There are likely so many Canadians who currently continue to hoard their cash rather than investing it. What’s frustrating is that many Canadians may actually have it in an investing account! Whether it’s a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) or anything else, why have it there if you’re not investing?
There is no good answer. Instead, stop hoarding your cash and see this market for what it is: an opportunity. In fact, it’s an opportunity to get some of the best passive income you’ve been dreaming of!
Deals on deals
Think of this downturn as a fire sale rather than a crash. Just as your favourite clothing lines might go on sale once in a while, every decade, the market also goes on sale. As the economy struggles, stocks plunge, and you can buy them for a steal.
This is especially beneficial if you want to lock in some great deals on passive-income stocks. What was once a yield at around 3% might suddenly be 5%! While the amount you get per share is the same, it costs far less to purchase those shares.
An example
Let’s look at the example of Canadian Imperial Bank of Commerce (TSX:CM). CIBC stock traded at $82.83 at its 52-week high. It now trades at just $56.49 as of writing. This means it’s certainly on sale for long-term investors.
In fact, CIBC stock is a great example of a deal you could buy today. CIBC stock is one of those TSX stocks that has been around for decades. It’s also a Dividend Aristocrat, increasing its dividend year after year for over 25 years. And it is a Big Six bank. It’s a great time to buy the stock.
Canadian banks have provisions for loan losses. Even with loan repayments down, CIBC has enough left on the side to recover to pre-fall prices within about a year. You can see this by looking to past performance.
Create massive income for life!
Now, if you want to create passive income that will last a lifetime, now is the time. CIBC stock is a great example, and I can also show you the difference in what you would get.
If you’re sitting on about $15,000, let’s see how much you could get in passive income now, as opposed to 52-week highs.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND (ANNUAL) | TOTAL PAYOUT (ANNUAL) | FREQUENCY |
| CM: 52-week highs | $82.83 | 181 | $3.40 | $615.40 | quarterly |
| CM: Today | $53.39 | 281 | $3.40 | $955.40 | quarterly |
As you can see, you can get an additional 100 shares buying today rather than 52-week highs. Further, you get an additional $340 each year! And you get that all for the same investment — just done at a different time.
Bottom line
While timing isn’t everything, it can certainly be something when you buy during a downturn. While we haven’t entered a recession yet, CIBC stock provides a great example as to why investing when the market is down is a great option to consider. When the market recovers, and it will, you’ll be sitting on 100 extra shares (or more) that will lead you closer to your savings goals far sooner.
