$100,000 in Savings and These 3 Stocks Could Help You Retire in 17 Years 

Do you have $100,000 in savings? Now is an opportune time to invest your savings in these stocks and get a head start in retirement planning.

| More on:
Retirement plan

Image source: Getty Images

Planning for retirement early is crucial, as time in the market can compound your returns with the economy. If you are in your late 30s and have up to $100,000 in savings, you could retire comfortably a millionaire in the next 17 years. To convert your $100,000 into a million dollars, you need a stock portfolio that can give you a 12% average annual return. 

How to build a portfolio that earns for you

A 12% average annual return won’t be possible with dividend stocks alone. A well-diversified portfolio across dividend stocks for passive income and growth stocks for wealth creation can give you a self-sustaining portfolio. Here’s how your retirement savings will compound and earn for you while you enjoy your retirement. 

YearInvestmentInvestment Return @ 12%Total Amount
2041 $113,174.9$1,056,298.6
How to convert $100,000 into $1 million.

Suppose you start with $100,000 in savings and invest in stocks that give a 12% average annual return. While these savings can give you a head start, you should invest regularly to retire with a sizeable portfolio. 

A $6,000 annual investment through the Tax-Free Savings Account for the next 17 years can grow your retirement pool to $943,000. After 17 years, even if you don’t contribute, your portfolio will automatically earn you more than $100,000 annually. You can live off your annual returns. 

Where to invest $100,000 savings

Now is a ripe time to invest $100,000 savings in stocks, as rising interest rates have corrected inflated stock prices. Some Dividend Aristocrats are available at their 52-week low, giving you an opportunity to lock in over 7% annual dividend yield. 

One stock for passive income in retirement 

BCE (TSX:BCE) stock is at its pandemic low due to overall market weakness and losses from Bell Media. BCE has been streamlining its news operations, which incur $40 million in annual operating losses, as it is losing advertising revenue. It expects to lose over $250 million in annual phone revenues from this restructuring. 

The short term will be challenging as the telecom and media companies undergo a generational shift amid a weak economic environment. But BCE will enjoy long-term secular growth 5G will bring through artificial intelligence (AI) at the edge. 

Now is a good time to invest a lump sum and lock in a 7.4% dividend yield. The company has not cut dividends in the last +40 years and is unlikely to break this trend. In the worst-case scenario, it might pause or slow its 5% annual dividend-growth rate. 

You could consider investing $30,000-$35,000 in a BCE dividend-reinvestment plan (DRIP) and compound your dividend income. 

Two stocks for capital appreciation 

Dye & Durham (TSX:DND) is a due diligence, task and workflow management software for legal and financial professionals. The company is currently in losses as its biggest revenue source, the real estate industry, is facing headwinds. Moreover, DND piled up debt on its balance sheet due to its aggressive acquisition spree in the last few years. 

DND management is focusing on reducing debt and improving cash flow. The company has the potential to recover as the real estate market revives. Till then, the stock could see a downtrend if fears of a recession materialize. You could invest $5,000-$6,000 and hold it till the stock recovers to its normal trading price of over $20, representing a 47% upside. 

Another growth stock is Ballard Power Systems (TSX:BLDP), which is working on hydrogen fuel cells. This technology is still in the early stages as the cost of producing hydrogen cells is high. Hence, it will take a while before Ballard Power Systems can show sizeable gains. But once the technology becomes feasible, the stock could grow by leaps and bounds and make up for lower returns of other stocks. 

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 Puja Tayal has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

grow dividends
Dividend Stocks

2 Unloved TSX Dividend Stocks That Could Soar in 2024

These top TSX dividend stocks look cheap right now.

Read more »

TFSA and coins
Dividend Stocks

3 TFSA Stocks I’m Eyeing for My 2024 Contribution

In 2024, I'll be adding dividend stocks like Brookfield to my account.

Read more »

TFSA and coins
Dividend Stocks

Canada Revenue Agency: 1 Crucial TFSA Change You Need to Be Aware Of

The TFSA contribution limit is out for 2024 and has increased to $7,000, raising the cumulative contribution room to $95,000.

Read more »

money cash dividends
Dividend Stocks

3 Passive-Income Streams That Will Take You to the Next Level

These passive-income streams do not take a second more of your time. Focus on your day job and look forward…

Read more »

retirees and finances
Dividend Stocks

Retirees: How to Earn $5,500 Per Year in Passive Income Without Putting OAS at Risk

Retirees can use this strategy to boost tax-free income while lowering portfolio risk.

Read more »

edit Women wearing red sweater shopping online and using credit card at home office
Dividend Stocks

How to Create Enough Passive Income to Fund Your Holiday Shopping

Passive income isn't hard work when you find the right methods, and you can create so much cash holiday shopping…

Read more »

green power renewable energy
Dividend Stocks

The Smartest Canadian Stocks for Steady Passive Income

Trying to find reliable passive income and capital upside? Check out these 3 smart stocks for steady long-term returns.

Read more »

Volatile market, stock volatility
Dividend Stocks

My Top No-Brainer, High-Yield Dividend Stock to Buy in 2023

Pizza Pizza Royalty would be an excellent buy, given its stable cash flows and high dividend yield.

Read more »