Did you miss the registered retirement savings plan (RRSP) deadline for 2025?

The deadline was March 2, 2026. Contributions made up until that date count toward last year. If you didn’t make your last 2025 RRSP contributions by then, you can no longer make them.

That doesn’t mean that you can’t still make RRSP contributions for any year, or that you’ve lost RRSP contribution room.

RRSP contribution room “rolls over” to future years and increases over time (provided you don’t max out your contributions). So, you can still get in those last-minute RRSP contributions. You haven’t lost the room; the contributions will just count towards 2026 or some other future year.

In fact, you’re not even out of options for lowering your 2025 taxes. There are literally dozens of different tax breaks that all Canadian citizen-residents are eligible to take advantage of. By being extra careful about your paperwork, you may be able to find some tax breaks you can count toward 2025, which can make up for the RRSP contributions you forgot to make.

In the ensuing paragraphs, I’ll explore what you can do if you’ve missed the 2025 RRSP deadline.

Find any other possible tax deductions you’re eligible to claim

Let’s get this out of the way first:

If you want to make RRSP contributions to lower your 2025 taxes owing, or trigger a larger 2025 refund, you can no longer do that.

However, you can still work toward lowering your 2025 tax bill… by counting your receipts.

There are dozens of tax breaks that the Federal government allows Canadian tax residents to claim. Some of them you might not even know about. Examples include tuition, student loan interest, work-related moving expenses, and several medical expenses. Look up the many available tax deductions on the CRA website at Canada dot ca, then scour your receipts, correspondence, and email inbox to see how many expenses you have that qualify. Who knows? By being diligent, you might find hundreds of dollars worth of tax breaks you didn’t know about.

Start making contributions for the next year

After taking care of your 2025 tax return, you need to start making contributions for 2026. No, you can’t make these contributions count for 2025 – the advice in the previous section will take you as close as you can get to that – but you can recover any 2025 contribution room you didn’t use. So, any RRSP contributions you forgot to make by March 2, you can make now and have them count toward 2026.

How to invest in your RRSP

Speaking of RRSPs:

Managing your RRSP is about much more than just making contributions. You also need to invest wisely in your RRSP to make the most of the account. That’s largely about picking wise investments.

Consider the iShares S&P/TSX Capped Composite Index Fund (TSX:XIC), for example. It’s an index fund that many Canadians hold in their portfolios. It tracks the S&P/TSX Capped Composite Index, an industry-leading index of 240 large cap Canadian stocks. It holds 220 of the 240, which means that it tracks its underlying index well. It has just a 0.05% management fee and a 0.06% total expense ratio, meaning that it is fairly cost-effective. Finally, XIC is liquid, with a narrow bid-ask spread. The bid-ask spread forms a “hidden fee” that market makers charge. So, there’s a second, “hidden” form of cost saving you get with XIC, on top of the low fee.

With a diversified portfolio of index funds like XIC, you can grow your RRSP over time. So, who cares if you didn’t get your last contribution in by the 2025 deadline. In investing, it’s the long-term compounding that counts.

The post If You Missed the RRSP Deadline, Here’s the Most Important Move to Make Next appeared first on The Motley Fool Canada.

More reading

• How to Build a Meaningful Passive Income Portfolio Starting With Just $25,000
• Maximizing Returns: How to Best Use Your TFSA in 2026
• Just Starting Out? 2 Simple ETFs That Any Canadian Investor Can Use
• How Does Your TFSA Compare to the $109,000 Milestone?

Fool contributor Andrew Button has no positions in the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Are you retiring soon and wondering whether you have enough money to retire on?

You’re not alone.

Many Canadians are increasingly worried that their savings won’t be enough to get them through their golden years in good shape.

There was a time when Canadians could count on generous employer-sponsored pensions to pay for their retirements. These days, such pensions no longer exist outside of government. The Canada Pension Plan (CPP) pays next to nothing unless you wait until you are 70 to claim it. Between the decline of defined-benefit (DB) pensions and paltry CPP/Old Age Security payments, most people don’t have much pension income anymore. This leaves savings to pay for the overwhelming majority of their retirements.

Unfortunately, most Canadians simply don’t have enough saved to retire comfortably. StatCan data shows that by the age of 60, most Canadians have between $350,000 and $370,000 in private pensions (i.e., Registered Retirement Savings Plans and Tax-Free Savings Accounts). At the same time, data collected by financial advisers shows that it actually takes more than $1 million to retire comfortably these days. So, while Canadians look at their $300,000 RRSPs and wonder whether they can hit a million, the truth is even that million probably isn’t enough — especially if you live in a big city!

