New Investors: How to Turn a $20K TFSA or RRSP Into $6 Million

If you’re looking to bolster your TFSA or RRSP, then buy up this safe stock and hold it for decades.

| More on:
Silhouette of businessman sit on chair and hold a cigar and looking at the city in night.

Image source: Getty Images

If you’re one of the new investors looking to get into the market right now, it can be super daunting. The market remains down, and it certainly could get worse before it gets better. I have no crystal ball, and I won’t pretend to.

What I can say is that right now is a great time to buy safe stocks that you can use to turn any Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) into your long-term goals far faster.

In fact, I’ll show you exactly how you can do that.

Find the right sector

Before you start investing, you want to be sure you’re getting into the right sector in general. Economists continue to recommend infrastructure stocks as one worth targeting. New investors should certainly consider this sector as well for their TFSA or RRSP for solid protection.

The reason you get that protection is because infrastructure remains essential no matter what the world does. We need to make coffee, go to work, have a shower. All of this is powered by infrastructure. If it breaks, you fix it. If you need more, you make it. There’s no way around it.

Find the right stock

But then you have to sift through all the infrastructure stocks out there to find the right one! But don’t worry, I’ve done the heavy lifting for you, and would recommend a company like Brookfield Infrastructure Partners LP (TSX:BIP.UN).

Brookfield invests in infrastructure assets all around the world. What’s more, it doesn’t stick to just water or just energy. It invests in it all. This creates a diversified portfolio that continues to offer you protection, even if we enter a recession.

And the best part? Right now is a great time to buy. Brookfield is down about 2.5% year to date. This is after climbing to all-time highs earlier this year. From that point, it’s down about 13%. So it’s a great time to jump in on the stock. Especially since in the last decade alone, it’s climbed 460%!

Make that money

So if you get in on that downturn action, in the next year you could see your Brookfield shares in your TFSA or RRSP return to all-time highs. If you put, for example, $20,000 into BIP.UN shares, that would turn your investment into $23,441 alone. Then, add on top of that the dividend income from a 4.04% yield, and you’ve gained another $805.56. That’s a total return of $4,246.56 in just a year!

But you’re thinking long term. So let’s say you then took those dividends and reinvested back into your TFSA or RRSP. You do that again and again for the next 30 years, setting it and forgetting it. In that time, you could turn your TFSA or RRSP into a whopping $6,169,112 based on historic data over the last decade!

Bottom line

New investors should be using this downturn to their advantage. By doing so, you could create a massive portfolio in your TFSA or RRSP. All from investing in a safe stock and using dividends to reinvest again and again. By doing so, you’ll be setting yourself up for life.

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Infra Partners LP Units. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

man is enthralled with a movie in a theater
Stocks for Beginners

Cineplex Stock Rose 10% in November: Is it a Buy Today?

Should you buy CGX stock?

Read more »

retirees and finances
Stocks for Beginners

TFSA Investors: 3 Solid Stock Ideas for Your $6,500 Limit in 2023

Here are three potential long-term winners for TFSA investors.

Read more »

Man considering whether to sell or buy
Stocks for Beginners

December 2022: Is it Better to Pull Your Money Out of the Stock Market or Keep Investing for Now?

Time in the market always beats timing the market. Diversify and stay the course.

Read more »

Paper airplanes flying on blue sky with form of growing graph
Stocks for Beginners

Stocks That Are Actually Soaring in a Down Market

Fairfax Financial Holdings and another TSX stock that's powered higher through a bearish 2022.

Read more »

railroad
Stocks for Beginners

CP Stock Could Be the Best Buy on the TSX Today

CP (TSX:CP) stock has been one of the few top performers on the TSX this year, and it should continue…

Read more »

falling red arrow and lifting
Stocks for Beginners

3 TSX Stocks That Could Rally Before 2023 Begins

Here are three TSX stocks to consider, even if inflation remains adamant next year.

Read more »

oil and natural gas
Energy Stocks

2 TSX Energy Stocks That Could Break Through the Roof in December 2022

Did you miss the energy rally? Here are two TSX energy stocks that still offer handsome growth potential.

Read more »

TELECOM TOWERS
Dividend Stocks

If I Could Only Buy 1 Stock Before 2023, This Would be it!

If you could buy 1 stock before 2023, what would it be? Here’s the stock I’m considering, and I think…

Read more »