How to Invest $50,000 of TFSA Cash in 2025

March came in like a bear. The stock market saw a significant sell-off, especially in oil stocks, as a 10% tariff on Canadian oil exports to the United States pulled down the WTI crude price to US$60/barrel from US$70–75/barrel. Suncor Energy’s stock price fell 20% and is unlikely to be revived anytime soon as the cyclical rally that began in 2021 came to an end. Value investors exited their positions in Canadian oil stocks in January 2024, when they were still trading near their cyclical highs, and are now sitting on a cash balance.

Like with Suncor, investors booked profits in many other stocks. If you are one of those investors and sitting with significant cash in your Tax-Free Savings Account (TFSA), now is a good time to invest your profits in value stocks.

How to invest $50,000 in TFSA cash in 2025

Many investors hoard cash during economic uncertainty, waiting for more opportunities to invest in value stocks in a bear market. Now is the time to invest as the market is ripe for value seekers, as tariff fears heavily discount tech stocks with secular growth.

Advanced Micro Devices stock

Advanced Micro Devices (NASDAQ: AMD) stock has fallen below the $100 mark as the United States-China trade war has intensified. China is an important market for chip companies because of its strong technology sector. AMD’s secular growth in artificial intelligence (AI) and virtual reality (VR) is driven by technological innovations. Recently, the company built the first server chip on a 2-nanometre node, affirming its technological supremacy.

AMD’s major competition is from Nvidia’s chips, which have performance supremacy. AMD compensates for the performance by making its graphics processing units (GPUs) more affordable, while providing the performance the tasks require. The next PC replacement cycle, AI at the edge, and future generations of AI have ample applications for both AMD’s and Nvidia’s GPUs.

America is bringing chip manufacturing back, with TSMC opening new fabrication facilities. The complex global chip supply chain created in the 80s and 90s to benefit from economies of scale is spreading worldwide as chips become the new oil.

Even if the chip supply chain undergoes a structural change, AMD will not be directly impacted as it designs chips and outsources manufacturing. It earns an amount based on the number of chips sold. The fixed cost burden during times of lower production is borne by the manufacturer, TSMC.

Now is a good time to buy and hold AMD stock. The fast-changing technology landscape could boost demand for chips. Companies that keep innovating and stay in line with technology will benefit.

A technology ETF for your TFSA cash

While we are talking about technology, the industry is developing on various fronts. Creating an AI infrastructure, metaverse, Web 3.0, the 5G infrastructure, autonomous vehicles, robotics, blockchain, cybersecurity, and the list goes on. Each technology is a part of the larger ecosystem that will make our homes, vehicles, and devices more efficient in serving us.

These technologies begin with hardware and then move to the technology stack, data centre, software, edge solutions, secure network connectivity, and devices. The iShares NASDAQ 100 Index ETF (CAD-Hedged) (TSX:XQQ) gives you exposure to all major tech companies that are working on the above technologies and reshaping the future. The ETF can help you get exposure to the leading players in a high-growth industry.  

The XQQ ETF’s top three holdings are Apple, Microsoft, and Nvidia, as it replicates the Nasdaq 100 Index, which comprises the top 100 Nasdaq stocks by market cap. The cyclicality of some tech stocks creates buy-the-dip opportunities in the XQQ ETF.

For instance, the XQQ ETF fell 21% during the 2018 trade war when technology stocks were the hardest hit. The second dip of 20% came during the March 2020 pandemic. The third dip of 35% was during the 2022 tech stock meltdown, and the fourth dip of 21% is now.

A $5,000 investment in the ETF at every dip would have bought you 861 units of the ETF. Your total investment of $20,000 is now worth $41,775.

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