In the ensuing paragraphs, I’ll explore why $1 million just isn’t enough to retire on anymore, and what you can do to retire on a reasonable timeline.

The costs

To show that it takes over $1 million to retire comfortably in a typical Canadian city, we first need to define what “living” entails. Here are some typical costs for a Canadian retired couple:

• $2,405 – typical rent for a two-bedroom apartment.
• $200 – a typical monthly utility bill.
• $600 – average grocery expenses for a Canadian adult.
• $100 – the cost of an average health insurance plan.
• $37 – an average Canadian family’s monthly spending on streaming services.
• $100 – allowance for additional entertainment expenses.

The above sums to $3,442 per month for the average Canadian. So, we have $41,304 in average annual expenses for a single Canadian retiree. If you have dependents, you’ll spend even more!

The earnings

Now, let’s look at how much yield it would take to earn $41,304 in annual dividend income.

$41,304 equals a $1,000,000 portfolio yielding 4.1304%. This is a problem because the Canadian stock market has only about a 2.37% dividend yield currently. If you throw $1,000,000 into iShares S&P/TSX 60 Index Fund, you’ll only get $22,210 back in annual income. The income could grow with time, but it’ll take a long time to get to $41,304!

So, $1,000,000 invested in the total Canadian stock market won’t produce enough income to retire on.

You could try active investing as an alternative. By investing in higher-yield assets, you could get enough dividends from a $1,000,000 position to retire on.

Take Enbridge (TSX:ENB) stock, for example. It’s a pipeline stock that has a 5.38% dividend yield. If you invest $1,000,000 into Enbridge, and the dividend doesn’t change, then you should get back $53,800 in annual dividend income. Here’s the math on that:

$1,000,000 in Enbridge seems to be enough to cover a single Canadian’s expenses in an average city. The problem here is risk. Throwing all your money into one company, or a small number of companies, exposes you to the risk of the company going bankrupt or losing the majority of its earnings power. I’m not saying this will happen with Enbridge, but it could.

Foolish takeaway

The bottom line on saving for retirement is that you just have to stick it out. There was a time when retiring at 55 might have been viable. Today, it’s not, at least not for most Canadians. You’ll likely need more than $1,000,000 to retire, and it takes some time to get that much money.

The post Retiring? $1 Million Isn’t Enough Anymore appeared first on The Motley Fool Canada.

More reading

• How to Make $300 Per Month Tax-Free From Your TFSA
• 2 Dividend Stocks Canadian Investors Could Comfortably Hold Right Through Retirement
• If I Were Only Buying 3 Stocks Right Now, These Would Be Them
• The Sectors Where Canada Actually Beats the United States
• 2 Undervalued Canadian Dividend Stocks That Look Attractive in 2026

Fool contributor Andrew Button has positions in the iShares S&P/TSX 60 Index Fund. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

AI data centres: They are the future, or so the tech sector thinks.

This year, the largest tech companies are expected to spend $700 billion on property plant and equipment (PPE). Much of that is going to AI data centres.

Why data centres?

Because they are where AI “lives.” When you ask ChatGPT or any other AI app to answer a question for you, the answer isn’t given by “the internet,” but by an AI running on NVIDIA (NVDA) hardware, located in a data centre somewhere. Hundreds of billions of dollars are being spent on such data centres, without which the miracle of modern AI wouldn’t have been possible.

As it turns out, Canada is one of the best places to build data centres. The country’s relatively cool climate lessens the cost of cooling data centres there, while its proximity to the U.S. provides advantages in catering to U.S. tech companies. In this article, I will explore the opportunity in AI data centres and why Canada could be among the companies best positioned to profit from it.

AI data centres: The opportunity

AI data centres are among the biggest opportunities for profitable capital deployment today. $600 to $700 billion is expected to be spent on AI data centres this year, based on big tech companies’ 2026 guidance. The market size is expected to grow from $21.27 billion to $133.5 billion by 2034, a compound annual growth rate of 25.8% (the apparent discrepancy between $700 billion now and $133.5 billion in 2034 comes down to capital expenditures vs revenue). So, this is an enormous growth opportunity. The question is, who is best positioned to profit from it?

