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The Easiest Way to Make $1,000,000

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No one can predict the future, but when it comes to choosing stocks that could potentially make you a millionaire, there are a few out there right now that should continue to do well right into that future.

There are several ways an investor could reach that million-dollar mark, two of which are outlined by fellow Fool writer David Jagielski.

Here I take a similar approach to the riskier version of Jagielski’s two choices, though with my method, an investor could put this stock in their Tax-Free Savings Account (TFSA) and not worry about incurring taxes by investing in foreign stocks.

Shopify

It won’t be a surprise to you that Shopify Inc. (TSX:SHOP)(NYSE:SHOP) continues to surpass expectations by analysts and investors alike. The stock has been on a steady increase since its initial public offering (IPO) back in May 2015, but in the past year the stock has kicked into overdrive, and investors want in.

The stock has come up almost 1,300% since its IPO, and many investors fear they may have missed the boat. Still other investors fear there could be a huge drop in share price coming soon, especially with a recession in our potential future.

But if you’re looking to get to a million dollars, while it’ll be quicker than investing in a bank stock it will definitely mean holding onto your Shopify stock past a recession in the next few years.

So honestly, I wouldn’t worry about today’s share price. Shopify is on the path to becoming a FAANG-status stock. That means today’s share price is just the beginning.

Let’s take a look at Amazon for example. After hitting the US$350 mark back in 2015, the stock soared into the stratosphere, but did have quite a long path of steady increases before then.

Shopify has been much quicker, though much of this comes from the large amount of innovation all in a short period of time, and leading to strong quarterly reports.

Most recently, Shopify shocked analysts again with a revenue increase of 48% to $362 million, beating analysts’ expectations by about 3.5% while also increasing its 2019 revenue guidance to up to $1.53 billion.

The company now boasts generating about $41.1 billion in gross merchandise volumes from 170 countries, as of its 2018 guidance.

Can Shopify keep it up? It’s certainly setting itself up to do so. The e-commerce company that started with small and medium-sized businesses has since grown incredibly, with more than 800,000 merchants using the site.

Now the company has expanded its base to entrepreneur clients, which means large businesses. These clients can use Shopify Plus, one of many new programs introduced by Shopify this year. Another exciting addition is that of Shopify’s Fulfillment Network, which will handle shipping for merchants, pitting itself in direct competition with Amazon.

As the company has more companies, countries, and business opportunities to take advantage of in the growing world of e-commerce, investors will likely see the stock continue to rise, even if there is a dip.

While waiting for a dip before investing is definitely a good idea, buying now isn’t necessarily a bad idea either. So let’s look at how long it could take to get to that million-dollar mark.

We’ll base Shopify’s growth on the last five years of Amazon, when things really took off. That growth has come up 256% for Amazon, and is a good starting point for Shopify as well.

That’s an average of 51% per year, and might be a bit optimistic, so let’s cut that back to 25% a year to be conservative. That way, should a recession or market downturn occur, this would take care of those periods as well.

So let’s see how long it would take a $50,000 investment to reach $1,000,000.

Year Portfolio
1 $62,283.75
2 $77,854.69
3 $97,318.34
4 $121,647.95
5 $152,059.94
6 $190,074.92
7 $237,593.65
8 $296,992.06
9 $371,240.08
10 $464,050.10
11 $580,062.62
12 $725,078.28
13 $906,347.85
14 $1,132,934.81

As you can see, looking at a similar trajectory to Amazon, it would take Shopify only 14 years to turn a $50,000 investment into more than $1,000,000. Given the way the company is moving, that could be quite a conservative estimate.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe owns shares of Shopify. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of Shopify and Shopify. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. The Motley Fool owns shares of and recommends Amazon. Shopify is a recommendation of Stock Advisor Canada.

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