According to the annual retirement study conducted by BMO, Canadians generally believe they need at least $1.7 million to retire comfortably. That’s an ambitious number, to say the least, and a 20% jump from the previous figure. But it’s also understandable, considering the rapid rise of inflation and the cost of living. People have re-evaluated the numbers and have landed on $1.7 million.
It’s important to understand that it’s not an impossible figure to grow your nest egg to. With proper retirement planning, enough time, disciplined savings, and, most importantly, the right assets, many Canadians have a healthy chance of growing their retirement savings/investments to this mark.
Many stocks may qualify as the right “assets” for this quest, but there are three that may fit well with the retirement investment strategies and risk tolerances of most investors.
A vertical market software company
Topicus (TSXV:TOI) is a relatively “new kid” on the block and, with a market capitalization of $7.1 billion, a giant in the venture capital market. But even though it’s a new stock, it represents a mature business well-known in the European markets. It specializes in vertical market software with applications only within a specific industry.
There are benefits of developing vertical market software, including a predictable consumer pool and higher customer loyalty. But these benefits are not why Topicus is a good candidate for helping you build your retirement nest egg.
The stock has already shown its decent growth potential in the limited time it has spent on the market. Then there is its parent company — one of Canada’s most consistent growth stocks.
If Topicus follows in the footsteps, you may be able to grow your savings in the company several-fold within the span of a decade.
An IT consulting company
Tech and IT are always evolving, and even though technologies become obsolete at an alarming pace, IT companies that help businesses with new technologies thrive. One such company is Montreal-based CGI (TSX:GIB.A). The company offers a wide array of IT services that overlap with businesses from various industries.
It also has a portfolio of proprietary solutions targeting the specific needs of its customers, including trading, energy grid monitoring, customer lifecycle, and payments.
The stock is among the top performers in the tech sector and has been for well over a decade. It has risen by about 350% in the last 10 years. At this rate, it has the potential to grow your capital over 10 times in three decades. So, if you divert about $70,000 into the company and it keeps growing at this pace, you may grow it to over $700,000 in three decades, which takes care of over 40% of the requisite sum.
A management and consultancy firm
If you are looking for a different spin on consultancy, WSP Global (TSX:WSP) is a compelling candidate. The company offers complex engineering solutions and solves sophisticated problems in transportation, infrastructure, environment, and energy. This diversified focus and a powerful network of consultants give the company its edge.
But even though its business model is impressive and potentially long-lasting (an important consideration for a long-term holding), the growth potential is even more impressive, especially from the decade-long perspective. The stock offered roughly 848% returns in the last decade via both capital appreciation and dividends. Even if it offers half that in the coming decades, you can experience 12-fold growth in 30 years.
When you are choosing stocks you may hold on to for multiple decades, fundamental analysis might not be enough. You also have to take the business model, industry, and macro factors affecting a company’s growth potential into account.