Canada benefits

Canada is positioned to profit from the AI data centre revolution in several ways:

1. Canada has a cool climate. This is an advantage in operating AI data centres, as it naturally reduces cooling costs.
2. Ample energy sources. Canada has ample traditional and renewable energy sources, both of which are key to powering AI data centres. In less resource-rich regions, the powering of AI data centres is becoming an issue. Canada’s Brookfield Renewable Partners is already supplying renewable power to U.S. tech companies; bringing data centres to Canada seems like only a natural extension of that.
3. Proximity to the United States. Canadian data centres can serve clients in the U.S., a country with some of the world’s biggest tech companies (hyper-scalers) as well as regular companies looking to utilize AI.

For these three key reasons, Canada is perfectly positioned to profit off the AI data centre boom.

One Canadian company already making moves

One Canadian company already making moves in the AI data centre space is Brookfield Infrastructure Partners (TSX:BIPC)(TSX:BIP.UN). The company is making big data centre investments, in Canada, the U.S. and abroad.

Brookfield Infrastructure Partners invests in all kinds of infrastructure: telco towers, pipelines, toll roads, and more. This year, the company is especially focusing on AI data centres. Some recent AI infrastructure projects have included:

• A $100 billion data centre project with Kuwait.
• The Radiant data centre project, which will see Brookfield Infrastructure build “AI factories” based on NVIDIA designs.
• A wholly owned portfolio of 150 data centres across Canada and the United States.

Brookfield Infrastructure is already a big player in AI data centres. With the capital it has at its disposal, and maybe with some incentives from the Federal Government, it can ensure that Canada gets a reasonable piece of the physical pie.

The post Why AI Data Centres Could Be Canada’s Next Big Investment Opportunity appeared first on The Motley Fool Canada.

More reading

• 3 Impressive Dividend Stocks With Yields Reaching as High as 6.9%
• 5 Canadian Stocks I’d Feel Good About Holding for the Next 10 Years
• Canada Is Pouring Billions Into Infrastructure: Does That Make BIP Stock a Buy?
• Here’s My Highest Conviction Canadian Stock to Buy Right Now
• Canadians: Here’s How Much You Need in Your TFSA to Retire

Fool contributor Andrew Button has no positions in the stocks mentioned. The Motley Fool recommends Brookfield Infrastructure Partners, Brookfield Renewable, Brookfield Renewable Partners, and Nvidia. The Motley Fool has a disclosure policy.

This year, Canadian investors got an extra $7,000 worth of Tax-Free Savings Account (TFSA) contribution room. If you’re new to TFSA investing, that may be all the cash you’ve got to invest in a TFSA. Where should you get started investing with $7,000? In this article, I’ll share one idea.

Brookfield Renewable Partners

Brookfield Renewable Partners (TSX:BEPC)(TSX:BEP.UN) is a Canadian renewable energy company/partnership. It is well known for supplying massive amounts of power to utilities and to U.S. tech giants.

Brookfield Renewable’s main claim to fame lately is its headline-grabbing activities in the United States. In 2024, the company agreed to supply Microsoft with 10 gigawatts of renewable power. In 2025, it inked a similar deal with Alphabet for three gigawatts. Later, it began exploring an $80 billion deal involving U.S. nuclear plants (this deal appears not finalized yet). The two major supply deals will provide billions in revenue for Brookfield Renewable, and the nuclear deal could supply even more if it closes. The three together provide hope for Brookfield Renewable’s growth and compounding well into the future.

I should clarify one thing: when I say that I “would seriously consider” Brookfield Renewable stock, I don’t mean that I have zero exposure to the stock now. I actually do own some directly, through a position in Brookfield Corp, one of the largest positions in my portfolio. Brookfield Corp owns 52% of Brookfield Renewable Corp, giving it (and me) substantial exposure to Brookfield Renewable.

There is certainly one difference between a direct Brookfield Renewable shareholder and me: I don’t collect the dividend in my brokerage account, nor do I enjoy the optionality of re-investing the dividend as I see fit. In the next section, I’ll explore why that optionality could be a major selling point for a certain type of investor.

The value of Brookfield Renewable’s dividend

One reason why you might want to own Brookfield Renewable directly, instead of through Brookfield Corp, is that owning the common stock lets you collect the dividend. If you own Brookfield Corp, the Brookfield Renewable dividends flow through to the company and are mostly, if not entirely, invested on your behalf by Brookfield management.

Why would you want to actually collect the dividend?

