Here's Exactly How $15,000 in a TFSA Could Grow Into $45,000

2026-02-17 16:50:00 ET

The Tax-Free Savings Account (TFSA) is a versatile capital multiplier, not an ordinary account , as the name suggests. Cash is the least effective asset to own within this wealth-building superpower.

To truly activate the multiplier effect of the TFSA, you must prioritize holding income-producing assets, particularly stocks . A $15,000 stock investment could grow to $45,000 or triple the value of the original capital.

Pure money growth

Stocks offer the highest potential for tax-free growth, allowing every capital gain and dividend payment to compound over time. In a TFSA, money growth is pure, and a 200% total return is a realistic goal. Since the $30,000 profit was generated inside a tax-exempt vault, every cent is yours. You pay zero taxes even if you withdraw the entire amount.

Systematic approach

Transforming the TFSA into a capital multiplier is not complex, but it does require a systematic approach and a longer time frame. If you’re starting from scratch, regular contributions — like maximizing the $7,000 annual limit for 2026 — will feed the money growth engine.

Assuming your available contribution room is $15,000, including unused rooms from previous years, the Rule of 114 applies. To find the estimated time needed to triple your capital, the formula is: Years = 114 divided by the annual return (yield).

For an 8% return, that period is approximately 14.2 years. However, if you continue adding $7,000 or the maximum annual limit in succeeding years, your TFSA balance could exceed $100,000 in that same timeframe.

Strong candidate

Diversified Royalty Corporation ( TSX:DIV ) in the industrials sector is a strong candidate for TFSA investors. In addition to the affordable price ($4.06 per share), the yield is 7.05%, while the payout frequency is monthly. Using the Rule of 114, it would take approximately 16.2 years for your $15,000 to triple.

The $688 million multi-royalty corporation collects a percentage of the top-line sales of its royalty partners, all of which are ongoing businesses and consumer-facing brands. In Canada, the partners are Mr. Lube + Tires, AIR MILES, Sutton, Mr. Mikes, BarBurrito, and Oxford Learning Centres.

The American partners are Stratus Building Solutions and Cheba Hut. Nurse Next Door provides home care services in both countries. Management said that making accretive royalty purchases and growth of purchased royalties increase cash flow per share. Diversified Royalty intends to continue paying a predictable, stable monthly dividend to shareholders and increase it over time.

Its CEO, Sean Morrison, said, “Overall, DIV’s portfolio continues to generate strong positive organic growth in a challenging economic environment, which supports the increase in our dividend.” Thus far, DIV has consistently paid monthly cash dividends since November 2014.

The multi-royalty model is not the only unique advantage. The company’s dividend-reinvestment plan (DRIP) is active. Investors can elect to use the monthly dividend to buy more common shares at a 3% discount. When you enroll in DRIP, dividends are reinvested as new shares.

Tax-exempt vault

TFSA users can turn the multiplier switch on at anytime and use a systematic approach to achieve a financial goal. Just remember that stocks, not cash, are the most effective assets to hold inside a tax-exempt vault.

The post Here’s Exactly How $15,000 in a TFSA Could Grow Into $45,000 appeared first on The Motley Fool Canada .

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

2026