As much as investors would like to help each other, creating a portfolio is a very personal endeavour. Many factors, including your age, risk tolerance, and investment horizon, will play an important role in how you should choose companies to hold over the coming years. In this article, I will describe three stocks that investors in three different age groups should consider.
Gen Z and millennials
These are individuals born in the 1980s and later. As a younger individual, you should still be in the “wealth-accumulation” stage of your life. At this point, investors should be more willing to take risks and invest in companies that may take a longer time to pan out. This does not mean, however, to start investing or trading penny stocks that may end up bankrupt.
An example of a riskier stock that Gen Z and millennials should consider is WELL Health Technologies (TSX: WELL). Although some readers may look at this and wonder why WELL Health is considered a risky investment, consider the next points.
One, the telehealth industry is still very much in its infancy. Although a lot of growth should arise from this space, there are still many barriers that stand in its way. Because of the pandemic, many regulatory hurdles have been removed, but consumers still need to show that they are willing to stick with these services moving forward. Additionally, WELL Health is still a very small company. It is possible that one of the larger players — e.g., Teladoc — can win an outsized portion of the available market share.
Generation X
Roughly speaking, these are individuals born between 1965 and 1980. At this point in an investor’s life, they may be looking for more of a balance between companies that provide an opportunity for wealth accumulation and those that provide wealth preservation.
One company that these investors should consider is Constellation Software (TSX: CSU). Constellation is a company that has given investors a very solid return since its IPO. In fact, since that time, Constellation has returned more than 8,650%.
The company is a large-cap company, which suggests it will be much less volatile than a young growth company. Run by one of the most impressive executives in Canada, Mark Leonard is dedicated to providing excellent returns to shareholders moving forward.
Baby boomers
These are investors that would have been born in 1964 or earlier. At this point, they should be firmly within the wealth-preservation portion of their life. It would be catastrophic if an investor were to experience crushing losses. If someone were unable to recoup the losses at this point in their life, their financial stability during retirement could be put at risk.
Therefore, investors at this age range should focus on companies that are much less volatile. Canadian Pacific Railway (TSX: CP)(NYSE: CP) is an excellent company for consideration. Although it operates within an industry that may not be very exciting to most, its services are essential to the continuation of Canada’s operations. Canadian Pacific transports many goods that are used across the country.
I am particularly interested in Canadian Pacific’s dedication to sustainability moving forward. It shows that the company’s management is actively thinking about optimizing its businesses for the future and getting ahead of the curve. I have a lot of faith in this company, and believe it has a chance to surpass its peers as the premier railway in Canada.