One reason is that the income could be fairly substantial. Brookfield’s dividend yield is currently 3.74%. That’s far above average for the TSX. With a $7,000 TFSA invested at a 3.74% yield, you’d get back about $257.40 in passive income each year. That’s not a bad start for a portfolio worth just $7,000!

A second, more important consideration is this: with dividends, you have some optionality in how you reinvest your profits. Do you feel like investing a bit from the renewable energy pile into the tech pile, the banking pile, or the precious metals pile? Brookfield Corp won’t necessarily always allocate capital where you want it to be allocated. By getting dividends from Brookfield Renewable Corp directly, you gain the ability to decide where your profits are reinvested. If you have strong feelings on the matter, then the dividend may be worth it.

The post 1 Canadian Stock I’d Seriously Consider If I Had $7,000 in TFSA Room appeared first on The Motley Fool Canada.

More reading

• 2 Canadian Utility Stocks That Could Be Headed for a Strong 2026
• Here’s My Highest Conviction Canadian Stock to Buy Right Now
• Rates Are on Hold for Now — These 2 TSX Dividend Stocks Look Worth Owning Regardless
• 4 Dividend Stocks I’d Happily Double My Position in Today
• Forget Telus: A Cheaper Dividend Stock With More Growth Potential

Fool contributor Andrew Button has positions in Brookfield. The Motley Fool has positions in and recommends Brookfield. The Motley Fool recommends Alphabet, Brookfield Corporation, Brookfield Renewable, Brookfield Renewable Partners, and Microsoft. The Motley Fool has a disclosure policy.

In 2026, the stock market is looking… confusing.

On the one hand, many of the world’s biggest companies appear to be pricey, with big tech stocks trading at 35-plus times earnings on average.

On the other hand, the AI revolution is genuinely creating a lot of value, with new revenue streams and investment opportunities coming seemingly out of nowhere.

How are investors to decide what to do here?

In my view, they should do so by focusing on overlooked parts of the market. If you look at things like hard assets, which are comparatively neglected right now, you can see a lot of hidden value. There are opportunities here that a person would be justified in having a lot of conviction in. In this article, I’ll explore my highest-conviction Canadian stock, a financial conglomerate that is well known for investing in hard assets.

Brookfield

Brookfield Corp (TSX:BN) is a Canadian financial conglomerate best known for its alternative asset management activities. The company operates several well-known subsidiaries such as Brookfield Renewable Partners (TSX:BEPC)(TSX:BEP.UN) and Brookfield Infrastructure Partners (TSX:BIPC)(TSX:BIP.UN) that are building some of the world’s most important infrastructure.

Exposure to everything in the Brookfield ecosystem

The “Brookfield ecosystem” is an interconnected network of companies either wholly or partially owned by Brookfield. The ecosystem consists of four main businesses, along with some peripheral ones. The four I’m referring to are:

1. Brookfield Asset Management (TSX:BAM). An ultra-high margin, asset-light asset manager that practically prints profit each and every year.
2. Brookfield Renewable Partners. A renewable energy company that supplies power to some of the world’s biggest utilities, as well as tech companies that are investing in AI data centres.
3. Brookfield Infrastructure Partners. An infrastructure company that is buying up pipelines, toll roads, telecom towers and data centres around the world.
4. Brookfield Wealth Solutions. An insurance business that is largely involved in re-insurance.

These four pillars of Brookfield’s ecosystem all have a lot of promise. Looking at what they have going for them, it can feel tempting to buy one of them and stick with it for life. However, you can get exposure to all four, and then some, with Brookfield stock. For my money, that’s the best way to play it.

A modest valuation

One attractive feature of Brookfield stock right now is a comparatively cheap price tag. The stock trades at about 20 times distributable earnings (DE). DE is an alternative measure of earnings used specifically by asset managers. 20 times DE is a lower “PE ratio” than that of the TSX, indicating undervaluation. Also, Brookfield Corp’s market cap is less than the value of all of its assets (taken at market values), minus the value of the company’s corporate-level debt. This too indicates undervaluation. On the basis of valuation, then, Brookfield looks attractive.

Strong future prospects

Finally, Brookfield Corp appears to have strong future prospects. The company has an elite leadership team consisting of high-profile executives Bruce Flatt and Conor Teskey, who have presided over a period of market-beating returns. Its board also has such distinguished members as Howard Marks. This much competence at one company points to the likelihood of the company performing well in the future. So, Brookfield is cheap today, and likely to deliver a lot of value tomorrow. It’s a win-win situation.

