TFSA investing is all about growing your savings account tax-free. But, what are the best Canadian stocks to buy in your TFSA account? We’ll recommend the best TFSA stocks to buy right now and go over everything you need to know about opening a tax-free savings account in Canada.
Key Highlights:
- Tax-free savings accounts are designed to help Canadians grow their wealth and save money
- TFSAs offer tax-free growth and withdrawals, allowing Canadians to achieve their financial goals faster
- Canadian residents age 18 or older with a valid SIN can open a TFSA account
- The TFSA Contribution Limit in 2023 is $6,500
- Shopify, Fortis & National Bank of Canada rank among the top 10 best TFSA stocks
| Rank | Stock | Rating | Market Cap | Dividend Yield |
|---|---|---|---|---|
| 1 | Shopify (SHOP.TO) | ⭐⭐⭐⭐⭐ | $116.487B | N/A |
| 2 | Barrick Gold (ABX.TO) | ⭐⭐⭐⭐⭐ | $40.287B | 2.21% |
| 3 | Royal Bank of Canada (RY.TO) | ⭐⭐⭐⭐⭐ | $178.052B | 4.21% |
| 4 | Fortis (FTS.TO) | ⭐⭐⭐⭐⭐ | $27.781B | 3.98% |
| 5 | National Bank of Canada (NA.TO) | ⭐⭐⭐⭐⭐ | $33.719B | 4.09% |
| 6 | Bank of Nova Scotia (BNS.TO) | ⭐⭐⭐⭐ | $78.264B | 6.49% |
| 7 | Bank of Montreal (BMO.TO) | ⭐⭐⭐⭐ | $86.54B | 4.89% |
| 8 | Canadian Imperial Bank of Commerce (CM.TO) | ⭐⭐⭐⭐ | $51.017B | 6.14% |
| 9 | Canadian Natural Resources (CNQ.TO) | ⭐⭐⭐ | $81.724B | 4.73% |
| 10 | TD Bank (TD.TO) | ⭐⭐⭐ | $154.307B | 4.71% |
How To Buy The Best Stocks In A TFSA Account
Today, the best investing apps make it easy to buy Canadian stocks in your TFSA account.
At Questrade, members can invest in the top ETFs for free and benefit from low commission fees while buying and selling stocks in their TFSA. To help minimize fees even more, Questrade is giving away a free $50 trade commission rebate to new members that sign up for an account.
In just four easy steps, Canadians can receive free cash to invest in their TFSA.
Check out our step-by-step guide on how to buy the best Canadian stocks in your TFSA.
- Click here to sign up for a TFSA account at Questrade
- Fill out the required documents with accurate personal information
- Add funds to your Questrade account
- Receive a $50 trade commission rebate to invest in the best TFSA stocks
Ranking The Best TFSA Stocks To Buy Right Now In Canada
- Shopify (SHOP.TO)
- Barrick Gold (ABX.TO)
- Royal Bank of Canada (RY.TO)
- Fortis (FTS.TO)
- National Bank of Canada (NA.TO)
- Bank of Nova Scotia (BNS.TO)
- Bank of Montreal (BMO.TO)
- Canadian Imperial Bank of Commerce (CM.TO)
- Canadian Natural Resources (CNQ.TO)
- TD Bank (TD.TO)
Reviewing The Best TFSA Stocks In 2024
Investing can be a valuable tool for Canadians on their journey toward financial freedom.
By investing their money in an TFSA, Canadians have the opportunity to grow their wealth and achieve their financial goals faster.
Below, we’ve ranked and reviewed the best Canadian stocks to buy in your TFSA in 2024.
1. Shopify (SHOP.TO) — Best Canadian TFSA Stock For Future Growth
- Rating: ⭐⭐⭐⭐⭐
- 52 Week Range: 33.00 – 93.83
- Avg. Volume: 3,611,785
- Market Cap: 116.487B
- PE Ratio (TTM): N/A
- EPS (TTM): -2.21
- Earnings Date: Aug 2, 2024
- Forward Dividend & Yield: N/A
- Ex-Dividend Date: N/A
Shopify is a prominent company that assists individuals and businesses in creating and managing online stores. It operates in the flourishing e-commerce market, focused on online buying and selling.
