When Does a Taxable Account Actually Beat a TFSA? Here’s the Answer

Investing is all about making smart choices that align with your financial goals. One of the most common dilemmas Foolish Investors face is whether to invest in a Tax-Free Savings Account (TFSA) or a taxable account. While TFSAs offer significant tax advantages, there are many scenarios where a taxable account might actually be more beneficial.

Let’s dive into one such scenario, wherein I highlight Pan American Silver (TSX:PAAS), a top Canadian mining firm. Pan American Silver is a leading producer of silver and gold, operating mines across the Americas. With operations in several countries, including Canada, Mexico, Brazil, and Argentina, the company has established itself as a major player in the metals and mining sector. Its stock currently trades at $77.70 per share with a market cap of $32.8 billion. Over the last year, PAAS has seen an impressive run, with its stock price surging by 109%.

Solid operating performance and financial growth

Pan American Silver’s recent operating performance has been nothing short of impressive. The company delivered record full-year 2025 production results, with 22.8 million ounces of silver, exceeding its prior guidance. This strong performance was driven by the successful integration of the Juanicipio mine and robust operations across its Latin American and Canadian mines.

As a result, its financial metrics have also shown solid growth. Notably, Pan American closed 2025 with US$3.6 billion in annual revenue, US$1.15 billion in attributable free cash flow, and a quarterly dividend yield of 1.3%. Its board recently raised the quarterly dividend by 29%, reflecting the company’s strong financial position and commitment to returning value to shareholders.

These factors are driving growth

Several key factors have contributed to Pan American Silver’s recent success. The integration of the Juanicipio mine has been a major driver, with the mine performing better than expected since its acquisition in September 2024.

In addition, the company’s aggressive exploration and development initiatives have led to new discoveries, such as the high-grade veins at the La Colorada mine. These discoveries are expected to further enhance Pan American’s production capabilities and financial performance in the years to come.

Could a taxable account beat a TFSA for PAAS investors?

While TFSAs offer tax-free growth and withdrawals, there are scenarios where a taxable account might be more advantageous for investing in solid stocks like Pan American Silver. One such scenario is when an investor has already maximized their TFSA contribution room. In this case, investing additional funds in a taxable account allows the investor to continue benefiting from a stock’s strong performance and growth prospects.

Moreover, for investors with a long-term horizon, the capital gains tax on investments held in a taxable account can be deferred until the investment is sold. Given Pan American Silver’s impressive track record and promising future, holding onto the stock for an extended period could result in significant capital appreciation, making the tax implications less of a concern.

So, if you’re considering investing in Pan American Silver, don’t let tax concerns hold you back. With its impressive track record and promising future, this stock could deliver significant returns for years to come.

The post When Does a Taxable Account Actually Beat a TFSA? Here’s the Answer appeared first on The Motley Fool Canada.

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Fool contributor Jitendra Parashar has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.