How to Invest $50,000 of Tax-Free Cash as Canada-US Trade Uncertainty Escalates

When headlines are filled with tariff threats, political sparring, and economic slowdowns, it’s easy to feel unsure about what to do with your investment cash. If you’re sitting on $50,000 in your Tax-Free Savings Account (TFSA) and wondering whether now’s the time to move or wait, you’re not alone. With Canada-U.S. trade relations facing uncertainty once again, some investors might lean toward cash. But that could mean missing out on opportunities.

Instead of sitting on the sidelines, this could be the perfect moment to make a long-term play, one that’s built for volatility, not shaken by it. For that, I’d look to Fairfax Financial Holdings (TSX:FFH). This is the kind of stock you want when things get messy. It doesn’t depend on hype, flashy growth, or smooth headlines. It thrives on taking a calm, calculated approach in choppy markets, and it’s made a name for itself by doing just that.

Why Fairfax

Fairfax is a Toronto-based holding company involved in property and casualty insurance, reinsurance, and investment management. What makes it stand out is how it combines insurance operations with value investing. Its CEO, Prem Watsa, is often called “Canada’s Warren Buffett,” and while the comparison may be a bit lofty, the track record speaks for itself. Fairfax has a long history of finding opportunities in uncertainty, and that makes it incredibly relevant in today’s market.

Let’s take a look at the numbers. In its most recent earnings report for Q1 2025, Fairfax reported net earnings of US$945.7 million, which works out to US$42.70 per diluted share. That’s not just a good quarter, that’s impressive by any standard. The big driver? Net investment gains of US$1.1 billion, with US$779.5 million coming from common stocks and US$388.4 million from bonds. That kind of performance shows why Fairfax is known for its savvy portfolio management.

But it’s not just about the investing side. Fairfax also runs a sizeable insurance business. Despite dealing with catastrophe losses of US$781.3 million, mainly tied to the California wildfires, its property and casualty insurance and reinsurance operations still managed to deliver adjusted operating income of US$685.5 million. The combined ratio across these segments was 98.5%. That’s a key number in the insurance world, and anything under 100% means the business is profitable before investment income is even considered. So even in a tough quarter, it stayed disciplined and profitable.

More to come

Financial strength is another reason this stock works well in a TFSA. As of March 31, 2025, Fairfax had a book value of US$1,080.38 per share, up from US$1,059.60 at the end of 2024. Its cash and marketable securities totalled around US$2.1 billion. That gives it plenty of flexibility to keep investing, support its insurance operations, and jump on new opportunities when others are pulling back.

Fairfax is also actively buying back its own shares, which can boost shareholder value over time. And while it’s not known as a high-dividend payer, it does pay one, and the real value is in the capital appreciation. With shares recently trading around $2,224 on the TSX, the stock still looks attractively priced considering its book value and earnings momentum.

Bottom line

When trade tensions rise, markets can react sharply. Export-heavy businesses, manufacturers, and tech companies often feel the heat. But insurance? Not so much. And Fairfax doesn’t just sit back during market dips. It often uses that environment to go hunting for undervalued investments, which can pay off down the road. In other words, it isn’t just a company that survives market volatility, it often thrives in it.

If you’re holding $50,000 in cash in your TFSA, it might feel safe, but it’s not doing much for your long-term wealth. Fairfax offers a way to put that money to work in a company that knows how to grow through uncertainty. It doesn’t rely on smooth economic conditions to make money, and it doesn’t overextend during good times. It’s conservative, but opportunistic, and that’s a powerful combination for uncertain times.

The post How to Invest $50,000 of Tax-Free Cash as Canada-US Trade Uncertainty Escalates appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Fairfax Financial. The Motley Fool has a disclosure policy.

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