Given the rapid growth of the e-commerce market, Shopify has gained popularity among entrepreneurs seeking an easy-to-use platform capable of handling numerous online stores.
The company’s revenue has consistently increased due to its subscription-based pricing model and a growing merchant base. Additionally, Shopify has diversified its revenue streams by offering value-added services such as payments and capital, further boosting its potential for growth.
Investors who have patiently held Shopify stock are now reaping the rewards, with a significant 85.58 percent year-to-date increase in 2023.
The recent upward momentum in Shopify’s stock price signals a shift in market sentiment, indicating the possibility of a long-term breakout.
Whether saving for a large purchase, vacation, or emergency fund, investors want to put their money into a company that has the potential for future growth.
As one of the top Canadian tech stocks, Shopify has firmly established itself as a market leader of the future, earning its place as the top choice on our list of stocks to consider for your TFSA account.
2. Barrick Gold (ABX.TO) — Cheapest Canadian Blue-Chip Stock In 2024
- Rating: ⭐⭐⭐⭐⭐
- 52 Week Range: 22.94 – 23.28
- Avg. Volume: 3,252,534
- Market Cap: 40.287B
- PE Ratio (TTM): 286.88
- EPS (TTM): 0.08
- Earnings Date: Aug 08, 2024
- Forward Dividend & Yield: 0.53 (2.21%)
- Ex-Dividend Date: May 30, 2024
Barrick Gold offers an appealing turnaround opportunity for Canadian investors.
One of the largest gold mining in the world, Barrick Gold is one fo the best Canadian stocks to buy and hold in your TFSA.
Although experiencing a decline of 3.77% Year-to-Date (YTD) in 2023, the stock has recently demonstrated resilience by rebounding from crucial support levels. This indicates a potential reversal in its recent downtrend, presenting a favorable buying opportunity for prudent Canadian investors.
Gold is widely recognized as a safe-haven asset and has traditionally been in demand during times of uncertainty. As one of the largest global gold producers, Barrick Gold is poised to benefit from potential increases in gold prices.
Factors such as economic volatility, inflation concerns, or geopolitical tensions can fuel the demand for gold, which bodes well for Barrick Gold’s prospects.
3. Royal Bank of Canada (RY.TO) — TFSA Stock with a History of Dividend Payments & Potential Growth
- Rating: ⭐⭐⭐⭐⭐
- 52 Week Range: 116.75 – 140.18
- Avg. Volume: 4,038,696
- Market Cap: 178.052B
- PE Ratio (TTM): 12.66
- EPS (TTM): 10.12
- Earnings Date: Aug 24, 2024
- Forward Dividend & Yield: 5.40 (4.21%)
- Ex-Dividend Date: Jul 25, 2024
Considered one of the top Canadian bank stocks for your TFSA account, Royal Bank of Canada has demonstrated strength despite a 0.23 percent year-to-date decline in 2023. Notably, the stock showed resilience by rebounding from critical support levels.
Being one of Canada’s largest banks, Royal Bank boasts a strong balance sheet, excellent credit quality, and a disciplined approach to risk management.
RBC enjoys the advantages of a strong market position and diversified business segments. With offerings ranging from personal and commercial banking to wealth management and capital markets operations, the bank is well-positioned to benefit from the growth of the Canadian economy.
Over the last five years, RBC investors have enjoyed capital gains of 26.25 percent, and the company has consistently raised dividends by an average of 8.09 percent annually during that period.
4. Fortis (FTS.TO) — Stable TFSA Stock That Pays Rising Dividends
- Rating: ⭐⭐⭐⭐⭐
- 52 Week Range: 48.45 – 62.00
- Avg. Volume: 1,617,273
- Market Cap: 27.781B
- PE Ratio (TTM): 19.50
- EPS (TTM): 2.94
- Earnings Date: Aug 2, 2024
- Forward Dividend & Yield: 2.26 (3.98%)
- Ex-Dividend Date: May 16, 2024
For TFSA investors that are looking for a combination of dividends and capital growth, Fortis might be worth some consideration.
A leading utility company in North America, Fortis is based in St. John’s, Newfoundland and Labrador and operates in Canada, the U.S., Central America, and the Caribbean.
The company serves millions of customers with essential services like electricity and natural gas distribution. This regulated and stable business model, supported by long-term contracts, provides a stable investment choice, especially during uncertain economic conditions.
