$100,000 in Savings and These 4 Stocks Could Help You Retire in 2 Decades

You are eligible for your pension, even if you retire early. You have to fill the gap in between with savings and investments and have enough left to supplement your pensions.

| More on:
Retirement plan

Image source: Getty Images

Retiring early is the dream of hundreds of thousands of Canadians, but only some get to realize that dream. It requires a massive nest egg to sustain the early retirees until their pensions kick in and then augment that pension to maintain their financial lifestyle.

The earlier you want to retire, the larger your nest egg should be. Growing this nest egg would require suitable investments, decent capital, and enough time.

If you are starting with $100,000 in savings and two decades to grow your investments, four top stocks may help you build a nest egg to the requisite proportions.

A bank stock

National Bank of Canada (TSX:NA) is the best growth stock in the Canadian banking sector. It’s the smallest of the Big Six banks and mainly relies upon its regional presence. Still, its growth has been decently higher than its larger counterparts that boast a significant international presence as well (mainly in the U.S.).

Like all other bank stocks in Canada, it’s also a generous and reliable Dividend Aristocrat, which magnifies the overall returns the company promises. The bank returned over 290% to its investors in the last decade through capital appreciation and dividends.

Assuming it maintains this number for the next two decades, you may experience about 5.8-fold growth. If you divert one-fourth of your capital ($25,000), you may see it rise to $145,000 with this projected growth.

A non-bank lender

While banks dominate Canada’s lending market, hundreds of thousands (if not millions) of Canadians may not qualify to lend with a bank due to a low credit score. This is where companies like goeasy (TSX:GSY) come into play.

It offers (small) personal and home loans to people with less-than-ideal credit scores/history. This business model has allowed this company to grow to the size of a small bank, and it has over 400 locations across Canada.

Apart from a correction the stock has yet to recover from, it has been an exceptional growth stock in the last decade. Even though it’s currently trading at a 57% discount, its overall returns (including dividends) for the last decade are massive — about 1,074%. Assuming the stock might grow your capital by 20-fold in the next two decades (following its current growth pattern), you may grow $25,000 into about $500,000.

A tech stock

Tech stocks in Canada generally have good track records regarding capital growth, but if you add consistency to the mix, no stock comes even close to Constellation Software (TSX:CSU). It has been one of the most consistent growth stocks for the last two decades in the entire TSX — not just the tech sector.

In the last decade, the stock has grown by about 1,890%. If you add the dividend, the overall returns become even more attractive — over 2,300%. Assuming it can maintain this momentum for the next two decades, you may invest $25,000 for a nest egg of around $1,150,000 (best-case scenario).

An EV stock

Lion Electric (TSX:LEV) is a small-cap electric vehicle (EV) stock growing smaller daily. Apart from a brief bullish momentum early on, the stock has mostly gone down since its inception and is currently trading at a 90% discount from its peak. Since it only started trading on the TSX in 2021, we don’t even have a half-decade worth of data on the stock’s growth potential.

However, as an EV stock, it may be a promising untapped opportunity. It’s also a bit unique compared to traditional EV stocks, which make personal/family vehicles, thanks to its focus on mass transport, primarily school buses. When the U.S. and Canadian governments start covering their school fleets with EVs, companies like Lion Electric may see their business soar, and the stock might follow.

If we use NFI Group’s (a similar but older company) rise to the peak as a precedent, we have about 800% growth in less than a decade (about 1,600% in two decades if the growth had continued). If Lion Electric matches that growth in the next two decades, your $25,000 capital may grow to $400,000.

Foolish takeaway

The four stocks (assuming the best-case scenario) might help you build a nest egg of about $2,195,000. If you reinvest the dividends instead of cashing them out, the number might be significantly higher because three of the four companies pay dividends. That can pave the way for early retirement.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software and NFI Group. The Motley Fool has a disclosure policy.

More on Dividend Stocks

potted green plant grows up in arrow shape
Dividend Stocks

Best of Both Worlds: 3 Growth Stocks That Also Pay Dividends

Dividend stocks are great until a downturn ends. But luckily, these three dividend stocks also offer a massive amount of…

Read more »

Payday ringed on a calendar
Dividend Stocks

Monthly Passive Income: 2 Top TSX Dividend Stocks to Buy in June 2023

Here are two of the best TSX monthly dividend stocks you can buy in June 2023.

Read more »

Female hand holding piggy bank. Save money and financial investment
Dividend Stocks

RRSP Wealth: 2 Great Canadian Dividend Stocks to Buy in June 2023

Top TSX dividend stocks are now on sale.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Retirees: 2 TSX Dividend Stocks That Reliably Pay You Cash

With strong underlying businesses, high-yielding dividends, and stable cash flows, these two TSX stocks can be excellent investments to consider.

Read more »

sad concerned deep in thought
Dividend Stocks

Better Buy for TFSA Passive Income: Telus Stock or TD Bank? 

Your passive income depends on the dividend yield you lock in. Telus and TD Bank are good investments, but which…

Read more »

Dividend Stocks

Turn a $10,000 Investment Into $844 in Cash Every Year

The power of compound interest from regular investments in quality dividend stocks can deliver solid long-term returns and make you…

Read more »

Dividend Stocks

Grab This 10.8% Dividend Yield Before It’s Gone!

This dividend stock is down 43% in the last year, and it's about to turn around in the near future.…

Read more »

grow dividends
Dividend Stocks

2 TSX Dividend Stocks With Seriously Huge Payouts 

If you are looking for dividend payouts of up to 7-11% of the stock price, now is the time, as…

Read more »