The post Here’s My Highest Conviction Canadian Stock to Buy Right Now appeared first on The Motley Fool Canada.

More reading

• 3 Impressive Dividend Stocks With Yields Reaching as High as 6.9%
• The Sectors Where Canada Actually Beats the United States
• 5 Canadian Stocks I’d Feel Good About Holding for the Next 10 Years
• 1 Practically Perfect Canadian Stock Down 19% to Buy and Hold Forever
• Canada Is Pouring Billions Into Infrastructure: Does That Make BIP Stock a Buy?

Fool contributor Andrew Button has positions in Brookfield and Brookfield Asset Management. The Motley Fool has positions in and recommends Brookfield Corporation. The Motley Fool recommends Brookfield Asset Management, Brookfield Infrastructure Partners, Brookfield Renewable, and Brookfield Renewable Partners. The Motley Fool has a disclosure policy.

Are you a Canadian investor holding U.S. stocks?

If so, congratulations! You are average!

While investors in all countries suffer from “home field bias” to some extent, few investors outright ignore the world’s biggest equity market, the good ol’ USA.

In Canada, it’s quite common for investors to hold U.S. stocks, especially blue chip tech stocks and index funds. Many Canadians hold U.S. stocks through their Canadian dollar-hedged equivalents (which aim to reduce exchange rate risk), as well as TSX-listed funds of U.S. stocks.

So, you are in good company holding U.S. stocks. Nevertheless, if you hold those stocks in a tax-free savings account (TFSA), there are some small print rules that influence how they are treated. In this article, I explore one small-print TFSA rule that affects your U.S. stocks in a very negative way!

U.S. dividend stocks are taxable inside a TFSA

One of the main fineprint TFSA rules you’ll need to be aware of is that U.S. dividend stocks are taxable within your TFSA. Taxable by the IRS, that is! While the Canadian government tends to honour the TFSA’s tax-exempt status (barring rule violations), the U.S. government is a whole other can of worms. Countries have the right to tax dividends that their companies pay, no matter where their holders are located. The U.S. imposes 15% withholding taxes on dividends paid by U.S. companies.

Let’s imagine that you’re holding Fortis Inc (TSX:FTS) stock in a TFSA. Fortis is a dividend stock that pays $0.64 in quarterly dividends, or $2.56 in annual dividends. The stock’s price is $78.15; so, the dividend yield is 3.27%. If you invest $50,000 into Fortis stock, you get $1,638 back in annual dividends. Here’s a table showing the numbers on that:

In a TFSA, you would pay zero dollars in taxes on all that income, because the TFSA completely shelters Canadian stocks from taxation. Easy peasy.

With U.S. stocks it’s different.

Let’s imagine a U.S. stock that’s identical to Fortis, apart from its country of origin. In Canadian dollar terms, its price is $78.15, and its annual dividends are $2.56. If you held this hypothetical stock, your pre-tax dividend income on a $50,000 position would be identical to that which you’d earn from Fortis: $1,638. The after-tax amount would be different, though. The U.S. charges a 15% withholding tax on all U.S. dividends received by Canadian holders. The TFSA does not spare you this tax. So, your after-tax dividends on the hypothetical U.S. stock would be $1,392.64. That is, $1,638.40 minus a 15% tax ($245.76).

A parting thought

As I showed above, U.S. dividend withholding taxes can be substantial, even if you hold U.S. dividend stocks in a TFSA. If this matter is a concern to you, you might want to hold your U.S. stocks in a registered retirement savings plan (RRSP) instead of a TFSA. Thanks to a tax treaty between Canada and the United States, U.S. stocks held in RRSPs are spared the withholding tax. Just something to think about when you contemplate whether to hold investments in an RRSP or TFSA.

The post The Small-Print TFSA Rule That Affects Your U.S. Stocks appeared first on The Motley Fool Canada.

More reading

• 3 Canadian Dividend Stocks Whose Passive Income Just Keeps Climbing
• 5 TSX Stocks That Could Be a Great Starting Point for New Canadian Investors
• 3 Impressive Dividend Stocks With Yields Reaching as High as 6.9%
• 2 Dividend Stocks Canadian Investors Could Comfortably Hold Right Through Retirement
• If I Were Only Buying 3 Stocks Right Now, These Would Be Them

Fool contributor Andrew Button has no positions in the stocks mentioned. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

Are you a Canadian investor holding significant sums of money in a tax-free savings account (TFSA)?

