The first $7,000 can be the hardest investment to make. Markets look expensive, headlines look alarming, and cash offers the soothing experience of doing absolutely nothing. Unfortunately, compounding also does nothing with money it never receives.
That delay can become expensive surprisingly quickly. An investor who puts $7,000 to work annually for five years could accumulate nearly $9,000 more than someone who saves the same money but waits until the end of year five to invest it.
The 2026 Tax Free Savings Account (TFSA) dollar limit is $7,000. Future limits may change, and investors should confirm available room before contributing. Unused room carries forward, while investment growth inside a TFSA doesn’t consume additional room. With that in mind, let’s see what not investing can cost you.
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What five years could cost
Consider two investors who each save $35,000 over five years. The first invests $7,000 at the beginning of every year. The second keeps each amount in non-interest-bearing cash and invests the full $35,000 after year five.
At an illustrative annual return of 7.5%, the early investor would finish the fifth year with approximately $43,708. That includes $8,708 of growth before fees. The waiting investor would still have $35,000 and a very well-rested buy button.
| STRATEGY | TOTAL CONTRIBUTED | VALUE AFTER FIVE YEARS | INVESTMENT GROWTH |
|---|---|---|---|
| Invest $7,000 annually | $35,000 | $43,708 | $8,708 |
| Wait until year five | $35,000 | $35,000 | $0 |
Actual returns won’t arrive at a polite 7.5% every year. Cash could earn interest, stocks could decline, and fees would reduce the result. The illustration simply shows what waiting removes: five separate opportunities for money to compound.
A stock I’d build gradually
Bombardier (TSX: BBD.B) offers a fitting example because its improving business comes with enough volatility to make gradual purchases sensible. The company manufactures Challenger and Global business jets while earning recurring revenue from parts, maintenance, and other services.
Second-quarter revenue increased 6% year over year to US$2.2 billion. Services revenue reached a record US$674 million, up 14%, while free cash flow improved to US$228 million from negative US$164 million one year earlier. Its backlog also reached US$21.8 billion, providing considerable work for future years.
The balance sheet repair may be just as important. Bombardier reduced its adjusted net-debt-to-adjusted- earnings before interest, taxes, depreciation and amortization (EBITDA) ratio to 1.6 times and pushed its next debt maturity to November 2030. That leaves more room to invest in the Global 8000, defence aircraft, and its higher-margin service network.
Considerations
Bombardier stock isn’t a bargain-bin selection among Canadian growth stocks. The shares recently traded around 27 times forward earnings, and business-jet demand can weaken during an economic downturn. Supply-chain delays and the company’s remaining debt add further risk.
With that in mind, I wouldn’t place every annual TFSA contribution into Bombardier stock. I would consider using part of each one to build the position gradually alongside diversified investments. That approach gives the business time to execute while reducing the danger of buying an entire position near a short-term high.
Foolish bottom line
Waiting for certainty usually means waiting for a higher price, a smaller compounding window, or both. Five years may not feel long, but nearly $9,000 of hypothetical growth suggests the calendar disagrees.
