Canadian TFSA (Tax-Free Savings Account) investors are in for great news! The government has announced an increase in the annual contribution limit for 2025, rising by $7,000. This boost brings the total cumulative contribution room for Canadians born before 1991 to a staggering $102,000.
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Maximize Tax-Free Investment Growth in a TFSA
While $7,000 may not seem like a huge amount initially, the tax-free compounding potential in a TFSA can transform it into a significant sum over time. For instance, let’s say you invest the $7,000 contribution in a stock that delivers a 15% annual compounded rate of return:
- After five years, your $7,000 could grow to $14,000.
- Over 10 years, it could expand to more than $28,000!
The power of a TFSA lies in its tax-free status. You keep all your investment gains, which allows your wealth to grow more efficiently compared to a taxable account. Even small contributions can lead to substantial wealth over time if invested wisely.
TFSA Contribution Limit Rises for 2025: What You Need to Know
TFSA vs. RRSP: Which is the Better Investment for Your Money?
Canadian Tax Season 2025: Key Deadlines, Updates
Top Stocks to Consider for Your TFSA
If you are searching for stocks with the potential to deliver average annual returns of 10-15% or more, here are two excellent options to consider for your TFSA:
1. goeasy Ltd. (TSX:GSY): A Specialized Lender with Consistent Returns
goeasy has proven itself as one of Canada’s top non-prime lenders. Over the past five years, its stock has climbed 140%, representing a 19% compounded annual growth rate (CAGR). Additionally, goeasy has increased its dividend per share by 148% (a 27% CAGR) during the same period.
This company offers a wide range of financial products, including point-of-sale loans, home equity lines of credit, and vehicle loans. It is also planning to launch a credit card designed for individuals with poor or no credit.
While goeasy stock can be volatile, it has consistently delivered high teens earnings-per-share growth. The company’s expansive retail network, robust online platform, and growing suite of financial products provide significant opportunities for market share expansion.
At just nine times earnings, goeasy’s stock is attractively valued. Investors also benefit from a 2.89% dividend yield, making it a solid choice for a TFSA.
2. Trisura Group Ltd. (TSX:TSU): A Specialized Insurer with High Growth Potential
Trisura Group is a lesser-known but high-performing stock. Over the past five years, it has delivered a remarkable 318% return, equating to a 33% CAGR.
Trisura specializes in bespoke commercial insurance and insurance fronting solutions in Canada and the United States. Thanks to its niche focus, the company earns above-average margins and strong returns on equity. Its growth prospects remain robust, particularly in the expansive U.S. market.
Despite its impressive mid-teens earnings growth potential, Trisura trades at a modest price-to-earnings (P/E) ratio of just 14. This is a bargain compared to peers in the specialty insurance sector, which often command significantly higher valuations.
As Trisura continues to execute its growth strategy, the stock could see considerable upside. With recent consolidation in its share price, this could be an opportune time for TFSA investors to consider adding it to their portfolios.
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How to Earn a Tax-Free Paycheque Every Month with Your TFSA
TFSA vs. RRSP: Which is the Better Investment for Your Money?
Why TFSAs Are Ideal for Long-Term Wealth Building
The TFSA remains one of the best investment vehicles for Canadians looking to grow their wealth tax-free. By selecting high-quality, growth-oriented stocks like goeasy and Trisura, you can maximize the benefits of your annual contribution room. Even small contributions, when compounded over time, can lead to significant financial gains—all without the burden of taxes.
With the increased contribution room in 2025, now is the perfect time to review your investment strategy and make the most of your TFSA. Whether you’re new to investing or a seasoned pro, the TFSA provides unparalleled opportunities for long-term financial growth.
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