If so, you may be surprised to learn that there are ways you can be taxed inside of your “tax free” account… or even worse, face fines and other legal consequences!

Though the Canada Revenue Agency probably isn’t actively watching your TFSA account, there are things that can tip them off. Your account’s manager (i.e. your bank or broker) reports your contributions and other key pieces of information to the government. This information, along with other things (e.g., unusual audit findings) can trigger an investigation into your TFSA. If you are found to have violated TFSA account rules, you may be taxed inside of your TFSA… or worse. In this article, I explore three red flags that the CRA is watching for, so you can keep your TFSA tax-free.

Day trading in your TFSA

One of the big CRA red flags that can cause you to lose all of your account benefits is day trading. Specifically, day trading full time while relying on specific professional expertise, such as financial software or subscription services. In the eyes of the CRA, this looks suspiciously like running a securities business. If the agency deems you to be running a securities business, it will tax you accordingly. It doesn’t matter that the securities are held in a TFSA, you will still be taxed.

To avoid the day-trading TFSA tax, adopt a long-term investment strategy, perhaps with quality Canadian index funds such as the iShares S&P/TSX 60 Index Fund (TSX:XIU). Not only is it more tax-friendly to hold such funds long term than to engage in complex day trading strategies, but it’s also likely more profitable. Most people who attempt day trading never make any money at it. The handful that do, if they realize outsized profits in their TFSA, are vulnerable to taxation. Meanwhile, if you hold XIU long term, you will enjoy the full benefit of diversification, pay ultra-low management fees (0.05%), and likely not get taxed in your TFSA. It’s a long-term investor’s dream come true.

Over-contribution

Another red flag the CRA is watching out for is excessive contributions. If the CRA finds you making absolutely massive contributions to your TFSA (let’s say, $100,000 per year for several years), it will almost certainly investigate. If it does, and finds you’ve been over-contributing, you’ll pay a 1% tax on the excess amount, and lose the tax-free benefits on said amount. This is quite a double whammy of punishment. So, be sure to contribute within your limits. Pro-tip: if you were younger than 18 in 2009, and have not made past TFSA contributions and withdrawals, your personal amount is much less than the $109,000 sometimes advertised!

Contributing while not a Canadian resident

Last but not least, a big TFSA red flag that the CRA looks for is contributing to a TFSA while not a resident of Canada. The CRA has an extremely easy time catching you doing this one, because you’ll likely be reporting any time spent as a non-resident to the CRA, and the CRA gets all your TFSA contributions from your bank/broker. The rule says you need to be a resident of Canada to contribute to a TFSA or accumulate TFSA room. The penalty for breaking this rule is a 1% tax each month, similar to over-contribution.

The bottom line

The TFSA is a tax-free account, as long as you play by the rules. Contribute within the limit, hold long term, and remain a Canadian resident, and the TFSA works in your favour. Run afoul of the account rules, and don’t be surprised if the CRA comes a-knockin’.

The post TFSA Investors Take Note — The CRA Is Actively Watching for These Red Flags appeared first on The Motley Fool Canada.

More reading

• How Do Most Canadians’ TFSA Balances Look at Age 30?
• 2 Canadian ETFs I’d Lock Into a TFSA and Never Touch
• 3 Canadian ETFs I’d Seriously Consider Adding to My Portfolio in 2026
• 3 Canadian ETFs Worth Tucking Into a TFSA and Holding for the Long Haul

Fool contributor Andrew Button has positions in the iShares S&P/TSX 60 Index Fund. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Are you starting off with $25,000 or so, and hoping to build a passive income portfolio?

If the goal is to live off your passive income, you’ve got a long way to go: it takes over $1 million invested at the TSX market yield to cover a typical Canadian’s annual living expenses.

If, on the other hand, your goal is to get started on a passive income portfolio that you could eventually live off of, you’re in luck.

With just $25,000 in starting funds, you can easily build toward a tax-free TFSA that can cover your living expenses someday. While you wait, you might start off collecting a few hundred dollars worth of passive income per year. In your first year, you could earn $500 or more – easily!

It takes just four simple steps to start building a passive income portfolio with just $25,000. So, let’s jump right into it.

