For most retail investors that are working with capital saved up from their primary income (job or business), creating a sizeable enough nest egg that augments government pensions is the ultimate investment goal. But with a decent amount of capital invested in the right assets, you can do far better than just a nest egg. You can actually build wealth, and the more time you have, the better.
However, if you only have a decade or so to reach your wealth-building goals, you will have to be a bit more discerning and daring with the assets you pick.
A business information services company
Thomson Reuters (TSX: TRI)(NYSE:TRI) has deep roots in media and information. It can trace its origin back almost 170 years when it started out as a business focused on transmitting stock market quotations. Now, it focuses on four business segments: legal, government, tax & accounting, and corporate tax and trade solutions. The legal business segment usually brings in most of the revenue.
The company is also a well-established aristocrat. But the current yield of 1.1% is not reason enough to buy this company. However, it’s also an amazing growth stock. And if it replicates its 10-year CAGR of 20.6%, it can be a great wealth-building tool. If you invest $100,000 in the company, you might get quite near half-a-million dollars or more if you reinvest the dividends.
A financial company
If we assume that the last decade’s growth is likely to predict the next decade’s, another stock that should be on your radar is goeasy (TSX: GSY). The financial Mississauga-based alternative financial company has established itself as one of the most successful non-bank lenders, targeting the low/bad credit market segment.
Despite a massive spike in its valuation, the company still has a market capitalization of just $2.7 billion, and currently, it’s going through a normalizing phase following an amazing bull run, which pushed the stock up 643% post-pandemic (between the crash and peak valuation). If you had invested $100,000 in the company exactly 10 years ago, you would have grown your capital to a whopping $3.2 million by now ($3.9 with dividends reinvested).
And if the company can offer even one-fourth of that growth, you can grow the same capital to about $800,000 in the next decade.
A software company
Few TSX growth stocks are as credible as Constellation Software (TSX: CSU). Thanks to its continuous growth over the last two decades, which has pushed its price tag to the very top of the bunch, it’s a highly coveted growth stock. And it’s not just its consistency that attracts the dividends but the growth pace as well.
The stock has grown about 2,400% in the last 10 years. And if we apply the same conservative approach (one-fourth of the last decade’s growth) and assume that the stock will grow about 600%, that’s still $600,000 with $100,000 invested in the company.
The growth of Constellation software can be attributed to its stable business model and the sustainability of growth to the diverse nature of the business.
Foolish takeaway
If you have $300,000 in capital to invest in the three companies, you might have a reasonable shot of growing your current wealth to about $1.9 million. The three growth stocks are time tested and in powerful positions within their sectors/industries, and the chances of them deviating from their growth path are relatively low, unless unprecedented circumstances like the pandemic rock the market.
Even then, the recovery pace of the three securities has been quite amazing.
