TFSA: Income vs. Growth Strategy in 2021

The Tax-Free Savings Account (TFSA) has grown into the most popular registered account among Canadians over the past decade. This account offers fantastic flexibility and the opportunity for investors to duck capital gains tax.

Today, I want to weigh income and growth strategies in your TFSA for 2021. As usual, the strength of these strategies depends on the investor and their risk tolerance.

Why you should churn out income in your TFSA

Most success stories for the TFSA have involved the substantial growth that can be achieved in what has been a red-hot market. However, investors who target the right dividend stocks can count on consistent tax-free income. Investors who want to pursue this course should consider some of the top REITs on the TSX.

For example, a health care-focused stock like Northwest Healthcare Properties REIT (TSX:NWH.UN)

The cumulative contribution room in a TFSA climbed to $75,500 in 2021. That leaves a great deal of room for investors to churn out income.

Going for growth in 2021

The growth potential of the TFSA can’t be denied. In the early 2010s, a handful of opportunistic investors were able to turn into TFSA millionaires. Now, with the increased contribution room, that is not a pipe dream for the average investor.

Super stocks like Shopify have made fortunes for Canadian investors since the mid 2010s. A growth strategy is the best bet for TFSA investors with a long investment horizon.