It’s no secret that saving your capital to buy stocks is essential to building your nest egg for retirement and achieving millionaire status. However, when it comes to investing, there are certain strategies to employ and ones to avoid in order to maximize the growth of your capital and gain as much wealth as possible.
For example, many investors, especially those who start young, are drawn to higher-risk investments such as meme stocks. Although it’s true that young investors have a longer investing horizon and can generally take on more risk, certain high-risk companies, such as many meme stocks, should always be avoided.
When it comes to long-term investing and reaching millionaire status, the power of compounding will be your best friend. What that means, though, is that as important as it is to maximize the gains you make investing in stocks, it’s even more important to minimize the losses in your portfolio.
For example, if you invest for five years and earn returns of 11% in the first year, 14% in the second year, and 10%, 12% and 9% in the third, fourth and fifth years, respectively, you would have earned a total return of 69.9% in just those five years, or a compounded annual growth rate (CAGR) of 11.2%.
However, if you buy riskier stocks and your returns are 18%, 15%, 21%, -25% and 19% in each of the five years, you would only have a total return of 46.6%, or a CAGR of 7.9%.
Therefore, even though you had higher returns in four of the five years, losing money in just one year can set you back significantly, showing why it’s essential to pick the highest quality stocks to invest in for the long haul.
Three of the best Canadian stocks to buy now
Since it’s crucial to avoid losing money on our investments, picking the highest-quality stocks that you can have confidence in owning for the long haul is paramount.
Therefore, if you’re looking for some of the best Canadian stocks to buy now, I’d recommend investments such as Alimentation Couche-Tard (TSX: ATD), Thomson Reuters (TSX: TRI), and Canadian Apartment Properties REIT (TSX: CAR.UN).
Each of these stocks has high-quality business models that allow them to grow consistently over the long haul while remaining robust in times of economic turmoil.
A Growing Retail Chain
For example, Alimentation Couche-Tard owns gas stations and convenience stores in countries all over the world. These are highly defensive businesses that generally have sticky demand regardless of whether the economy is growing at a healthy pace.
Additionally, Couche-Tard’s extensive network of stores allows it to achieve cost efficiencies, often resulting in higher margins compared to those of smaller competitors. This scale allows for continued investment in growth, both organically and through acquisitions.
Over the last 10 years, Couche-Tard has earned investors a CAGR of 18.9%, showing why it’s one of the best stocks to buy now and hold for years.
A Global Information Empire
Thomson Reuters is another high-quality business with a truly impressive record of consistency. Not only does it have a diverse portfolio of operations across various sectors, including legal, media, tax, and accounting, but as a leading global news and information service provider, Thomson Reuters has established a strong brand reputation.
Furthermore, nearly 90% of its revenue comes from subscription services, which gives it a tonne of predictable and stable recurring sales and leads to consistent free cash flow generation.
In fact, over the last decade, it has performed even better than Couche-Tard, earning investors a CAGR of 21.2%, showing why it’s also one of the best Canadian stocks to buy now.
A Highly Diversified REIT
Finally, real estate is another industry where you can find many high-quality and reliable stocks, especially in residential real estate, given its defensive nature.
And with Canadian Apartment Properties REIT (CAPREIT) being the largest and most diversified residential REIT in Canada, it’s no surprise that it’s one of the top stocks to buy now.
CAPREIT constantly invests in upgrading its existing properties or acquiring new assets to grow operations and its cash flow.
And while it hasn’t grown as much as Couche-Tard or Thomson Reuters, with CAPREIT earning investors a CAGR of 11.2% over the last decade, it’s certainly one of the best and most consistent Canadian stocks to buy now and have confidence in owning for years to come.