With a 5.02 percent year-to-date increase in 2023, Fortis is demonstrating considerable strength in the market. Currently, the stock is trading only 8 percent below its all-time highs.
Moreover, its dividend yield of 3.98 percent makes it an attractive option for TFSA investors aiming that want to benefit from compound interest.
The company’s consistent dividend payments add to its appeal for income-oriented investors, offering a reliable income stream to help achieve financial freedom.
5. National Bank of Canada (NA.TO) — Top Canadian Bank Stock To Buy and Hold For 5 Years
- Rating: ⭐⭐⭐⭐⭐
- 52 Week Range: 82.16 – 104.83
- Avg. Volume: 1,555,365
- Market Cap: 33.719B
- PE Ratio (TTM): 10.72
- EPS (TTM): 9.31
- Earnings Date: Aug 30, 2024
- Forward Dividend & Yield: 4.08 (4.09%)
- Ex-Dividend Date: June 23, 2024
Despite the struggles faced by most Canadian bank stocks, National Bank of Canada has emerged as a standout performer, delivering an impressive 8.69 percent year-to-date return in 2023.
Recognized as one of the top dividend stocks in Canada, National Bank benefits from its diverse business segments and strong presence in Quebec. Providing a comprehensive range of financial services, including personal and commercial banking, wealth management, and investment banking.
Despite its robust year-to-date performance, National Bank is still seen as an undervalued stock within the Canadian banking sector.
Trading merely 5.04 percent below its all-time highs, National Bank stock offers a strong mix of capital and dividend growth.
National Bank stock has demonstrated a remarkable dividends per share growth rate of 8.56 percent over the last five years. During the same period, patient investors have enjoyed significant gains of 58.26 percent.
While the broader banking sector has encountered challenges, National Bank of Canada has displayed relative strength and even outperformed expectations, showcasing its resilience and potential for sustained growth.
Even with its impressive performance, National Bank still offers promising upside and is a great option for Canadians looking for a stock to buy and hold over the next 10 years.
6. Bank of Nova Scotia (BNS.TO) — Great TFSA Stock For Dividend Investors
- Rating: ⭐⭐⭐⭐
- 52 Week Range: 63.05 – 81.98
- Avg. Volume:3,661,371
- Market Cap: 78.264B
- PE Ratio (TTM): 9.66
- EPS (TTM): 6.76
- Earnings Date: Aug 23, 2024
- Forward Dividend & Yield: 4.24 (6.49%)
- Ex-Dividend Date: Jul 04, 2024
Bank of Nova Scotia, commonly known as Scotiabank, stands as one of Canada’s highest dividend stocks, making it a great option for investors who want to benefit from compound interest.
Although experiencing a 1.03 percent year-to-date decline in 2023, the stock recently bounced off of critical support near $63, showing relative strength in a weak banking sector.
As a result, Bank of Nova Scotia stock presents a value proposition for TFSA investors, who can enjoy a generous dividend yield of 6.49 percent.
As a leading financial institution in Canada with a significant global presence, Scotiabank has a wide customer base and a well-established brand reputation, enabling it to capitalize on a diversified array of financial services.
Scotiabank’s enduring track record of dividend payments and commitment to delivering value to shareholders makes it an attractive option for Canadians saving for the future.
7. Bank of Montreal (BMO.TO) — Canadian Bank Stock With History of Dividend Payments
- Rating: ⭐⭐⭐⭐
- 52 Week Range: 111.88 – 137.64
- Avg. Volume: 2,229,574
- Market Cap: 86.54B
- PE Ratio (TTM): 12.09
- EPS (TTM): 10.04
- Earnings Date: Aug 29, 2024
- Forward Dividend & Yield: 5.88 (4.89%)
- Ex-Dividend Date: Jul 27, 2024
Bank of Montreal is another Canadian bank stock to keep an eye on when investing in your TFSA.
TFSA investing is all about watching your savings grow and providing a quicker path to reaching your financial goals, making companies like BMO among the best stocks to buy in Canada.
Despite experiencing a 2.14 percent year-to-date decline in 2023, the stock has flashed relative strength since bouncing off of support around $112.
Thanks to its diverse portfolio of financial services, BMO benefits from a broad customer base and a longstanding history of stability.
