How to Grow Your TFSA to $500,000 in 15 Years

Shopify Inc. (TSX:SHOP)(NYSE:SHOP) can help turn the goal of a $500,000 TFSA from a pipe dream to a reality.

| More on:

If you’re a young investor like a millennial, you can and should take on more risks to grow your TFSA at an optimal rate. So, go for growth and stop investing like you’re twice your age! Otherwise, a $500,000 TFSA, which is an inevitability for many of today’s young Canadian investors, will forever be a pipe dream.

Young investors should aim for half a million!

Although it may seem “safer” to be overweight bonds and cash, you’ll be taking on a considerable amount of upside risk, which is arguably worse than downside risk for a young person who has all the time in the world to make back potential losses and wait for stocks to recover ground in the event of a crash.

Many young investors I’ve talked with are saving, but they’re reluctant to start investing and plan to “wait until after a market crash” before getting in.

Although such a strategy of buying after a crash sounds fool-proof (that’s a lower-case f) and easy to do on paper, it’s almost impossible to put into practice in real time, especially as a beginner with limited knowledge about how the markets work.

While the bull market may be getting older, I still believe that investors ought to begin their journey to a $500,000 TFSA as soon as they’re able, rather than waiting around for a black swan event, which may never happen for five, 10, or even 20 years!

The opportunity cost of sitting on the sidelines are unfathomably high, so do aim high when it comes to your TFSA and have a realistic timeframe, such as 15 or 20 years, so you’re not tempted to speculate on Bitcoin, Tulips, or whatever the next mania of the 2020s will be.

Take leaps of faith on “sexy” businesses

Consider stocks that defy the laws of gravity like Shopify (TSX:SHOP)(NYSE:SHOP), which, while frothy, will likely do far better over the course of many years. The stock is absurdly overvalued at the time of writing at 30.2 times sales, and although one risks paying up for three or more years’ worth of growth upfront, the risk/reward trade-off is still quite favourable for those willing to hold the name for the next 15 years, recessions included.

After an unbelievable 2019, the bar set before the name has been raised to the sky for 2020. Given Tobias Lütke and company have a product that’s destined for sustained profitability (with margin-expanding catalysts such as add-on services), I think it’ll be hard to keep Shopify down, and the stock will probably remain jaw-droppingly pricy until a recession actually hits.

For now, Shopify remains one of Canada’s sexiest growth stocks. And given the long-term multi-bagger potential, I think investors who desire to bring their TFSAs to half a million ought to consider getting skin in the game today, while the stock looks to break out, and on any potential dips moving forward to lower one’s basis.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify.

More on Tech Stocks

A data center engineer works on a laptop at a server farm.
Tech Stocks

3 No-Brainer Data Centre Stocks to Buy With $500 Right Now

Data centres are going to be a huge growth opportunity in the next decade. And these are the top buys.

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Is OpenText Stock a Buy, Sell, or Hold for 2025?

OpenText stock has fallen in the last few years, but that could mean this top tech stock remains an undervalued…

Read more »

AI microchip
Tech Stocks

Celestica Stock: Buy, Sell, or Hold?

Celestica's stock price has rallied 950% in the last five years. Will the AI boom send it even higher in…

Read more »

data analyze research
Tech Stocks

2 Ridiculously Cheap Growth Stocks to Buy Hand Over Fist in 2024

Well Health Technologies is a cheap growth stock to buy for its record-breaking results, massive revenue growth, and profitability.

Read more »

A worker uses a double monitor computer screen in an office.
Tech Stocks

4 Reasons to Buy Kinaxis Stock Like There’s No Tomorrow

Kinaxis stock has a strong past. But there is even more to look forward to from this top tech stock.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

The Future of AI: Best Canadian Stocks to Buy Now

Here are two of the best AI-focused stocks in Canada that you can consider adding to your portfolio before it’s…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Tech Stocks

2 TFSA Stocks to Buy Right Now With $7,000

Are you looking for growth stocks that can help you maximize the tax-free withdrawals of the TFSA? This article is…

Read more »

cloud computing
Tech Stocks

3 No-Brainer Tech Stocks to Buy Right Now for Less Than $1,000

Not all tech stocks are the risky investments that many think they are. Which is why we're focusing on the…

Read more »