The primary goal of investors is to save for retirement and lead a comfortable life once the monthly paycheque stops. While Canada has a couple of pension plans for residents, you still need to have substantial savings in retirement. For instance, the average monthly payout from the Canada Pension Plan (CPP) is less than $1,000, which is quite low.
So, you need to create a retirement nest egg by investing in asset classes that consistently outpace inflation. Historically, stocks have allowed long-term investors to create game-changing wealth. Despite the ongoing volatility surrounding the stock market, equities remain the best bet for investors.
Moreover, if you hold stocks in a TFSA (Tax-Free Savings Account), you will benefit from tax-sheltered gains for life, making it a popular registered account in Canada.
Source: Getty Images
Invest in the TFSA and delay the CPP payment
The maximum cumulative contribution room in a TFSA has risen to $88,000 in 2023. If you invest this sum in a diversified index fund such as the S&P 500, your investment would balloon to $600,000 in 20 years, given annual returns of 10%.
Alternatively, you can also consider allocating a portion of your TFSA contribution towards quality growth stocks to help you generate market-beating gains and further accelerate your savings.
Once you have achieved your retirement goal, it might be advisable to delay your CPP payout. For every month you delay the CPP after the age of 65, the payment will increase by 0.7%. So, Canadians delaying their CPP by five years will see their pension payments increase by 42%, which is a significant bump.
Here are two top TFSA stocks you can buy and hold in 2023 that should help you beat inflation over time.
CrowdStrike stock
The demand for cybersecurity products and solutions should remain strong, given the number of data breaches and hacks has increased exponentially in recent years. CrowdStrike (NASDAQ: CRWD) is one of the leading companies in cybersecurity and has already returned 164% to investors in the last four years.
In the fiscal first quarter (Q1) of 2024 (ended in April), CrowdStrike increased sales by 42% year over year to US$692.6 million. Comparatively, its adjusted net income was up 82% at US$136.4 million, while free cash flow surged 44% to US$227.4 million.
The company ended Q1 with an annual recurring revenue of US$2.73 billion, and it expects this number to reach US$5 billion by fiscal 2026.
CRWD stock is also priced at a discount of 20% to consensus price target estimates.
Lightspeed stock
A company operating in the fintech space, Lightspeed (TSX: LSPD) stock is down 87% from all-time highs. In fiscal 2023 (ended in March), Lightspeed reported revenue of $730.5 million, an increase of 33% year over year. It ended the year with a net retention rate of 110%, which suggests existing customers increased spending on the platform by 10% in the last year.
While still unprofitable, Lightspeed expects to report a positive adjusted earnings before interest, tax, depreciation, and amortization by the end of fiscal 2024.
Analysts now expect sales to increase by 22% to $1.19 billion in fiscal 2023, which suggests LSPD stock is priced at less than three times forward sales.
Lightspeed stock is trading at a discount of 22.6% to consensus price target estimates.