This stability is reflected in its consistent dividend payments, having maintained this practice for 29 years, with dividends growing at an average rate of 10.11 percent per share over the last decade.
As the economy recovers from the impacts of inflation, BMO stands to gain from increased economic activity and an overall improvement in market conditions.
8. Canadian Imperial Bank of Commerce (CM.TO) — One of the Highest TFSA Dividend Stocks in Canada
- Rating: ⭐⭐⭐⭐
- 52 Week Range: 53.58 – 68.74
- Avg. Volume: 3,075,355
- Market Cap: 51.017B
- PE Ratio (TTM): 10.92
- EPS (TTM): 5.19
- Earnings Date: Aug 28, 2024
- Forward Dividend & Yield: 3.48 (6.14%)
- Ex-Dividend Date: Jul 27, 2024
CIBC Bank, officially known as the Canadian Imperial Bank of Commerce, ranks among the top Canadian stocks to include in your TFSA investment.
Being one of Canada’s largest banks, CIBC offers a comprehensive range of banking and financial services catering to both individuals and businesses. Its strong reputation, extensive customer base, and expertise across various sectors contribute to its distinguishing features.
Unlike some of its counterparts, CIBC stock has displayed relative strength in 2024.
CIBC not only possesses potential for growth, but it also boasts a history of increasing dividends. The company has consistently paid dividends for over 29 years, making it one of the best Canadian stocks to buy and hold in your TFSA.
Over the past decade, investors in CIBC have seen significant gains of more than 36 percent on their positions. That’s on top of benefiting from a remarkable dividend per share growth rate of 9.4 percent.
CIBC stock has been on an upward trajectory, recently rebounding after touching its 50-day moving average, indicating a possible preparation for another move higher.
9. Canadian Natural Resources (CNQ.TO) — Top Canadian Mining Stock To Buy In 2024
- Rating: ⭐⭐⭐
- 52 Week Range: 61.23 – 84.25
- Avg. Volume: 5,786,434
- Market Cap: 81.724B
- PE Ratio (TTM): 8.80
- EPS (TTM): 8.51
- Earnings Date: Aug 03, 2024
- Forward Dividend & Yield: 3.60 (4.73%)
- Ex-Dividend Date: June 15, 2024
Canadian Natural Resources is a prominent player in Canada’s energy sector, specializing in oil and natural gas exploration, production, and development.
Over the last five years, investors in Canadian Natural Resources have witnessed substantial gains of 65.21 percent, accompanied by an impressive dividend per share growth rate of 18.44 percent within that period.
Although the stock has only experienced a modest 0.36 percent increase year-to-date in 2023, it has managed to sustain its gains since early 2022, demonstrating stability amidst a challenging market.
Ranked among the leading energy stocks in Canada, Canadian Natural Resources is poised to capitalize on the potential recovery in oil and natural gas prices, driven by increased demand for energy resources.
As the global economy rebounds and energy consumption surges, the company’s robust asset portfolio and operational efficiency position it favorably for further growth.
10. TD Bank (TD.TO) — Well-Known Canadian Bank Stock Poised For A Rebound
- Rating: ⭐⭐⭐
- 52 Week Range: 76.32 – 94.05
- Avg. Volume: 6,382,769
- Market Cap: 154.307B
- PE Ratio (TTM): 10.59
- EPS (TTM): 7.92
- Earnings Date: Aug 24, 2024
- Forward Dividend & Yield: 3.84 (4.71%)
- Ex-Dividend Date: Jul 07, 2024
Rounding out the list of the top 10 best stocks to buy in your TFSA in 2024, TD Bank might be among the most undervalued companies on the list.
Despite experiencing a notable year-to-date decline of 5.41 percent in 2023, TD Bank stock is currently finding crucial support around $82, indicating a potential bottom and creating an appealing entry point for value-seeking investors.
As the economy progresses and market conditions stabilize, TD Bank’s solid fundamentals and market position present a compelling investment option for Canadians that want to save for the future.
