A Smart Strategy to Use Your TFSA to Effectively Double Your $7,000 Contribution

If you invest the full $7,000 TFSA (Tax-Free Savings Account) contribution into a savings account earning 4% annually, you will wait 18 years to see it double. But there is a better way to invest in the TFSA.

My pick for Canadians looking to compound their TFSA balance is EQB (TSX:EQB), Canada’s challenger bank. The combination of its track record, its pending transformative acquisition, and the tax-free nature of TFSA gains creates one of the most compelling setups available to Canadian investors right now.

The Tax-Free Savings Account is a tax shelter that the Canada Revenue Agency lets you use to invest in stocks, exchange-traded funds, and other securities. This tax-sheltered status matters enormously when you own shares of a fast-growing company. Owning the right stock inside your TFSA is therefore one of the highest-leverage financial decisions you can make.

Is this TSX bank stock a good buy?

EQB delivered a 10-year total shareholder return of nearly 400% as of the end of fiscal Q1 2026, placing it second among all Canadian banks. For perspective, a $7,000 investment compounding at that 10-year pace would have grown to well over $30,000.

EQB is a company in the early stages of a step-change transformation. It recently reached an agreement to acquire PC Financial and partner with Loblaw, a deal that, upon closing, will instantly quadruple its customer base to roughly 3.3 million.

EQB will also become the exclusive financial partner for the 17-million-member PC Optimum loyalty program, one of the most recognized consumer programs in the country.

Loblaw and its parent company, George Weston, are set to take a 17% ownership stake in EQB at closing, with the right to purchase up to 25% within four years.

EQB also launched its first-ever restructuring program, cutting costs and refocusing on core priorities. In Q1 2026, adjusted earnings per share improved, the efficiency ratio came down meaningfully, and return on equity climbed 360 basis points, moving EQB closer to its medium-term target range of 15% to 17%. Loans under management grew, and new customers continued to arrive daily.

The EQ Bank digital platform now serves more than 633,000 customers. It recently ranked as the top bank in Canada and North America by The Banker magazine.

The TFSA math makes EQB stock a top buy

A Canadian investor who put $7,000 into EQB today inside their TFSA and held for a decade, assuming a return profile similar to the last 10 years, would not pay a single dollar in tax on that growth.

No capital gains tax when the stock appreciates, and no withholding on dividends if reinvested. Every dollar of that compounding stays in your pocket.

That is the power of pairing the right growth stock with the right account. EQB is a Canadian bank in the midst of a major scale-up, with a proven management team, a transformative acquisition in progress, and a decade-long track record of outperforming peers.

Your TFSA gives you the tax-free wrapper to let all of that compound without friction.

The post A Smart Strategy to Use Your TFSA to Effectively Double Your $7,000 Contribution appeared first on The Motley Fool Canada.

Should you invest $1,000 in EQB right now?

Before you buy stock in EQB, consider this:

The Motley Fool Canada team has identified what they believe are the top 10 TSX stocks for 2026… and EQB wasn’t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 … if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have over $18,000!*

Now, it’s worth noting Stock Advisor Canada’s total average return is 94%* – a market-crushing outperformance compared to 85%* for the S&P/TSX Composite Index. Don’t miss out on our top 10 stocks, available when you join our mailing list!

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* Returns as of April 20th, 2026

More reading

• 2 Canadian Stocks to Buy if Mortgage Rates Stay High
• TFSA vs. RRSP: The Simple Rule Canadians Forget
• Canadians: How Much Should Be in a 20-Year-Old’s TFSA to Retire?
• 2 Canadian Stocks That Get Better Every Time the Bank of Canada Cuts Rates

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends EQB. The Motley Fool has a disclosure policy.