Step 1: Choose your environment

Before you invest in anything, you need to know where you’re going to hold the investments. If you’re a typical working-age Canadian, the best place is likely some kind of retirement account. The tax-free savings account (TFSA) lets you contribute, invest, and withdraw funds tax-free. The RRSP is similar to the TFSA, but taxable on withdrawals, and provides a tax deduction on contributions. Where you choose to invest is a matter of preference. The simplest environment to get started in is a TFSA, because the TFSA’s tax rules are simpler than the RRSP’s.

Step 2: Choose your asset allocation

Your asset allocation is how much you’ll put into various categories of assets: stocks, bonds, real estate, etc. Since this article is about retirement saving, I’ll ignore real estate, which is primarily a lifestyle investment. Basically, you need a certain percentage of your money in stocks for long-term gains, and a certain percentage in bonds for liquidity. How much you need in each category depends on your situation. If you are 100% sure your job will cover all your expenses for all your working days, you could put as much as 100% in stocks. If you are retired, disabled with no ability to work, and holding $750,000, you may want to protect up to 50% of your net worth in bonds. Given that you are starting off with $25,000, I will assume you’re still working and suggest that 60%–80% in equities, and 20%–40% in bonds, is best for your needs.

Step 3: Pick your securities

Once you know what asset classes you’ll be in, you need to choose which specific assets you will purchase.

For “equities” (i.e., stocks) you might want to go with something like the iShares S&P/TSX Capped Composite Index Fund (TSX:XIC). The iShares S&P/TSX Capped Composite Index Fund is a highly diversified fund holding 220 stocks. It passively tracks the S&P/TSX Capped Composite Index, meaning that it incurs no active management costs. Owing to the lack of active management costs, the fund has very low fees: 0.05% management and 0.06% total. The fund is also highly liquid, with narrow bid-ask spreads – so you don’t lose much money to market makers when you trade it. Finally, XIC pays a small dividend yielding about 2%.

Step 4: Dollar cost average

Once you’ve decided on your environment, your asset allocation and your securities, all that’s left to do is invest progressively over time. Take, let’s say, 10% to 20% out of each paycheque, and put it into your securities portfolio. Over time, you should end up with a substantial portfolio capable of covering your expenses in retirement.

The post How to Build a Meaningful Passive Income Portfolio Starting With Just $25,000 appeared first on The Motley Fool Canada.

More reading

• If You Missed the RRSP Deadline, Here’s the Most Important Move to Make Next
• Maximizing Returns: How to Best Use Your TFSA in 2026
• Just Starting Out? 2 Simple ETFs That Any Canadian Investor Can Use
• How Does Your TFSA Compare to the $109,000 Milestone?

Fool contributor Andrew Button has no positions in the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Do you like the idea of buying a handful of truly great stocks, and holding them forever?

For investors like Warren Buffett and Charlie Munger, buying great ‘holds’ and sticking with them long term is the very pinnacle of investing. Trading in and out of positions might work when you are small and young enough to deal with the stress; but over the long run, you’re better off sticking with stocks that take you higher and higher.

Many such opportunities are found among dividend stocks, especially dividend growth stocks. Stocks that grow their dividends over time tend to be superior long-term performers on a total return basis. They also tend to stand the test of time. In this article, I share the three dividend stocks I’d feel most comfortable buying and holding forever.

Brookfield Asset Management

Brookfield Asset Management (TSX:BAM) is a Canadian-American asset management company that has been growing and compounding its investors’ wealth at impressive rates over the years. By many accounts, it has compounded at a 16% CAGR over the last decade (the calculation is made complicated by a spinoff a few years ago). At any rate, the company is solidly profitable, with a 71% gross margin, a 52% net margin, and a 30% levered free cash flow (FCF) margin. These are pretty solid numbers, and BAM has the potential to keep delivering over the long term, owing to its stellar reputation and disciplined management team.

Fortis

Fortis Inc (TSX:FTS) is a Canadian utility company, and the only stock on this list I do not actually own. I think that Fortis is worth owning forever; but I don’t think it’s the most exciting opportunity out there today.

What Fortis has going for it is stability, essentially. It is a regulated utility, which gives it high barriers to entry within its service areas. It is fiscally prudent, never paying more than 75% of its earnings out as dividends. Finally, it is a dividend champion, with 52 consecutive years of dividend increases under its belt.

