If you’ve got $10,000 in unused TFSA room, how you allocate it today can make a meaningful difference over the long haul — especially when you harness tax-free growth and dividends. Rather than chasing flashy short-term gains, the best approach is a balanced plan with diversification, strong business models, and a mix of growth and income.

A core strategy is to build a foundation with broad market exposure. Instead of putting all $10,000 into a single company, consider splitting it between funds and individual stocks. For example, you could direct about half your capital into a global equity ETF (e.g., an ETF that holds Canadian, U.S. and international stocks). This gives you diversified exposure to a wide range of sectors and geographies, reducing the risk that comes from owning just a handful of names. Over decades, broad market exposure tends to smooth out volatility and deliver consistent returns.

The next portion of your TFSA can be used to own high-quality Canadian dividend stocks that have strong cash flows and histories of raising payouts. Firms with solid fundamentals — like major banks or utilities that dominate their industries — can provide regular dividend income that compounds inside your TFSA without ever being taxed. Reliable dividend growers help anchor your portfolio with steady cash flow while also participating in capital appreciation over time.

Another element to consider is growth stocks with long runway potential. While growth names can be more volatile, owning a slice of companies with strong competitive advantages and secular tailwinds can turbocharge long-term returns. The key is balance: growth stocks paired with diversified funds and dividend payers can offer both upside and resilience.

Also Read: Long term investing in Canada

Timing and market levels are secondary to consistency and discipline. Making one lump-sum investment isn’t inherently better or worse than dollar-cost averaging; the bigger point is to stay invested through market cycles and avoid emotional trading. If you know you’ll add money to the market regularly, dollar-cost averaging can reduce anxiety about entry prices.

Also Read: Best long term Canadian stocks

Finally, once your TFSA is invested, don’t let it sit idle. Reinvest dividends automatically, rebalance annually to maintain your target allocation, and update your holdings as your goals evolve. A thoughtful TFSA strategy turns tax-free space into a powerful compounding engine that can significantly boost your retirement savings over decades.