What NOT to do with your TFSA
The TFSA is a Canadian investor’s dream: tax-free growth, tax-free withdrawals, and flexibility to invest in everything from ETFs to individual stocks. It’s basically a cheat code for building long-term wealth.
But just because you can buy a stock in your TFSA doesn’t mean you should — especially when it comes to chasing “hot” stocks.
At Curious Clan, we believe curiosity is the key to smart investing. So let’s take a closer look at one of the most tempting — and dangerous — TFSA habits: chasing hype.
The Lure of the Hot Stock
Picture this: your coworker tells you how they made a 300% return in their TFSA thanks to a “next big thing” stock. You look it up — and sure enough, it’s been skyrocketing. Your brain starts buzzing. “If I just throw in $5,000 now, maybe I can double it too.”
This is how many people get sucked in.
And hey, it’s true — if you had invested $5,000 in Tesla at the beginning of 2015, it would’ve grown to over $1.5 million by 2025.
Incredible, right?
But here’s the thing: that’s hindsight. It’s easy to spot winners in retrospect. What no one talks about are the dozens of other “next Teslas” from 2015 that completely flopped.
Hindsight is Not a Strategy
Let’s break it down:
- In 2015, Tesla was still considered a risky, unprofitable car company.
- It had strong critics and uncertain future prospects.
- No one — not even Elon Musk — could’ve predicted a 1,500x return.
Meanwhile, what about:
- GoPro?
- Tilray?
- WeWork?
All were hyped. All were “hot.” All burned TFSA investors who jumped in without research.
Why Research Matters (Especially in a TFSA)
Here’s the real issue: your TFSA is a tax-free account, but it’s not a risk-free account. Money lost inside your TFSA doesn’t give you any tax benefit — it’s just… gone.
When you chase a hot stock:
- You’re often buying at inflated prices.
- You’re reacting emotionally, not rationally.
- You’re assuming the momentum will continue (spoiler: it often doesn’t).
Doing your homework means:
- Looking into the company’s business model, revenue, and debt.
- Understanding their market, competition, and risks.
- Reading annual reports and analyst opinions — not just Twitter hype.
If all of that sounds boring, that’s okay. It’s supposed to be boring. Boring investing is usually what builds real wealth.
Real Examples of TFSA Wipeouts
Let’s look at a few real cases where hype lured people into poor TFSA decisions:
- Aurora Cannabis (ACB): Once a favourite among retail investors. Its stock surged in 2018… then crashed over 90%.
- Blackberry (BB): Had a meme-stock moment in 2021. Great nostalgia, terrible investment returns.
- Wealthsimple Crypto Picks: Promoted as “the future.” Many dropped 60%+ in months.
If you put these into your TFSA based on buzz, those losses were locked in. And since TFSA losses aren’t tax-deductible like they are in other accounts — you couldn’t even claim the pain.
So What Should You Do Instead?
A few curious-minded principles to follow:
✅ Be curious before you commit. Look at earnings reports, trends, and actual performance.
✅ Don’t invest in what you don’t understand. Even if it’s going viral.
✅ Build a core TFSA portfolio with index funds or blue-chip stocks. Then use a small portion — say 10–15% — for riskier bets only if you’ve researched them.
✅ Ignore the noise. If everyone’s suddenly talking about a stock, you’re probably late.
Final Thoughts: Smart Curiosity Beats FOMO
It’s easy to get caught up in someone else’s success story. But in investing — especially inside your TFSA — you don’t get extra credit for being trendy. You only win by being thoughtful, consistent, and curious.
Chasing hot stocks without doing your homework is like betting your life savings on a lottery ticket because someone on Reddit said it’s “guaranteed.”
Don’t do it.
Let your curiosity and wisdom guide you to understanding — not just excitement.
Have you ever chased a stock and regretted it? Or maybe you caught a good one? Share your story in the comments — the Curious Clan is all about learning together.