Early retirement is the dream of many, but only some manage to make this dream a reality. It’s less about having enormous savings at your disposal and more about having realistic expectations, a good investment strategy, and adequate risk tolerance.
Let’s say you are in your 30s, and you want to retire in two decades, a few years before you hit the actual retirement age. You might be able to pull it off with just a fully funded TFSA ($88,000) and the right stocks.
A transport and logistics company
With a market capitalization of $12.7 billion, TFI International (TSX: TFII) is counted among the large-cap stocks trading on the TSX. Over the years, it has become one of the largest logistics/trucking companies in Canada and has developed an impressive network of over 550 facilities and eighty operator companies in North America.
It’s growing both organically and through an aggressive acquisition strategy. It has acquired about 118 businesses in the last 15 years.
TFI International was a compelling growth stock well before the pandemic, though it was supercharged after the 2020 crash. This significantly improved its returns for the past 10 years — 635% through price appreciation and about 814% if you include the dividends. If the stock can replicate this return potential in the next two decades, you might be able to grow your capital by about 16 times.
A tech company
Tech stocks in Canada are known for their capital-appreciation potential. Descartes Systems Group (TSX: DSG) is one of the most stable examples of the growth potential the tech sector is coveted for. It’s a logistics technology company that has developed a massive network of logistics technologies and has integrated business intelligence with its platform.
As a stock, Descartes only offers capital-appreciation potential (no dividends), but that’s compelling enough. It returned about 840% to its investors through price appreciation, and if it keeps growing at that pace in the future, it’s possible to grow your capital in this company to about 16.8 times in the next 20 years.
An engineering services company
WSP Global (TSX: WSP) has a long and proud history of offering engineering and other professional services to a wide variety of clients. The company caters to businesses from multiple sectors, including real estate, infrastructure, transportation, energy, and environmentally oriented businesses, which is expected to be a thriving market as the world becomes greener.
It’s a compelling pick, not just for its growth potential but also as a stable blue-chip company that has a massive international reach. It pays dividends, but they pale in comparison to its capital-appreciation potential, which pushed the value of the stock up over 600% in the last 10 years. At this pace, it might grow 12-fold in the next two decades.
Foolish takeaway
If we consider the best-case scenarios, and all three stocks manage to grow, as per the projections in the next two decades, it’s possible to grow a fully-stocked TFSA to over a million dollars.
That sum, in a dividend portfolio offering a 6% collective yield, can help you generate a $5,000 income, which, combined with your Old Age Security and Canada Pension Plan pensions (when they finally kick in), can help you live your golden years comfortably.
