Use These TFSA Tactics to Effectively 2X Your Annual Contribution

2026-02-25 20:15:00 ET

A Tax-Free Savings Account (TFSA) is one of the most efficient tax-planning instruments to build wealth. No other account allows you to withdraw the total income from your investments tax-free. Those who understand the power of the TFSA have harnessed it to grow their investment severalfold.

According to the CRA’s latest TFSA statistics for the 2023 tax year, total contributions were $106.6 billion and fair market value (FMV) was $618.6 billion, which is 4.8 times the contribution amount. Even you can grow your TFSA contribution 2 times annually and 5 times in the long term. Here are some investment tactics that can make the most of the TFSA’s tax-free growth.

TFSA tactics to grow your annual contribution by 2x

The only way to grow your money twofold is through compounding, where you invest the money to make money and reinvest the earned amount to make more money. When money starts working for you, your investment grows multifold. Here are a few tactics to make your money work for you.

Let’s understand this with an illustration.

Suppose you had a $20,000 TFSA balance in 2022, of which you invested $10,000 in Suncor Energy ( TSX:SU ) for dividends and $10,000 in Constellation Software ( TSX:CSU ) for growth. You got 277 shares of Suncor and 5 shares of Constellation.

In 2022, the energy market was booming as the Russia-Ukraine war altered the global oil supply chain. The oil price peaked at US$125/barrel, and Suncor was a no-brainer stock to buy and hold. At the end of 2025, the $10,000 investment was $16,343. Constellation has dipped to a three-year low due to uncertainty around the impact of artificial intelligence (AI) on traditional software. The $10,000 investment was $16,565 at the end of 2025. In such a case, you can enhance your TFSA FMV with a few tactics.

Rebalancing your TFSA portfolio

The TFSA allows you to grow your money tax-free. It means you can sell shares and reinvest in another stock without paying capital gains tax, provided you don’t withdraw money from the TFSA. The rebalancing strategy requires you to determine your asset allocation. You may decide to allocate 50% in growth stocks and 50% in dividend stocks. You rebalance your portfolio at the end of  December.

Continuing on the above example of $20,000 invested in Suncor and Constellation, your investment didn’t change much in 2023. However, it changed drastically in 2024 as Constellation was at its peak. Since then, it has dipped 44%, while Suncor has jumped 44%. Wouldn’t it be nice if you owned more of Suncor? That is exactly what rebalancing does.

As per your 50-50 allocation, you should have $18,000 invested in both in 2024. Thus, you sell a share of Constellation for $4,458 and buy 87 shares of Suncor, increasing your Suncor share count to 364 and Suncor investment value close to $18,000.

This rebalancing helped you book profits on Constellation when the stock was at its cyclical high while staying invested with the remaining four shares for more such growth cycles. This way, your downside risk is reduced. Similarly, you managed to buy Suncor just before the 2026 rally.

In this case, you take only two stocks you want to stay invested for the long term and enhance your returns through timely profit booking on cyclical peaks.

Regular investing

Another tactic is to keep investing regularly. The Canada Revenue Agency (CRA) adds a fresh TFSA contribution limit on January 1. If you have withdrawn any amount in the previous tax year, that also gets added to your TSFA contribution room on January 1. Make the most of this benefit by investing your complete contribution room. For 2026, the TFSA contribution limit is $7,000, which you can invest in one go or throughout the year.

A good tactic is to invest $500 every month, as that can help you grab seasonal opportunities. Shares of Shopify and Descartes Systems fall from March to June and rise from July to February. There could be deviations in some years, but the long-term seasonality remains intact.

The post Use These TFSA Tactics to Effectively 2X Your Annual Contribution appeared first on The Motley Fool Canada .

The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Constellation Software and Descartes Systems Group. The Motley Fool has a disclosure policy . Fool contributor Puja Tayal has no position in any of the stocks mentioned.

2026