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This is TFSA Trouncers, a series that profiles how Canadian investors invest their tax-free savings accounts. Whether you’ve been successful in growing your TFSA or not, we’d like to hear from you. Please fill out this form to contribute. You may choose to be anonymous, but we do require an e-mail address and may request a screengrab of your portfolio for fact-checking purposes.
The tax-free savings accounts of Tom and his wife have reached a value of $2.3-million in the aggregate. That number is not a typo. They each have more than a million dollars in their TFSAs and together the accounts add up to $2.3-million.
For the longest time, Tom didn’t think the mounting capital gains were anything special. “It wasn’t until reading Globe and Mail articles on TFSAs that I realized how fortunate we were to have accounts of this size,” he said recently.
Tom is in his mid-60s and worked as a farmer in southern Ontario for nearly three decades until 2016, after which he took a part-time job in the agricultural industry. He retired this spring.
Tom has been “a keen student of investing and the markets” for a long time. After graduating in the late 1980s from university with a degree in economics, he got started with an investment in a balanced mutual fund.
This investor built a $875,000 TFSA using some unique portfolio manoeuvres few have ever thought of
Years later, he switched to a broker. By then, he had read up on investing and learned a lot about several industries as a result of his work experience. His investment approach, in a nutshell, focused on identifying and researching “unloved, mispriced stocks.”
“We would move in and out of short-term positions, taking small profits along the way and generating commissions for my broker friend,” Tom said. In the 2000s, he tried some hedge funds instead. They were busts.
Tom now considers himself a “hybrid investor.” That means he manages a portion of his and his wife’s money while relying on a private wealth management firm to manage the other portion as a conservative base.
This base is sufficient to provide the lifestyle to which Tom and his wife have grown accustomed. He is resigned to paying the firm’s management fee and will never touch these funds other than to pay for the essentials.
The money that he manages is where risks are taken. Having worked several decades as a farmer, he is no stranger to risk. “In farming, an all-in approach comes naturally,” Tom remarks. “Taking risks is common – for example, farmers often grow just one commodity or do cash cropping.”
In investing, as in farming, there is a lot of research, fact checking, dialogue and sticking with things that can be understood. He always asks: “If this venture goes to zero, will our living standard decline in a material way?” If the answer is yes, they will move onto something safer.
One particular decision gave a major boost to their TFSA portfolios. It involved a new energy company that in 2007 was looking for investors to help them build and operate a plant. At the investor presentations, Tom learned about the business plan, risks and other matters.
But it was the credibility of the founders that ultimately convinced him. He liked how they handled tough questions and one-on-one discussions. They performed well in past business dealings and had a good reputation in the community. Risk was also mitigated by some government backstops and grants.
Tom and his wife then sold a sizable portion of their non-registered investments to buy shares; they purchased more shares in subsequent rounds. Tom was also active in attending annual meetings, speaking to other shareholders and asking lots of questions.
The financial backing and active participation earned him an invitation from one of the directors to put his name forward for a position on the board of directors. With the shareholder base being relatively small and mostly acquainted with Tom, he was elected.
He saw becoming a director as a way to manage his risk exposure. The board meetings would give him a very good idea of how the company was doing. This came in handy when Tom and his wife had some doubts and were thinking of selling their stake – but being on the board gave him the information and insight to maintain conviction.
In 2023, the shareholders in the energy company expressed a desire to sell the company after it had recovered from a rough patch. In anticipation of a sale at a premium price, Tom and his wife decided to transfer their shares into their TFSAs.
To make room, they moved their TFSA holdings into non-registered accounts in December, 2023. Since they had $750,000 in TFSA investments at the time, this created ample contribution room in January, 2024.
It was filled up by transferring over the energy company’s shares from their non-registered accounts. In December, 2024, the takeover of the company went through at a hefty premium, more than doubling their TFSAs to $1.85-million in total. The cash was then deployed into mainly other energy stocks, which took their TFSAs to $2.3-million by mid-2026.
What an expert says
We asked Tina Tehranchian (C.M.), a senior wealth adviser with CI Assante Wealth Management Ltd., for her thoughts on the TFSAs of Tom and his wife.
First, congratulations to Tom and his wife on achieving such remarkable growth in their TFSA accounts. Clearly, they accepted a significant amount of risk by investing a substantial portion of their money in the shares of a single company. However, it appears they had a good understanding of the risks they were taking, as they considered the possibility of losing their entire investment and the impact such a loss could have on their financial situation and their ability to achieve their long-term financial goals.
They have also been working with a private wealth management firm to ensure that a portion of their portfolio is professionally managed and invested more conservatively.
For investors who have accumulated a substantial nest egg and enjoy investing in the markets themselves, this type of “hybrid” approach can work well. It is important, however, that their wealth advisers understand the composition of the self-managed portion of the portfolio and take it into account when constructing the professionally managed portfolio. This helps ensure that their overall assets are appropriately diversified and that they are not inadvertently exposed to an excessive level of risk.
Tom and his wife should also ensure that they have a comprehensive financial and estate plan in place. Their plan should demonstrate that they can achieve their financial goals using conservative assumptions for rates of return and longevity. It may show that they no longer need to take significant investment risk to achieve their goals, or that they have the financial capacity to provide greater support to family members or the charities they care about during their lifetimes.
Larry MacDonald is the author of The Shopify Story and blogs at Shopify’s Journey.