Time, stocks/assets, and capital are three important ingredients of retirement planning. The general rule of thumb for time and capital is that the less you have of one thing, the more you would need of the other.
Your investment choices can also make a significant difference. So, if you are in your 50s and just a decade away from your retirement or simply want to achieve reliable and powerful growth in a decade, you should keep an eye on three stocks.
When buying stocks for your retirement nest egg, the growth potential should be carefully balanced with stability. A company like Toromont Industries (TSX:TIH) is not a great pick just because of the growth potential it offers to its investors but also because of its business model and position in the industry.
Toromont Industries is one of the largest heavy-equipment dealers in the world, though that’s not the full width of its business operations. It has a number of different businesses under its banner, mostly related to heavy equipment and services, but it also has a mature refrigeration business.
As for growth, the stock rose about 371% in the last decade, and if you calculate the returns, including dividends, the number was significantly higher (460%). Assuming the stock offers similar returns in the next decade, you can grow your $50,000 capital to $230,000.
The tech sector has no shortage of powerful growth stocks, and Descartes Systems Group (TSX:DSG) is one of the prime choices.
The company has a logistics platform with a wide range of solutions associated with supply chain, logistics, and consumer management. In today’s data-driven world, platforms like Descartes Systems that offer supply chain/logistics visibility and make informed decisions in real time are highly coveted.
The stock has been going up almost consistently since 2008; in the last decade, it grew about 983%. That’s almost 100% a year, but even if it underperforms — i.e., grows around 600% in the next decade — you can turn your $50,000 in savings into a sizable $300,000 nest egg. Assuming it repeats history, your returns would be significantly higher (almost half-a-million dollars).
Thomson Reuters (TSX:TRI) markets itself as a “trusted provider of answers,” which may make it sound like a simple consultancy firm, but it’s much more than that.
It offers specific technological solutions and services to legal, news, tax, and risk & fraud industries. The proprietary solutions are part of the company’s strengths, and services to these industries are one of the primary factors responsible for its organic growth.
The stock is also a well-established Aristocrat currently offering a 1.6% yield. It may not look like much, but its dividends made up a significant portion of its returns in the last 10 years. The stock went up 390%, but if we add the dividends into the mix, the overall returns were about 610%. If it performs similarly in the next decade, you can turn $50,000 of capital into $300,000.
The three stocks, assuming their performance in the next decade matches or exceeds the performance in the past decade, can turn your $150,000 savings into a massive nest egg of about $830,000. All three are among the top stocks in their industries, making them good picks, even for investors with modest risk tolerance.