TD Bank

The Toronto-Dominion Bank (TSX:TD) is a Canadian bank stock that I actually have been holding “forever” (i.e., nearly as long as I’ve been investing). I first started buying the stock in 2019, as the markets were recovering from the 2018 correction. I held the stock until about 2023, when I started to sour on it. I got out at a minor gain at $81.

Later, in December of 2024, I saw that the stock had slid to a lower level: $74. I knew that that level probably had something to do with the $4.3 billion fine and $430 billion asset cap the U.S. Department of Justice (DoJ) put on the company’s U.S. retail business. I also thought that the fine and asset cap didn’t justify such a cheap price for the whole business, as it had many segments (e.g., Canadian banking, investment banking) not affected by the cap. So, I went and bought TD stock in considerable volume, making it my largest stock position.

Today, things are going pretty well with TD Bank. It’s growing, with its revenue and earnings both up by high percentages over the last year. It’s profitable, with a 30% net margin. And finally, it still has very high capital and liquidity ratios, indicating that it is well run. For these reasons, I’d be comfortable holding TD Bank stock for many decades to come.

The post The Dividend Stocks I’d Feel Most Comfortable Buying and Holding Forever appeared first on The Motley Fool Canada.

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Fool contributor Andrew Button has positions in Brookfield Asset Management and TD Bank. The Motley Fool recommends Brookfield Asset Management and Fortis. The Motley Fool has a disclosure policy.

Alimentation Couche-Tard (TSX:ATD) stock has dropped 6.8% from its 52-week high, set on February 23. On that date, the stock traded at $85.26. At the time of this writing, it traded for just $79.34. That was a curious decline for a (de-facto) energy company in that period. The 2026 market has lifted most energy stocks, as rising oil and gasoline prices have made gas stations more profitable. It’s odd, therefore, that Alimentation Couche-Tard has not participated in the rally. In this article, I explain why I’d buy Alimentation Couche-Tard stock following its late first quarter sell-off.

Why Alimentation Couche-Tard’s sell-off looks peculiar

Oil stocks have been, for the most part, rallying since February 28. On that date, the U.S. and Israel invaded Iran, prompting a major global crisis that has also been a massive windfall for energy companies. As part of its retaliation, Iran destroyed Gulf oil refineries and closed the Strait of Hormuz, resulting in a reduction in global oil, natural gas and fertilizer supplies, as well as increases in those commodities’ prices. Energy stocks have predictably rallied on these developments, with the S&P/TSX Energy Index up 36% year to date.

Alimentation Couche-Tard is not an energy company is the classic sense of the term. As a gas station operator, it is classified as a retailer. That being the case, the company nevertheless earns 74% of its revenue and 54% of its gross profit from fuel sales. Gasoline and Diesel have been rising in price, just like the crude oil used to make them. You’d expect Alimentation Couche-Tard to be profiting off the current oil and gas market dynamics, if not to quite the same extent as the average energy company, then to almost the same extent. Instead what we are seeing is ATD stock selling off starting at almost the exact date when energy prices started going ballistic.

Valuation

One possibility for Alimentation Couche-Tard’s sell-off relates to valuation. The stock trades at 20 times earnings, 3.5 times book, and 10 times operating cash flow. Again, this is not inconsistent with TSX energy or retail stocks. Canadian retailers generally trade at about 20 times earnings while energy stocks trade at about 17.5. Suncor Energy, an energy stock I own and which has risen 50% year to date, is at 19.5 times earnings. There is nothing about ATD’s valuation multiples that would predict a pronounced sell-off during an energy bull market.

Performance of the non-energy segment

A final possible explanation for ATD’s poor 6.8% sell-off is its merchandise and service segment. If results in this segment, which account for about 50% of earnings, have been truly catastrophic (let’s say, deeply negative earnings), then high fuel revenues wouldn’t make up for them.

Fortunately, “catastrophic merchandise and sales revenues” is not what’s been observed. In the most recent quarter, ATD’s merchandise and fuel sales revenue increased 8.7%, while the segment margin increased from 0.5% to 2% year over year. This improvement in performance isn’t consistent with the reduction in share price that we’ve seen from ATD since February 23 –particularly since fuel segment revenues look set to explode next quarter. So, overall, I think Alimentation Couche-Tard is probably a decent buy here.

The post This Canadian Dividend Stock Dropped 6.8% – Here’s Why I’d Buy It Anyway appeared first on The Motley Fool Canada.

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Fool contributor Andrew Button owns shares in Suncor Energy. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool has a disclosure policy.