SHOP:CC - How to Turn Your TFSA Into a Gold Mine Starting With $6500
2023-09-26 09:00:00 ET
When it comes to long-term savings, the Tax-Free Savings Account (TFSA) should not be overlooked. The TFSA is often associated with short-term savings goals. I’d argue that’s due largely to the flexibility that comes from tax-free withdrawals, which is completely fair. However, those with long-term time horizons may want to consider taking advantage of the tax-free compound growth opportunities within a TFSA.
Maximizing returns in a TFSA
In addition to tax-free withdrawals, Canadians also have the ability to earn tax-free compounded returns within their TFSA. For a short-term savings goal, the impact of compound growth in a portfolio focused on stocks may be minimal. But for anyone with decades of time in front of them, the TFSA can be a legitimate tool to help you retire sooner.
The TFSA contribution limit in 2023 is $6,500. Fortunately, unused contributions can be carried over from year to year. Anyone who was 18 years or older in 2009, when the TFSA was introduced, would have a total contribution limit of $88,000 today.
With that in mind, I’ve reviewed two top growth stocks that TFSA investors may want to consider loading up on today. Both picks are also trading at significant discounts right now. The pair of companies is a perfect duo for investors with long-term time horizons that are willing to be patient.
TFSA stock #1: Shopify
It’s hard to believe that after all of the volatility over the past three-and-a-half years, Shopify ( TSX:SHOP ) is trading at just about the same price today as it was prior to the COVID-19 market crash in 2020.
After plummeting in early 2020, Shopify went on to finish the year up more than 100%. The monster gains continued right through most of 2021 before ending the year on a decline. That trend continued until late 2022, when shares finally began to rebound. The tech stock is now up more than 50% year to date, making a case that it may have bottomed out in late 2022.
Despite joining the TSX close to 10 years ago, Shopify remains largely in growth mode. And it’s the long-term market opportunity in the global e-commerce space that explains why so many investors remain extremely bullish on the tech company.
In the short term, I wouldn’t bank on volatility slowing down all that much yet. If you’re willing to be patient, though, long-term investors may not get another buying opportunity like this for a while.
TFSA stock #2: WELL Health Technologies
WELL Health Technologies ( TSX:WELL ) experienced a different type of roller coaster during the pandemic. Demand for telehealth services skyrocketed in 2020, which led to shares ending the year up more than 400%.
As demand in the telehealth space began slowly fading from its pandemic-induced surge, the stock soon returned to reality. Today, shares are trading 50% below all-time highs that were set in early 2021. However, WELL Health is one of the few growth stocks actually trading significantly higher than pre-pandemic prices. Shares are up a market-crushing 175% since the beginning of 2020 and are up more than 700% over the past five years.
The pandemic may have created a short-term tailwind for WELL Health, but I’m still a massive long-term bull on the telehealth space.
The post How to Turn Your TFSA Into a Gold Mine Starting With $6,500 appeared first on The Motley Fool Canada .
Fool contributor Nicholas Dobroruka has positions in Shopify. The Motley Fool has positions in and recommends Shopify. The Motley Fool has a disclosure policy .
2023