Want $1 Million in Retirement? Invest $50,000 in These 2 Stocks and Wait a Decade 

Investing to earn $1 million in a decade requires high-growth stocks. If you are willing to take risk, these stocks could make it happen.

| More on:
Retirement plan

Image source: Getty Images

The way stock markets work, time in the market is more important than timing the market. If you want to convert $50,000 into $1 million in 10 years, your portfolio has to give you a compounded annual growth rate (CAGR) of 35%. However, the 10-year CAGR of the TSX Composite Index is 4.4% and 20% for iShares S&P/TSX Capped Information Tech Index ETF. The stock market is risky. But you have to invest in risky high-growth stock to get a 35% CAGR in a decade.

How to prepare a returns target for a $1 million retirement portfolio

It is difficult to identify a stock that can give a 35% CAGR from a stock. If your portfolio generates a lower return, the time required to convert a $50,000 investment to $1 million will increase. It is always better to consider all scenarios and prepare for everything. Because as value investor Warren Buffett says, “Risk comes from not knowing what you’re doing.”

I have prepared a table of various scenarios of different returns CAGR and the years it will take to reach $1 million:

CAGR35%25%15%10%
Years10142232

I calculated annual returns at 35% to determine the number of years. 

The first year calculation was $50,000 x 1.35 = $67,500. 

Since it is a CAGR, next year’s calculation started from the previous year’s close: $67,500 x 1.35. 

Just keep multiplying the previous year’s returns with 1.35, and when the amount crosses $1 million, you know the number of years it will take. 

YearInvestment Return @ 35%
2024$67,500.0
2025$91,125.0
2026$123,018.8
2027$166,075.3
2028$224,201.7
2029$302,672.3
2030$408,607.5
2031$551,620.2
2032$744,687.3
2032$1,005,327.8
10 Years

You can use this formula and tweak your CAGR or investment amount depending on how your portfolio is performing. A stock won’t give a consistent 35% return every year. Some years could see a decline, and some could see a significant surge. 

Two growth stocks to buy and wait for a decade for a $1 million portfolio

It is difficult to determine a high-growth stock, as a 35% CAGR return needs a business in the growth stage with the potential to scale successfully. I have identified two such stocks that have the potential to be high-growth stocks. 

Advanced Micro Devices 

AMD (NASDAQ:AMD) is a stock with significant growth potential, as it has proven in the last nine years with its turnaround since Lisa Su took over as chief executive officer. Between October 2014 and October 2023, a $10,000 investment would be $317,000 by now, growing at 46.8% CAGR. Since the stock has already achieved its turnaround rally, such a CAGR is difficult to replicate. But a 30-35% CAGR is possible as secular trends of artificial intelligence and 5G drive demand for data centres and embedded chips. 

The one area that could drag its returns in the short term is its high exposure to the declining PC and laptop chip market. While PCs and laptops will continue to grow, their growth rate will slow as most of the demand comes from replacement. You can buy the stock now and even when it dips due to short-term headwinds. 

Ballard Power Systems stock

Apart from a turnaround stock that still has its moat, a company making revolutionary technology can see significant growth. But most of its growth will likely come in the later years. Canada’s Ballard Power Systems (TSX:BLDP) has been working on hydrogen fuel cells for decades and has successfully tested it on commercial vehicles and marine. 

The hydrogen fuel industry is currently facing infrastructure and supply chain bottlenecks. However, several major infrastructure investments are progressing. Germany and Norway plan to replace Russia’s natural gas and coal with hydrogen pipelines. Australia and many other countries are actively investing in hydrogen fuel, as it has the potential to give a nation energy security while reducing carbon emissions. 

While Plug Power is leading in the hydrogen space, Ballard Power Systems is also an attractive investment. Once the hydrogen fuel cells become mainstream, BLDP stock could surge severalfold and surpass the 35% CAGR target. 

While I would not suggest investing $25,000 in BLDP, given its high risk, you can invest $10,000 and wait for a decade. 

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 recommends Advanced Micro Devices. The Motley Fool has a disclosure policy.

More on Tech Stocks

Happy family father of mother and child daughter launch a kite on nature at sunset
Dividend Stocks

Got $10,000? That’s All the Start-Up Funds You Need to Get Money for Doing Nothing 

Have you been delaying long-term investments for later? Investing money while you are working can help money work for you.

Read more »

A man smiles while playing a video game.
Tech Stocks

3 Top Gaming Stocks to Buy in February

Gaming stocks range from physical gaming locations to companies making computer gaming hardware. Each has its strengths and weaknesses.

Read more »

stock research, analyze data
Tech Stocks

Lightspeed Stock Drops 24% After Earnings, and I Think it’s a Buy

Lightspeed (TSX:LSPD) stock fell by 24% after earnings disappointed, but CEO JP Chauvet says the company is right on track.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Tech Stocks

Why Shopify Stock Jumped This Week

Shopify (TSX:SHOP) stock climbed 14% this week as analyst recommendations continue to come in ahead of earnings.

Read more »

Male IT Specialist Holds Laptop and Discusses Work with Female Server Technician. They're Standing in Data Center, Rack Server Cabinet with Cloud Server Icon and Visualization
Tech Stocks

3 Undervalued Software Stocks Set to Jump in 2024

These software stocks are overdue for a recovery, and that should certainly happen as they move back to profit in…

Read more »

A worker uses a double monitor computer screen in an office.
Tech Stocks

2 Artificial Intelligence Stocks You Can Buy and Hold for the Next Decade

AI technologies are rapidly evolving, and their impact on various economic and market segments is still not accurately quantified, which…

Read more »

edit Woman calculating figures next to a laptop
Energy Stocks

How Long Would It Take to Turn $20,000 Into $100,000 With TSX Dividend Stocks?

TSX dividend stocks can convert a one-time $20,000 investment into $100,000 if you make your dividends work for you. Let’s…

Read more »

Businessman holding AI cloud
Tech Stocks

Future-Proofing Your Portfolio: Embrace AI Stocks for Long-Term Growth

This AI stock recently surged by 40% in two days. OpenText stock is getting an AI makeover that may engineer…

Read more »