XIT:CC - How to Turn Your TFSA Into a Gold Mine Starting With $10,000
2025-02-24 16:00:00 ET
The Canada Revenue Agency (CRA) has stated the 2025 Tax-Free Savings Account (TFSA) contribution limit at $7,000. However, Canadians under 35 had an average TFSA savings of $11,980 in 2023, according to Statistics Canada data. Albert Einstein said, “Compound interest is the eighth wonder of the world. He who understands it earns it … he who doesn’t … pays it.” Similarly, TFSA is a great tool to harness the power of compounding for three reasons:
- It can help your money compound tax-free
- It allows you to withdraw the compounded money tax-free without any withdrawal limits
- TFSA withdrawals do not affect income-based CRA benefits like Old Age Security (OAS).
Building a gold mine with $10,000
The above benefits of TFSA make it a gold mine. It is up to you how efficiently you can mine gold. One method is to use the tax benefits of TFSA to invest in high- growth stocks for the long term. A stock that could grow your money 10-fold in 10 years is a perfect fit for TFSA. A $10,000 investment converting into a $100,000 TFSA portfolio gives you $90,000 in tax-free investment income.
Technology stocks are a no-brainer growth investment for such high returns. Technology is reshaping how we live, work, and consume content. Multiple trends are at play: artificial intelligence (AI), embedded devices, and a 5G network connecting the embedded devices to the internet to perform AI functions.
TFSA stock #1
iShares S&P/TSX Capped Information Technology Index ETF ( TSX:XIT ) can give you exposure to all relevant technology stocks trading on the TSX. The exchange-traded fund (ETF) has generated an average annual return of 20% in 10 years and 36% in 12 months. It can help you diversify your investments across the tech sector and mitigate the impact of any disruptions in individual stocks. For instance, the once soaring Lightspeed Commerce and Dye & Durham have taken a major setback from a short sellers’ deep dive report and management change from active shareholders.
Those who invested in these stocks at their peaks are in deep red.
However, the XIT ETF offset the downside of the above two stocks with a sharp upside of Celestica , whose stock price grew 1,600% in the last five years. Investing in the XIT ETF can help you beat the market and never miss out on a TSX tech rally.
TFSA stock #2
The TFSA allows you to invest in U.S. stocks, and Advanced Micro Devices ( NASDAQ:AMD ) is at the cusp of the AI revolution. Tom’s Hardware, citing data from Mercury Research, reported that AMD’s data centre central processing unit (CPU) market share by revenue increased to 35.5% in the fourth quarter of 2024 compared to 31.8% a year before. AMD is beating Intel in the CPU space.
Moreover, AMD’s data centre graphics processing unit (GPU) demand is growing as more companies invest in AI capabilities. Even China’s Deepseek model used AMD’s processors. Moreover, it is benefiting from Personal Computer refreshment cycles which drove its client revenue up 52% to a record US$7.05 billion in 2024.
Despite strong earnings, the stock price continued to fall, as it traded at high valuations of 53 times forward price-to-earnings ratio . It is now trading at 24 times its next year’s earnings per share (EPS). Now is a good time to buy the stock and enjoy the AI and PC refreshment rally. It could triple your money in the next three to five years.
TFSA stock #3
Topicus.com ( TSXV:TOI ) is a spin-off of Constellation Software and is gradually showing the benefits of compounding. Even Topicus acquires vertical-specific software companies. Many acquisitions work, but many do not. Initially, Topicus reported a loss in 2021. However, that pullback of two steps helped the company move 10 steps forward. The company has grown its market capitalization from $7.3 billion in September 2023 to $11.57 billion in February 2025. The value addition was driven by successful acquisitions.
Now is a good time to buy Topicus.com stocks while it trades around $145-$150. If this stock replicates the success of its parent Constellation, it could become $4,000 per share in the next 15 years or less.
The post How to Turn Your TFSA Into a Gold Mine Starting With $10,000 appeared first on The Motley Fool Canada .
The Motley Fool has positions in and recommends Dye & Durham and Topicus.com. The Motley Fool recommends Advanced Micro Devices, Constellation Software, Intel, and Lightspeed Commerce. The Motley Fool has a disclosure policy . Fool contributor Puja Tayal has no position in any of the stocks mentioned.
2025