Skip to main content
investor clinic

Now that we can make contributions to our tax-free savings accounts for 2023, I’m curious to know: How much would one’s TFSA have been worth at Dec. 31, 2022, if one had contributed the maximum each year and invested it in either a stock index fund or a bond index fund? This will help me decide what to invest in this year.

Great question. I couldn’t find an answer online, so I crunched the numbers myself.

Before I reveal the results, I’ll explain my methodology.

I selected two popular exchange-traded funds: the iShares S&P/TSX 60 Index ETF XIU-T and the iShares Core Canadian Universe Bond Index ETF XBB-T. For both, I assumed the maximum contribution was invested at the start of each year from 2009 (when the Tax-Free Savings Account was introduced) through 2022. I made no allowance for trading commissions or – because we’re investing in a TFSA – taxes.

I then found the total returns for each ETF over 14 different investment periods (2009 through 2022, 2010 through 2022, 2011 through 2022, and so on) and calculated what the initial investment in each period would have grown to as of Dec. 31, 2022. (I obtained ETF returns from the iShares website and cross-checked them with the compound returns calculator at, which produced similar results.)

The total dollar amount invested in each ETF was $81,500, which is the sum of the maximum annual TFSA contributions from 2009 through 2022 – $5,000 for the years 2009 through 2012, $5,500 for 2013 and 2014, $10,000 for 2015, $5,500 for 2016 through 2018 and $6,000 for 2019 through 2022. (For 2023, the TFSA limit was increased to $6,500.)

So how did each ETF make out? Drum roll please …

It wasn’t even close. Stocks blew bonds out of the water.

An investor who put all TFSA contributions into XIU – which holds 60 of the largest Canadian companies by market capitalization – would have ended up with $147,247 at the end of 2022. XIU’s compound annual growth rate over those 14 years was about 8.4 per cent, which assumes all distributions were reinvested in additional ETF units.

An investor who chose XBB – which holds a diversified basket of Canadian government and corporate bonds – would have ended up with $89,700. XBB’s compound annual growth rate was about 2.7 per cent – less than one third of XIU’s annual return.

The lesson? If your goal is to grow your wealth over the long run, stocks are the way to go. True, stocks are generally more volatile than bonds, but that’s the price investors pay for the superior returns they deliver.

That’s not to say investors should avoid bonds, or guaranteed investment certificates, altogether. When safety is your key consideration, such as when you are saving for a home or a child’s education, fixed-income investments have their place. It’s also prudent to keep a portion of your portfolio in bonds or GICs to provide some stability. But if you play it too safe with your investments, you may regret it down the road.

I want to borrow money so I can take advantage of about $50,000 of TFSA contribution room that I have available. Is this a good idea? And can I deduct the interest?

I’ll answer your second question first. No, you can’t deduct the interest. Interest is only tax deductible if you’re borrowing to invest in a non-registered account.

As for whether it’s a good idea to borrow to invest, I wouldn’t even consider it now – especially if the interest isn’t tax deductible. With borrowing costs having spiked, the rate on a secured home-equity line of credit has jumped to nearly 7 per cent, according to That’s the return your TFSA will have to generate just to cover the interest on your loan, and it’s a high hurdle to clear given that the stock market has returned about 8 to 9 per cent annually over the long run.

Instead of borrowing to invest, you’re probably better off exploring ways to save more of your income so you can take advantage of your unused TFSA contribution room. The fact that you have $50,000 of space indicates you’ve had a hard time scraping together contributions every year. Or perhaps you made a large TFSA withdrawal at some point (withdrawals are added to your contribution room on Jan. 1 of the following year).

Either way, the expense, hassle and stress of borrowing to invest hardly seem worth it in this environment. But if you set up a plan to make regular contributions and chip away at your unused TFSA room, you’ll be rewarded in the long run.

E-mail your questions to I’m not able to respond personally to e-mails but I choose certain questions to answer in my column.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.