Comparing The Top-10 Canadian TFSA Stocks
| Rank | Stock (Ticker) | Rating | 52 Week Range | Avg. Volume | Market Cap | Forward Dividend & Yield |
|---|---|---|---|---|---|---|
| 1 | Shopify (SHOP.TO) | ⭐⭐⭐⭐⭐ | 33.00 – 93.83 | 3,611,785 | 116.487B | N/A |
| 2 | Barrick Gold (ABX.TO) | ⭐⭐⭐⭐⭐ | 22.94 – 23.28 | 3,252,534 | 40.287B | 0.53 (2.21%) |
| 3 | Royal Bank of Canada (RY.TO) | ⭐⭐⭐⭐⭐ | 116.75 – 140.18 | 4,038,696 | 178.052B | 5.40 (4.21%) |
| 4 | Fortis (FTS.TO) | ⭐⭐⭐⭐⭐ | 48.45 – 62.00 | 1,617,273 | 27.781B | 2.26 (3.98%) |
| 5 | National Bank of Canada (NA.TO) | ⭐⭐⭐⭐⭐ | 82.16 – 104.83 | 1,555,365 | 33.719B | 4.08 (4.09%) |
| 6 | Bank of Nova Scotia (BNS.TO) | ⭐⭐⭐⭐ | 63.05 – 81.98 | 3,661,371 | 78.264B | 4.24 (6.49%) |
| 7 | Bank of Montreal (BMO.TO) | ⭐⭐⭐⭐ | 111.88 – 137.64 | 2,229,574 | 86.54B | 5.88 (4.89%) |
| 8 | Canadian Imperial Bank of Commerce (CM.TO) | ⭐⭐⭐⭐ | 53.58 – 68.74 | 3,075,355 | 51.017B | 3.48 (6.14%) |
| 9 | Canadian Natural Resources (CNQ.TO) | ⭐⭐⭐ | 61.23 – 84.25 | 5,786,434 | 81.724B | 3.60 (4.73%) |
| 10 | TD Bank (TD.TO) | ⭐⭐⭐ | 76.32 – 94.05 | 6,382,769 | 154.307B | 3.84 (4.71%) |
What Is A Tax-Free Savings Account?
Introduced by the Canadian government in 2009, a Tax-Free Savings Account (TFSA) is a registered savings account available to Canadian residents.
It is designed to encourage adults to save and invest by providing tax benefits for contributing to the account.
Tax-free savings accounts offer a few key advantages, including tax-free growth and withdrawals.
How Does A TFSA Work in Canada
In order to make the most of the tax-free benefits, you’ll have to contribute to your account.
Once money enters a TFSA, the money cannot be taxed by the Canada Revenue Agency.
You can put money into the TFSA each year, up to a certain limit each year. However, TFSAs aren’t just for holding cash. You can buy a wide range of investments, including the best Canadian stocks and ETFs.
The best part is that when you take money out of the TFSA, you won’t owe any taxes on your earnings.
This makes it a great way to save for short-term goals, like buying a car or going on a trip, or for long-term goals, like a major purchase or wedding.
How Much Can I Contribute To My TFSA?
The annual contribution limit for a Tax-Free Savings Account in Canada is determined by the Canadian government based on your age and earnings. In 2023, the annual contribution limit was raised to $6,500.
Since the program was introduced in 2009,
Since unused TFSA contributions roll over, they can add up over time, allowing some Canadians to carry over thousands of extra dollars in contribution room to use when they need it the most.
Who Can Open A TFSA in Canada?
In Canada, any individual who is a Canadian resident and has reached the age of majority in their province or territory (typically 18 or 19 years old) can open a Tax-Free Savings Account.
Below, we’ll go over the rules and restrictions on who can open a TFSA in Canada.
- Must be a Canadian resident
- Must own a valid Social Insurance Number (SIN) issued by the Canadian government
- Must be at least 18 years old to open a TFSA and start making contributions
- TFSA contribution room accumulates from the year you turn 18, even if you don’t open an account right away
Note: Any individual that is a non-resident of Canada who has a valid SIN and who is 18 years of age or older is also eligible to open a TFSA
TFSA Contribution Limits
TFSA contribution limits are cumulative.
This means that if you do not deposit the maximum amount in a particular year, the remainder will carried over, increasing your contribution limit in the following years.
Since TFSA accounts were introduced in 2009 and are only available to people age 18 or older, Canadians born in 1991 or earlier are allowed the maximum contribution limit.
If you were born before 1991, you can deposit a total of $88,00.
