3 Ways to Grow $100,000 Into Huge Retirement Savings

Stocks like Canadian National Railway (TSX:CNR) can be good tools to build wealth with if you use them properly.

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Do you have $100,000 that you hope to grow into an amount that can pay for your retirement?

If so, you’ve got a ways to go, but it can definitely be done. A poll of Canadians recently found that most believe they can retire on $750,000. If you invest $100,000 at a 10% rate of annual return, then it will take you approximately 20 years to turn your initial amount into $750,000. Of course, this is simplifying things a little, because after 20 years, the “retirement number” will likely have grown to more than $750,000.

Still, this bit of simple math serves to illustrate just how much $100,000 can grow with just an “average” annualized return. In this article, I’ll explore a few ways in which you can grow $100,000 into a sum that could eventually pay for your retirement.

Guaranteed Investment Certificates

Guaranteed Investment Certificates (GICs) are fixed-income investments offered by banks. The way they work is, you give the bank money for an agreed on amount of time (say, a year), and in exchange, the bank agrees to pay you back more when the term is over. These days, you can get yields up to 5% on term deposits.

If you deposit $100,000 into such a GIC, you’ll get $105,000 back at the end! That’s $5,000 in free cash, and with inflation now below 5%, you could even realize a positive real rate of return on such a simple investment!


Another asset you can invest your $100,000 in is stocks. Stocks are riskier than GICs, but the returns on them are much higher when everything goes well.

Individual stocks like Canadian National Railway (TSX:CNR) can be a welcome addition to a well-diversified portfolio of stocks, bonds, and GICs. As you can see in the chart below, CNR’s stock has risen over time, rewarding investors who have had the patience to hold.

Will CNR continue rising in the future?

There are some signs suggesting that it will. First, it has only one competitor in Canada and only a handful in the U.S., so it doesn’t face much competitive pressure.

Second, it has had decent growth over the last 12 months, with revenue up 20% and earnings up 16%.

Third, it is highly profitable, with a 30% profit margin.

Fourth and finally, with a 22 price-to-earnings ratio, it isn’t nearly as expensive as certain other stocks on the market. Nothing is ever a sure thing, but “wide moat” stocks like CNR often deliver.

Index funds

Index funds like iShares S&P/TSX 60 Index ETF (TSX:XIU) are pooled portfolios of stocks based on entire stock market indexes. XIU is based on the TSX 60 — the 60 largest companies in Canada by market cap. The fund is very diversified, so investors “spread their eggs across many baskets.” It’s also fairly cheap, with a 0.16% management fees. Finally, it is the most popular index fund in Canada, which means it enjoys high trading volume and liquidity.

Overall, it’s a good asset to have in your portfolio. Throw in some U.S. and international funds, and you’ve practically got your whole portfolio built right there!

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 Andrew Button has positions in iShares S&p/tsx 60 Index ETF. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy.

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