Why You Should Start Investing in a TFSA As Soon As You Start Earning
If you’re one of those who wants to build wealth through investing, then you should know that there are two key elements: time and rate of return. In Canada, one of the best tools to help you make the most of these two factors is the Tax-Free Savings Account (TFSA). Not only does it offer you a simple and flexible investment account, but it also allows you to grow your wealth tax-free, making it a no-brainer for anyone looking to build long-term wealth.
Let’s say you start working at 25 and begin contributing to your TFSA regularly. In 2025, the TFSA annual limit is $7,000, which means you’d contribute around $583/month. If you keep that up until you’re 60, here’s what your investment could look like under different return scenarios:
Three Investment Scenarios — All Tax-Free
1. High Growth, Higher Risk (12% return)
If you’re young and can handle more risk, you might invest in growth stocks or aggressive ETFs. Assuming a 12% average annual return:
👉 You’ll have around $3.75 million by age 60.
💰 And it’s all tax-free.
2. Balanced Approach (10% return)
Let’s say you prefer a balanced portfolio — some stocks, some bonds, less volatility. With a 10% return:
👉 Your TFSA would grow to approximately $2.2 million by 60.
Still totally tax-free.
3. Conservative & Safe (8% return)
If you’re ultra-cautious and stick to lower-risk investments like index funds or blue-chip dividend stocks, with an 8% return:
👉 You’d still end up with about $1.3 million at retirement.
Again, that’s tax-free income.
The Cost of Waiting 10 Years
Now here’s the part that really matters: what if you delay investing until age 35 instead of 25?
With the same monthly contribution of $583 and the same rate of return, here’s what your TFSA would look like:
| Scenario | TFSA at 60 (Start at 25) | TFSA at 60 (Start at 35) | Difference |
|---|---|---|---|
| 12% return | $3.75 million | $1.1 million | -$2.65 million |
| 10% return | $2.2 million | $750,000 | -$1.45 million |
| 8% return | $1.3 million | $500,000 | -$800,000 |
That’s the power of 10 years.
Even if you invest the exact same amount every month, delaying by a decade can cost you hundreds of thousands — or even millions — in lost gains.
Why TFSA Is a No-Brainer
- No taxes on growth or withdrawals
- Flexible — you can invest in stocks, ETFs, GICs, bonds, and more
- Withdraw anytime without penalty (and get the room back the next year)
- No impact on government benefits like OAS or GIS
The Bottom Line
Whether you’re aiming for $1.3 million or $3.75 million, the real lesson here is:
Start early. Stay consistent. Let time and compound growth do the work — tax-free.
The TFSA isn’t just a savings account. It’s a long-term wealth builder. And the earlier you get started, the bigger your reward. Have you started your TFSA journey?