Annual TFSA Contribution Limit & Maximum Contribution by Year
| Year That You Turned 18 | Annual TFSA Contribution Limit | Maximum Cumulative Contribution Limit |
| 2023 | $6,500 | $6,500 |
| 2022 | $6,000 | $12,500 |
| 2021 | $6,000 | $18,500 |
| 2020 | $6,000 | $24,500 |
| 2019 | $6,000 | $30,500 |
| 2018 | $5,500 | $36,000 |
| 2017 | $5,500 | $41,500 |
| 2016 | $5,500 | $47,000 |
| 2015 | $10,000 | $57,000 |
| 2014 | $5,500 | $62,500 |
| 2013 | $5,500 | $68,000 |
| 2012 | $5,000 | $73,000 |
| 2011 | $5,000 | $78,000 |
| 2010 | $5,000 | $83,000 |
| 2009 or Earlier | $5,000 | $88,000 |
Can You Invest In A TFSA Account in Canada?
Yes, you can invest in your TFSA account.
In fact, the TFSA account is arguably one of the best accounts to open in Canada for investing.
Tax-Free Savings Accounts were designed for Canadians to save more money, invest, and build their wealth faster.
The key to the TFSA is that Canadians can grow their savings tax-free by buying and selling a wide range of investments, including stocks, ETFs, bonds, GICs, and more. When the value of these investments appreciates over time, Canadians won’t have to pay any tax on their capital gains.
Canadians over the age of 18 can open a TFSA at a bank, financial institution, or an online broker, like Wealthsimple or Questrade.
What Kinds of Investments Can a TFSA Hold?
Canadians can buy and sell a number of different types of investments in their TFSA account.
Tax-free savings accounts can hold anything from blue-chip stocks, to Canadian bank stocks, dividend stocks, penny stocks, and more. Canadians can buy stocks, ETFs, mutual funds, bonds, Government Investment Certificates (GICs), and more.
Let’s go over the different types of investments that you can hold in your TFSA.
- Cash: You can keep money in the TFSA as cash, similar to a regular savings account.
- High-Interest Savings Accounts: Many financial institutions offer TFSA savings accounts, which provide higher interest rates than regular savings accounts, and the interest earned is tax-free.
- Guaranteed Investment Certificates (GICs): TFSA GICs offer a fixed interest rate over a specified period, providing a secure investment option.
- Stocks: You can buy individual stocks of companies listed on stock exchanges.
- Bonds: Government and corporate bonds can be purchased within a TFSA.
- Mutual Funds: TFSA allows you to invest in mutual funds, which offer diversification across various assets.
- Exchange-Traded Funds (ETFs): ETFs are similar to mutual funds but trade like individual stocks on stock exchanges.
- Real Estate Investment Trusts (REITs): Some REITs can be held in a TFSA, providing exposure to the real estate market.
- Dividend-Paying Stocks: Dividends earned from stocks held within a TFSA are tax-free.
The Best Investing Apps To Open A TFSA in Canada
The best stock trading apps offer several different account types, including TFSA, RRSP, and FHSA accounts for Canadians.
Canadians can open an account, deposit funds, and buy stocks in their TFSA account with the click of a button.
Below, we’ll break down the best investing apps in Canada and what they have to offer new customers.
- Questrade — $50 in free trades, plus buy ETFs in Canada for free
- Wealthsimple — $10 cash and commission-free trades on all Canadian stocks
- Interactive Brokers — Earn up to 1.83% USD on idle cash balances
How To Open A TFSA Online At Questrade
- Click here to visit Questrade
- Click “Open an Account” in the top-right corner of your screen.
- Select “Tax-Free Savings Account (TFSA)”
- Fill out the application form, provide your personal information, and verify your identity.
- Fund your account and start investing
TFSA vs RRSP vs FHSA
| TFSA | RRSP | FHSA | |
|---|---|---|---|
| Purpose | Flexible savings for various goals | Save for retirement | Save for first home purchase |
| Tax Deductibility | Contributions are not tax-deductible | Contributions are often tax-deductible | Contributions are often tax-deductible |
| Tax-Free Growth | Yes, tax-free growth | Yes, tax-deferred growth | Yes, tax-free growth |
| Tax-Free Withdrawals | Yes, tax-free withdrawals | No, taxes upon withdrawal | No, specific withdrawals for home purchase |
| Withdrawal Restrictions | No restrictions, flexible withdrawals | Taxes and potential penalties before retirement | Qualifying home purchase |
| Contribution Limits | Annual limits set by the government | Income-based and annual limits | Specific limits based on regional regulations |
| Investment Options | Wide range of investment options | Wide range of investment options | Wide range of investment options |
TFSA Withdrawals
TFSA withdrawals refer to the process of taking money out of a Tax-Free Savings Account.
