Most Canadians invest for one reason – to have a sizable nest egg waiting for them in retirement. The government pensions are not nearly enough to cover all the expenses most Canadian seniors and retirees have. Without adequate savings and secondary income sources of their own, they might be too financially constrained to enjoy their golden years.
This is why investment is a significant part of their retirement planning. Another part is choosing the right place to build this retirement nest egg. The Tax-Free Savings Account (TFSA) is a great option, but it’s often reserved for investments and income you might need constant access to.
However, a Registered Retirement Savings Plan (RRSP) is dedicated to retirement savings by design. Parking your RRSP cash in the right stocks can help you build a sizable nest egg for your golden years.
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A real estate service company
FirstService (TSX: FSV) is a giant in two industries – property management and essential property services. It operates a portfolio of over 9,000 residential communities, containing many housing units.
The company controls upwards of 6% of the available market in this niche, making it the largest property manager in North America. As for the second business segment, it has eight brands under its essential property services banner.
Many of them are among the leaders in their respective market segments, such as closets, painting, etc. This dominance in the market gives them a significant edge, not just as a business but also as an investment. They have rock-solid financials backing up their dividends, though the yield is too low.
However, its most impressive investment characteristic is its growth potential. The stock has risen well over 100 percent in the last five years alone, and this included a major slump covering a major part of this duration. Considering its current performance and strategic acquisition strategy, it may keep performing this way or even better in the coming decades.
A stock like this can be transformative for your RRSP portfolio, and given enough time, it can give a significant boost to the size of your nest egg.
A tech company
Descartes Systems Group (TSX: DSG) is one of the few tech stocks in Canada that have offered consistent growth for over a decade. Usually, stocks in the tech sector tend to offer smaller periods of rapid growth, which, while useful in its own right, undermines their position as buy-and-forget RRSP stocks.
Descartes, in contrast, is one of the best candidates for a long-term holding (from the tech sector), and it’s not just because of its consistency. The stock returned 184% to its investors in the last five years. At this rate, you can expect well over 3 times growth in less than a decade.
The stock doesn’t pay any dividends, but if it continues to perform this way, it can be a compelling addition to your retirement portfolio.
Foolish takeaway
It’s important to understand that even though the two might technically qualify as “buy-and-hold” stocks, a more sophisticated and active investment approach wouldn’t hurt. You can keep them in your RRSP as long as they are performing well and exit when they are entering a long-term slump phase.
Then, you can buy them at a discounted rate (ideally just before their recovery potential kicks in) to significantly enhance your overall return potential, giving your nest egg an additional boost.
