The Motley Fool

Stash Your Money in This Stock for the Next 30 Years

The number one retirement mistake Canadians continue to make is simply not saving enough. If you want to avoid this mistake, there’s one critical trick: choose a few long-term investments and automate your savings.

The three stocks below make up an ideal portfolio for savers of any age or risk tolerance.

By selecting long-term investments and automating your investment schedule; for example, automatically depositing a few hundred dollars per month into your brokerage account makes your portfolio becomes a set it and forget it machine.

You never have to worry if you’re saving enough or if your money is in promising and resilient opportunities.

Want to assemble the perfect portfolio for the next 30 years? These stocks look like your best bet.

This is your guru

If you want to stash your money away for 30 years, it’s ideal to find a company or manager with a 30-year track record. This isn’t a large group to choose from, as already, in any given year, the majority of money managers fail to beat the market index.

When you expand that time frame to three, five, or 10 years, the percentage of managers outperforming the index falls dramatically.

On a 30-year time frame, there’s only a handful of people in the world with a record of outperformance; one of them is Prem Watsa, founder and CEO of Fairfax Financial Holdings Ltd (TSX:FFH).

Fairfax Financial is essentially a baby Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B). Here’s how the business model works. Both Fairfax and Berkshire own several insurance companies that collect premiums throughout the year.

These premiums don’t need to be paid out immediately, resulting in an outstanding cash balance called a float. Both companies can invest this float until claims need to be paid out. At Fairfax, Prem Watsa is in charge of the investments. At Berkshire, it’s Warren Buffett.

How has each manager fared over the last 30-plus years? Both Watsa and Buffett have achieved annual share price growth between 15% and 20%. Those results easily trounce the market averages. Watsa and Buffett are some of the only investors who can boast such an impressive track record.

Here’s the exciting part: Fairfax is worth just $16 billion, while Berkshire is worth more than a half trillion dollars, which means that Fairfax should easily have 30 years of growth ahead of it.

Berkshire, on the other hand, will start to battle the law of large numbers fairly quickly. After all, it’s easier to double or triple in size as a $16 billion company than it is as a $500 billion company.

Tricks up his sleeve

Fairfax Financial stock gives you access to one of the best investors in recent decades It also gives you exposure to the fastest growing economies of tomorrow. That’s because the company owns large stakes in both Fairfax India Holdings Corp. (TSX:FIH.U) and Fairfax Africa Holdings Corp. (TSX:FAH.U).

Both vehicles, as their names suggest, focus their investments on specific geographies that demonstrate high rates of population and GDP growth.

In recent years, population growth throughout North America has fallen below the replacement rate. That means that over time, the overall population levels should begin to shrink, as citizens aren’t producing enough children to offset population loss.

It’s extremely hard to grow your economy if populations begin to drop. As India and many countries throughout Africa don’t have this problem, don’t be surprised to see these regions skyrocket on the “largest world economies” list. When that happens, you’ll be glad to own Fairfax Financial stock.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

The Motley Fool owns shares of Berkshire Hathaway (B shares) and has the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares) and long January 2021 $200 calls on Berkshire Hathaway (B shares). Fairfax Financial is a recommendation of Stock Advisor Canada. Fool contributor Ryan Vanzo has no position in any stocks mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

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.