A combination of growth stocks could allow you to retire within 10 years. All you need is a little capital (say, $50,000) and careful planning. Here’s a two-step strategy that could help you retire early if you’re young or secure your future if you’re starting late.
Growth stocks
The minimum amount you need to retire is $500,000. In fact, my Fool colleague Nelson Smith dug into the numbers and discovered that half a million could provide a stable retirement for nearly every Canadian. So, the first step is to meet that benchmark.
If you’re starting off with $50,000 in savings, you need a ten-fold return to meet this goal. That implies an annually compounded growth rate of 25.8% or higher. Plenty of technology and growth stocks exceed this benchmark. Here’s a list:
- Dollarama (27% CAGR since 2009)
- Constellation Software (38.9% CAGR since 2013)
- Shopify (37.9% CAGR since 2015)
- WELL Health Technologies (125.8% since 2016)
So, a tenfold return within 10 years is certainly possible. Probably the best sector for this pace of growth is technology. Three out of the four growth stocks mentioned above are tech stocks. The smallest one delivered the best returns.
Focusing on smaller, relatively-unknown growth stocks is still a winning strategy. Here’s a list of four growth stocks that could exceed 26% CAGR over the next 10 years:
WELL Health Technologies is quickly gaining traction in the telehealth sector. As doctors and patients worldwide realize that remote medical care is both cost effective and more convenient, I expect this growth stock to rapidly boom. Currently worth $370 million, this stock could be worth 10 times as much if it expands to the United States and gains a fraction of healthcare market share.
Maxar Technologies has been steadily declining for years and is now too cheap to ignore. Space technology is one of the few industries I can think of with infinite potential. Maxar is a clear leader. It’s been building satellites and gathering images from low-earth orbit for years. A turnaround in its balance sheet could unlock billions in value.
Absolute Software and Open Text are both top picks for the robust enterprise software market. Open Text’s endeavours in artificial intelligence research could propel the growth stock to new heights. Meanwhile, Absolute’s cybersecurity solutions face relentless demand and the stock price doesn’t reflect this growth potential.
Each of these stocks is focused on cutting-edge technology and is based in an industry with massive potential. I believe at least one or more of these stocks could be multi-baggers in the years ahead. By splitting your $50,000 investment between these stocks you could drastically improve your chances of an early retirement.
Bottom line
If you have just $50,000, you could secure a comfortable retirement in ten years or less. All you need is a few savvy growth stock picks. Growth stars such as Maxar and WELL Health are on my radar for the next decade.
A portfolio of emerging technology stocks and underrated growth stars could deliver a 10-fold return in less than a decade.