One of the significant advantages of a TFSA is that any withdrawals made from the account are entirely tax-free. When you take money out of your account, you won’t owe any taxes on the amount you withdraw, regardless of whether it’s the original contributions or the investment earnings.
That means you can buy the best Canadian stocks in your TFSA account and earn investment income without paying any capital gains tax.
The tax-free withdrawals make TFSAs a flexible savings tool that can be used for various financial needs, such as funding a vacation, covering unexpected expenses, or even as a source of retirement income.
There are no restrictions on when you can make withdrawals, and you can access your funds without penalties or tax consequences, making TFSAs an excellent option for both short-term and long-term financial goals.
Are TFSAs Tax-Deductible?
No, Tax-Free Savings Accounts (TFSAs) are not tax-deductible.
When you contribute money to a TFSA, you do so with after-tax income. This means you’ve already paid taxes on the money before contributing it to the TFSA. The advantage of a TFSA is that any investment growth within the account, such as interest, dividends, and capital gains, is tax-free.
Additionally, when you make withdrawals from the TFSA, you won’t owe any taxes on the amount withdrawn, making it an attractive and flexible savings and investment option for various financial goals.
Comparing The Pros and Cons of TFSA Investing
| TFSA Advantages | TFSA Disadvantages |
|---|---|
| ✅ Tax-Free Growth | ❌ Contribution Limits |
| ✅ Tax-Free Withdrawals | ❌ No Tax Deductions |
| ✅ Contribution Flexibility | ❌ No Tax Deferral |
| ✅ Carry Forward Unused Contribution Room | ❌ Limited Foreign Withholding Tax Benefits |
| ✅ No Impact on Government Benefits | ❌ Not Ideal for Active Traders |
| ✅ Wide Range of Investment Options | ❌ Unused Contribution Room Doesn’t Earn Interest |
| ✅ No Contribution Deadline | ❌ Estate Taxation |
| ✅ Spousal TFSA Contributions | |
| ✅ Great for Emergency Savings | |
| ✅ Estate Planning Benefits |
TFSA Investment Strategies
- Compound Interest: Take advantage of the power of compound interest by reinvesting dividends, interest, and capital gains within your TFSA. This reinvestment can lead to exponential growth over time.
- Low-Cost Index Funds or ETFs: These funds track the performance of an entire market or sector and generally have lower fees compared to actively managed funds. They offer broad exposure to the market and can be a good choice for investors seeking a passive investment approach.
- Dividend Stocks: Dividend-paying stocks can provide a regular income stream that can be reinvested or used as additional income. Since the income earned in a TFSA is tax-free, it can be an attractive option for dividend investors.
- Buy and Hold Strategy: Avoid frequent trading and market timing, as this can lead to higher transaction costs and potentially lower returns. Instead, adopt a buy-and-hold strategy that focuses on holding investments for the long term.
- Diversification: Diversify your TFSA investments across various asset classes, such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), and other investment vehicles. Diversification helps spread risk and can lead to more stable long-term growth.
What Are The Best TFSA Stocks To Buy In Your TFSA Account?
The best TFSA stocks for Canadians to buy in their Tax-Free Savings Accounts will ultimately depend on their financial goals and risk tolerance.
For Canadians that are looking for a growth stock to buy in their TFSA account, Shopify is worth a second look. The tech stock has more than doubled over the past year and is up more than 41 percent since May 3. After a long decline, the stock finally appears to be moving into stage 2 of its breakout. Despite its recent climb, Shopify still has plenty of room to grow, as it is still trading 136 percent off of its all-time highs.
For Canadians looking to add one of the best Canadian banks and dividend stocks to their portfolio, National Bank of Canada is worth some consideration. The stock has proved to be resilient during a downturn in the Canadian banking industry, showing relative strength in a sector that has been outpaced by the market. Once the outlook starts to improve for the sector as a whole, National Bank of Canada could find itself ahead of the pack as a clear leader moving forward.
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