canadian National Railway (TSX: CNR) can provide a strong foundation to boost that average Canadian TFSA. The railway operates a rail network that connects ports on three coastlines to major markets across North America.
That network is a major defensive draw for Canadian National. For a competitor to replicate that network would cost tens of billions and require a decade or more of construction.
Adding to that appeal are the types of products that the railway hauls across that network. Canadian National transports everything from grain and energy products to automotive components, raw materials, and essentials.
As an income investment, Canadian National offers a quarterly dividend with a yield of 2% as of the time of writing. That’s not the largest yield on the market, but the railway’s dividend is the real attraction. Ove the past several years, Canadian National has reported a compound annual dividend growth rate of nearly 10%.
For a 50-year-old investor, that combination of dividend growth, essential infrastructure and growth potential makes Canadian National a hard-to-ignore option.
An acquisition strategy built for growth
Another option for investors looking to boost their average Canadian TFSA is Constellation Software (TSX: CSU). The company acquires specialized software businesses that serve customers in specific industries and markets.
Many of those businesses provide software their customers use for daily operations. This creates a recurring revenue stream and customer stickiness. Constellation allows those acquired companies to operate independently and provides a framework for disciplined capital allocation.
This also means that Constellation has cash to reinvest back into its business to fund more acquisitions. That strategy has created a compounding cycle whereby existing businesses generate cash that can help fund the purchase of future businesses.
While Constellation does offer a dividend, the yield is only 0.18%. Instead, the main focus of the stock is in building long-term growth.
VFV offers simple S&P 500 exposure
Individual Canadian stocks aren’t the only option for investors looking to bolster their TFSA in relation to the average Canadian TFSA balance. ETFs can provide an attractive option for growth and income generation.
One example of that is the Vanguard S&P 500 Index ETF (TSX: VFV). The fund provides exposure to some of the largest companies in the U.S. through the S&P 500 Index.
That includes many of the most established companies across segments such as technology, healthcare, financial services and consumer products, to name just a few.
This provides immediate diversification while reducing the impact that any one holding could have on the portfolio.
Like Constellation, income isn’t the priority of the Vanguard S&P 500 Index. As a result, the yield offered is a modest 0.84%.
As of the time of writing, VFV trades up 18% over the trailing 12-month period. The ETF is also up nearly 90% over the past 5-year period.
What’s the average Canadian TFSA balance at 50?
The Canada Revenue Agency groups TFSA holder balances into groups. For investors aged 50 to 54, the most recent update shows an average TFSA balance of just over $35,000.
That same group also had an average unused contribution room amount of just over $62,000.
That makes the average Canadian TFSA balance a good benchmark, but it also reinforces that there’s still time and plenty of contribution room available.
By way of example, another 15 years of contributions, even at $200 per month, could double that TFSA balance. And that’s before factoring in market growth or reinvested dividends.
