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TFSA Investors: 2 Top Bull Market Buys to Build Wealth Tax-Free

A bull outlined against a field
Image source: Getty Images.

Written by Adam Othman at The Motley Fool Canada

The amount of capital you have access to is one of the core variables determining the size of the nest egg you can build, and it’s more than just about how much you can save. Take the Tax-Free Savings Account (TFSA) as an example.

If your goal is to build a nest egg in the TFSA, your capital would be limited by the contribution room available in the TFSA every year. However, you can circumvent this problem by focusing on another variable — i.e., the stock.

If you choose powerful and consistent growth stocks and hold them in your TFSA for long enough, you may be able to grow a sizable nest egg in this tax-free account.

A logistics company

TFI International (TSX:TFII) has grown from a relatively modest trucking company to one of the logistics giants in Canada. Strategic acquisitions have augmented its organic growth, and it now owns and operates a sizable network of over 90 operating companies and has over 620 facilities in North America. The company is now expanding its reach to Mexico.

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As a stock, TFI International was already an impressive pick, but the pandemic and the boost it gave to the e-commerce industry became a major growth trigger for the company. The stock grew by about 370% in the last five years, and most of this growth came from the post-pandemic boost it experienced.

Thanks to its fundamental strengths, the company still rides this growth momentum, though the steam is running out. However, its market value seems reasonably fair, and its business expansion may allow the stock to maintain a decent growth pace going forward. This will make it ideal for growing a TFSA nest egg.

A tech company

Even though tech stocks in Canada have a reputation for volatility, even the relatively consistent growers run out of steam in a few years and often experience a brutal correction phase before normalizing. But that doesn’t seem to be the case with Constellation Software (TSX:CSU).

This tech stock has been going up almost consistently for close to two decades, and between 2006 and 2024, the stock has grown by about 20,000%.

This is phenomenal growth and not something you can expect from the stock going forward. However, even though its current growth pace is a far cry from its historical growth, it’s still enough to make Constellation one of the most impressive growth stocks in Canada.

It rose by over 220% in the last five years alone, and if it manages to keep this pace, the stock can seriously expedite your TFSA wealth-building.

Foolish takeaway

The two stocks can help you build a sizable nest egg in your TFSA. They have a consistent growth history and are currently offering a compelling growth pace. Unless there is a significant reduction in their growth momentum or the trajectory reverses, the stocks can be wealth-building allies in a TFSA.

The post TFSA Investors: 2 Top Bull Market Buys to Build Wealth Tax-Free appeared first on The Motley Fool Canada.

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Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy.

2024