How to Convert $10,000 Into a TFSA Money-Making Engine

Understand why the TFSA is essential for your investment strategy, by offering tax-free growth and flexible contributions.

Puja Tayal

Puja Tayal has been writing for Motley Fool Canada since 2020. Her love for writing inspired her to start a college newsletter. With a Bachelors's degree in Finance and Accounting and CFA Level 1, Puja strives to transform stock discussions into breakfast table chats through her articles. A movie buff and a finance geek, Puja weaves superheroes, cartoons, and novels to tell you a story touching different aspects of investing, from portfolio and tax planning to retirement savings. Follow her on Twitter for more stories.

Published September 23, 8:45 pm EDT

The Tax-Free Savings Account (TFSA) is a great tool for earning investment income for three reasons.

Firstly, it allows your money to grow tax-free. This means no dividend or capital gains tax on reinvestments and rebalancing.
Secondly, it allows you to withdraw amounts tax-free without conditions. There is no cap on how much you can withdraw and for what purpose.
Thirdly, it adds the withdrawn amount to your contribution room on January 1. So, if you withdraw $5,000 in 2026, your 2027 TFSA contribution limit will include the new limit plus the $5,000 withdrawn in 2026.

Printing canadian dollar bills on a print machine — Source: Getty Images

How to convert $10,000 into a TFSA money-making engine

You can use the three benefits above to build an investment strategy that helps you make money. The 2026 TFSA limit is $7,000, but if you have previous years’ unused contribution room or a 2025 withdrawal of, say, $3,000, a $10,000 contribution is possible.

Canadian Natural Resources

Canadian Natural Resources (TSX: CNQ) is a stock to buy at any upcoming dip when the crude price falls below US$70. The stock is in an upcycle, and the company’s low production cost and strong balance sheet give it an edge to continue growing dividends. The stock can give you both dividend growth and capital appreciation.

The 2026 energy shock drove its stock price up 53% as WTI surpassed US$100 and has been hovering above US$90 for most of the time. CNQ earned surplus cash, considering its mid-US$40s cost per barrel after including dividend and maintenance costs.

If you already own the stock, consider booking profits and buying at the next dip. The TFSA will protect you from capital gains tax. Suppose you invested $4,500 in 2025 and bought 100 CNQ shares for $45 per share; today you can sell 50 shares for $68 per share and get $3,400. Later, when the stock falls to $58, you can use this amount to buy 58 shares.

While your 50 shares stay locked in the core portfolio, the remaining 50 shares help you accumulate more shares through profit booking and buying the dip. However, limit profit booking to once or maybe twice a year, as trading is not allowed in a TFSA. Frequent buying and selling in the same stock could attract the Canada Revenue Agency’s attention and make the capital gains taxable.

Tax-Free dividend reinvestment in a TFSA

CT REIT (TSX: CRT.UN) is a buy and opt for the dividend reinvestment plan (DRIP). The REIT gives monthly payouts to unitholders from the rent it collects from its parent, Canadian Tire, for leasing the stores. CT REIT has some of the safest dividends as its payout ratio is gradually reducing despite dividend growth. When your parent pays rent, the default risk is almost nil and occupancy is never a concern. The benefit of having an assured tenant without paying brokerage fees or placing ads gives CT REIT a cost advantage and helps it grow dividends.

A 5.8% yield, plus 3% average dividend growth, and a DRIP that uses the dividend amount plus a 3% bonus on the dividend amount to buy CT REIT units can compound income significantly. A little over $4,000 invested in CT REIT can buy 238 units, which can pay $233.24 in dividends spread over 12 monthly installments.

Tax-Free capital appreciation in a TFSA

Shopify (TSX: SHOP) is a stock to buy between March and June. The seasonality of this e-commerce stock makes it a perfect investment for rebalancing and profit booking. Its flywheel concept and asset-light model continue to deliver double-digit revenue growth and mid-teens free cash flow margin. Even during a slower year, the stock still experiences a seasonal rally, though it remains below its usual 40% to 50% gain.

You can make the most of Shopify’s seasonality by selling during the October to February peak, as the rally is triggered by holiday season sales. This amount can be used to buy Shopify shares in the March-June period.

Shopify stock has already increased 25% from its June price of around $154. If you already own the stock, consider selling it when its price crosses $230, which is 50% above its June level.