MENU

First Brexit… then Trump… Now, it’s time for Pro

Is your portfolio really prepared for what’s coming next?

To help investors like you navigate this historically uncertain — yet high-flying — market and prepare for an inevitable downturn, we’re re-opening our Motley Fool Pro Canada service to a select few new members for a short time.

To discover how Pro Canada could help you to increase your upside potential… reduce your downside risk… and earn paycheque-like income in the process, simply click here — before the small number of spots we have left are all gone!

How to Transform $30 a Week into +$80,000

I’ll let you in on a little secret. Here’s how you can transform savings of $30 a week into more than $80,000.

Saving $30 a week translates to saving $120 a month or $1,560 a year. Let’s say $1,560 is invested at the end of every year.

Over a period of 20 years, your investment would become $89,349 assuming a rate of return of 10%. If you can achieve a 10% rate of return, you’ll be able to double your money in a little over seven years.

Why assume a 10% return?

A 10% return is near the historical average market return. Some experts say that going forward, the average market return is going to be lower, partly because of lofty valuations.

However, if you invest in individual stocks, you can choose the ones that are priced at better valuations to, hopefully, increase your returns.

Dividends and price appreciation both contribute to your returns. Dividends are sourced from earnings or cash flows, and price appreciation is sourced from growth or multiple expansions due to growth or discounted valuations.

Where can you get 10% returns today?

Firstly, some stocks offer yields of close to 10%. For example, Slate Office REIT (TSX:SOT.UN) yields almost 9.5% at $7.93 per unit, which means it only needs to appreciate a little over 0.5% to achieve that 10% return.

Secondly, some companies offer juicy yields and growth potential. For example, Brookfield Renewable Partners LP (TSX:BEP.UN)(NYSE:BEP) yields 5.9% and aims to increase its distribution by 5-9% per year. Indeed, its distribution has grown 6.5% per year on average since 2011. Its distribution per share is 7.2% higher than a year ago.

Thirdly, high-growth companies such as Walt Disney Co (NYSE:DIS) are estimated to grow their earnings at a rate of 10% or higher. Specifically for Disney, it trades at a reasonable multiple of 17.5 at under US$100 per share.

Of course, any dips would make it even more attractive. Disney also offers a growing dividend with an initial yield of 1.4% that’ll add to your returns.

Lastly, undervalued stocks such as Magna International Inc. (TSX:MG)(NYSE:MGA) can also return 10% or more. Its share price is 31% lower than a year ago.

At about $48, it trades at a discounted multiple of 7.6. If it traded at its normal multiple tomorrow, it’d be worth $68 per share, implying an upside of 38%. It also offers a safe yield of 2.7% while you wait for its shares to rise.

Summary

You can transform a weekly savings of $30 into $89,349 in 20 years, of which $31,200 would be your savings and $58,149 would be from investing. You’ll need to achieve a rate of return of 10%.

You can get 10% returns by buying a mix of companies with different income and growth expectations. Typically, the higher the income you receive from an investment, the less growth you should expect from it. Likewise, the lower the income you receive from an investment, the higher growth you should expect from it.

Stock Buy Alert Hits Astounding 96% Success Rate!

The hand-picked investing team inside Stock Advisor Canada, recently issued a buy alert for one special type of "bread-and-butter" stock where The Motley Fool U.S. has banked profits on 23 out of 24 recommendations. Frankly, with an astounding 96% success rate that has delivered average returns of 260%, chances are this new pick could deliver life-changing returns as well. Because the team at Stock Advisor Canada fully embraces the same time-tested investing philosophies that have led to countless Motley Fool winners globally. So simply click here to unlock the full details behind this new recommendation and join Stock Advisor Canada.

*96% accuracy includes restaurant stock recommendations from Motley Fool U.S. services Stock Advisor, Rule Breakers, Hidden Gems, Income Investor and Inside Value since each services inception. Returns as of 5/27/16.

Fool contributor Kay Ng owns shares of Brookfield Renewable Energy Partners and SLATE OFFICE REIT. David Gardner owns shares of Walt Disney. The Motley Fool owns shares of Walt Disney.

NEW! This Stock Could Be Like Buying Amazon In 1997

For only the 5th time in over 14 years, Motley Fool co-founder David Gardner just issued a Buy Recommendation on this recent Canadian IPO.

Stock Advisor Canada’s Chief Investment Adviser, Iain Butler, also recommended this company back in March – and it’s already up a whopping 57%!

Enter your email address below to claim your copy of this brand new report, “Breakthrough IPO Receives Rare Endorsement.”

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.