Turn a $75K TFSA Into $1 Million with This Top TSX Stock

How to turn a $75K TFSA into $1 million? Simple: buy this Top TSX tech stock!

| More on:

Looking for a single stock that could take a $75,000 Tax-Free Savings Account (TFSA) to the seven- digit realm? How about a stock that can do this in less than 10 years?

In this article, I’m going to discuss why Constellation Software (TSX:CSU) is the perfect stock.

Constellation’s track record impressive

Over the past decade, an investor with a $75,000 investment in Constellation would now have well over $2 million. Of course, the TFSA was in its infancy at that time, just a few years old. Investors would not have been able to plug $75K into this stock at that time, but could have over the past 12 years.

If investors believe Constellation will provide even half its long-term historical growth rate over the coming decade, a $1 million TFSA is not out of the question.

The kicker? That’s a million dollars the tax man can’t touch. The TFSA is the perfect place to buy and hold long-term growth stocks like Constellation. Thus, I recommend investors allocate a heavier weighting to such stocks in their TFSA. Over the long run, the tax benefits could be enormous.

Barbell strategy makes sense for most investors

Thus, a barbell strategy might make sense for the average investor’s TFSA and RRSP accounts. On one end of the barbell, the higher risk, higher growth stocks would go in the TFSA. On the other end, the lower risk, defensive income stocks would go in the RRSP. Such a strategy is often employed by long-term investors looking for the best of both worlds. Total return comes from both capital appreciation and dividend income. Having capital appreciation in the most tax-efficient place just makes dollar and cents.

Constellation’s status as a TFSA core holding is cemented by its growth profile. The company is one of the best acquirers on the TSX historically. Accordingly, investors can expect more growth on the horizon as Constellation pursues bigger deals. The company recently announced it’s considering cutting or eliminating its dividend to pursue such deals.

This should be viewed as a positive by long-term growth investors. Indeed, there’s no better company to leave one’s money with than a proven compounder like Constellation.

Bottom line

As far as top picks I’d recommend investors consider putting into their TFSAs, Constellation is about as good as it gets. This company has the historical track record and amazingly long runway to achieve similar growth in the future.

Finding a company that not only has the potential for the level of capital appreciation needed to turn $75K into $1 million, but has done this historically is difficult to do. Indeed, Constellation is one of a select few companies that investors would be remiss to ignore.

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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Software.

More on Tech Stocks

Man data analyze
Tech Stocks

3 Reasons Celestica Stock Is a Screaming Buy Now

These three reasons make Celestica stock a screaming buy for long-term investors.

Read more »

profit rises over time
Dividend Stocks

These 2 Dow Stocks Are Set to Soar in 2025 and Beyond

Two Dow Jones stocks are screaming buys but Canadians must hold them in an RRSP or RRIF to avoid paying…

Read more »

telehealth stocks
Tech Stocks

Well Health Stock: Buy, Sell, or Hold?

Another record-breaking quarter and strong demand sets the stage for continued momentum for Well Health stock.

Read more »

3 colorful arrows racing straight up on a black background.
Dividend Stocks

TSX Stocks Soaring Higher With No Signs of Slowing

Three TSX stocks continue to beat the market and could soar higher in an improving investment landscape.

Read more »

profit rises over time
Tech Stocks

2 Non-AI Tech Stocks to Buy in November for Better Returns

Not all AI stocks are riding the hype train, and for many investors, well-understood and predictable growth stocks might be…

Read more »

worry concern
Tech Stocks

In a Few Years, You’ll Probably Regret Not Owning BlackBerry Stock

Here’s why I believe BlackBerry could be one of the most overlooked Canadian tech stocks right now.

Read more »

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

Is Constellation Software Stock a Buy for its 0.25% Dividend Yield?

Here's what investors may want to consider when it comes to Dollarama (TSX:DOL) and its relatively low dividend yield.

Read more »

Nurse talks with a teenager about medication
Tech Stocks

Shares of WELL Health Just Zoomed. Is It a Buy?

Given its improving financials and healthy growth prospects, WELL Health could deliver superior returns over the next three years.

Read more »