A client of mine recently opened up about feeling behind. He’s 32 years old, has yet to contribute to his TFSA, and only just started getting serious about his finances. The good news? He’s motivated. He wants to start saving $2,000 per month. That’s an incredible habit to build at any age, let alone early in your career.
But he also felt like he needed to make up for lost time. His solution? Put the money into riskier individual stocks, niche sectors, and a bit of Bitcoin to try to juice returns.
This is a common reaction when someone starts late or feels like they’re falling behind. They think the only way to catch up is by swinging for the fences.
Here’s what I told him instead:
“It’s your savings rate that matters most right now. You don’t need to take extreme risks to get ahead. You just need to stay consistent and invest smart.”
Risk Isn’t Binary—It’s a Spectrum
There’s a misconception among newer investors that you’re either playing it safe or you’re taking risk. But risk isn’t an on/off switch. It exists on a spectrum, and how you take risk matters more than whether you take risk.
Here’s how I’d describe the risk spectrum:
| Investment Type | Risk Profile | Outcome Range |
|---|---|---|
| Single stock | Extremely high (can go to zero) | Huge upside or total loss |
| Sector ETF (e.g. tech) | High (cyclical, theme-based) | Long stretches of underperformance |
| Country ETF (e.g. TSX) | Moderate (home bias, cyclical exposure) | Potentially decades of lagging |
| Global ETF (e.g. VEQT) | Diversified, still 100% equity | High volatility, reliable growth |
| GICs or cash | Very low risk | Guaranteed, but low return |
Many investors look at something like VEQT—a globally diversified 100% equity ETF—and think, “That’s too boring. Too vanilla. I need something with more juice.”
But VEQT is far from a GIC. It’s exposed to the full ups and downs of the stock market. It just doesn’t come with the added risks of concentration. And that’s the key: you can take risk without being reckless.
You Don’t Get a Do-Over in Your TFSA
One of the most important things I tell clients about the TFSA: It’s not just about tax-free growth—it’s about protecting limited, valuable space.
If you invest $20,000 in a high-risk stock and it drops to $5,000, you don’t just lose $15,000—you lose the chance to grow that original $20,000 tax-free for life.
There’s no capital loss to claim. And that contribution room doesn’t come back. Once it’s gone, it’s gone.
That makes the TFSA a bad place to gamble, and a great place for reliable, long-term compounding. It rewards steady, diversified investing far more than lottery-ticket bets.
Want to Take Risk? Go Global, Go Equity
If you’re young and saving aggressively, you should take risk. But you can do that by going 100% equities in a diversified, evidence-based way—not by rolling the dice on hot stocks or crypto.
Take VEQT, for example. It’s:
- Made up of thousands of companies across the globe
- Balanced by market capitalization and geography
- Still 100% stocks—so yes, you’ll see volatility
- But incredibly resilient over time
Here’s the reality: VEQT isn’t “safe” in the sense of being a GIC. It will drop in value during market downturns. But it’s a smart way to take risk, because you’re not betting on one company, one country, or one trend. You’re betting on global capitalism continuing to function.
And historically, that’s been a pretty good bet.
Catching Up Doesn’t Mean Catching Fire
Let’s go back to my 32-year-old client. He wants to catch up—and he can.
Suppose he uses his full $88,000 of unused TFSA room over the next few years, contributing $2,000 per month until it’s filled. That takes him about five years.
After that, he continues maxing out new TFSA room each year. Assume the TFSA limit starts at $7,000 and increases by $500 every three years. With that modest assumption, here’s what his TFSA could grow to by age 65, assuming a 7% average annual return:
- Age 42: ~$200,000
- Age 52: ~$640,000
- Age 65: ~$1.35 million, all tax-free
That’s the power of compounding in a TFSA—even without doubling your money overnight. You don’t need to take wild bets or chase moonshots. You just need time, consistency, and a solid plan.
Final Thoughts: Risky Isn’t Always Rewarding
There’s nothing wrong with taking risk. But there’s a world of difference between calculated risk and reckless risk.
And those lottery-like returns you’re chasing? Unless you’ve got a time machine to scoop up NVIDIA in 2015 or a crystal ball to spot the next breakout stock, let’s be honest—you’re gambling, not investing.
- Don’t confuse “boring” with “safe.”
- Don’t confuse “risky” with “smart.”
If you’re just getting started, the best thing you can do is save aggressively and invest in a low-cost, globally diversified equity portfolio. It might not feel exciting today—but your future self will thank you.
