It will be highly comforting to have a seven-digit bank balance in your sunset years. But how can one achieve such a feat with these uncertain markets? It’s true that markets have been highly volatile and unpredictable this year. But some TSX names have continued to rally, despite pandemic worries and a recession.
High-growth stocks to create long-term wealth
Such consistent performers will be highly useful when you want to achieve a long-term financial goal. If one wants to be a millionaire by 2030, they should consider high-growth stocks that inherently come with above-average risk.
High-growth tech stock Shopify has been a solid wealth creator in the last few years. If one had invested $10,000 in SHOP approximately five years ago, the amount would have accumulated to $452,000 today.
Let’s take a look at other TSX stocks that offer handsome growth potential for the future.
The $35 billion Constellation Software (TSX:CSU) is one such stock investors can consider for the long term. In the last 10 years, it has returned 4,700%, beating TSX stocks by a wide margin. If one had invested $25,000 in CSU stock a decade ago, it would have accumulated $1.2 million today.
Constellation Software has managed a superior growth in all these years, mainly driven by its unique business model. The company acquires smaller tech companies that have a leadership position in niche markets.
Its client base comprises commercial businesses as well as government and related parties. Constellation’s software is hard to replicate, which bodes well for long term customer relationships.
Importantly, it’s not prudent to demand the same growth from Constellation for the future. However, it will likely continue to grow at an above-average pace, driven by its superior earnings potential and business model.
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A top TSX growth stock in the air cargo space
Cargojet (TSX:CJT) is another top stock that has multiplied shareholders’ wealth in the last few years. The freight and logistics airline company has managed to operate fairly smoothly throughout the pandemic.
Cargojet stock has returned 2,400% in the last 10 years. This is smaller compared to Constellation, but it is, in fact, much bigger against broader markets.
It looks balanced for strong growth going forward. Sustained e-commerce growth will likely increase Cargojet with its unique selling proposition of next-day delivery.
The Foolish takeaway
Investors should note that with growth stocks like Constellation Software or Cargojet, it may take much less time to create a robust retirement fund than with defensive stocks. This is where taking a high risk can pay off.
Notably, a higher initial investment or a little longer duration will generate a similar amount of wealth. Investors can consider other high-growth stocks like Kirkland Lake Gold or Kinaxis that have created significant wealth in the last few years.
It would take around 30-40 years to reach a seven-digit bank balance with slow-growing stocks like Fortis. That does not mean slow, defensive stocks should be avoided altogether. The stability generally offered by such stocks is unmatched. Notably, an optimum combination of both aggressive and defensive stocks would generate wealth as well as will provide stability to the portfolio.
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 Vineet Kulkarni has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends CARGOJET INC., Constellation Software, Shopify, and Shopify. The Motley Fool recommends FORTIS INC and KINAXIS INC.