It’s a good idea to get started investing early, even if you’re moving ahead with a relatively small amount (think $2,000). Indeed, you won’t be able to make a considerable amount with a limited sum, but you will be able to build a nice investing foundation for yourself early on. As your knowledge base builds up after having the opportunity to better learn the ropes in markets, you’ll eventually feel more comfortable picking and choosing your own stocks with future contributions.
Indeed, it’s never too early to get started investing. In this piece, we’ll look at two beginner-friendly stocks that could make sense to check out as you begin a journey that may very well lead you to a comfortable retirement.
If your bank or brokerage requires you to have a minimum deposited amount (let’s say $10,000 or so) to avoid added service fees, it may make sense to stick with TSX Index or S&P 500 index funds until you’ve got five figures to put to work. However, if there’s no minimum or you can pick up partial shares of companies for little or no commission, the following two picks, I believe, are worth buying or watching closely going into a new year.
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Fairfax Financial Holdings
Fairfax Financial Holdings (TSX: FFH) is arguably one of the better beginner stocks out there. It’s an insurance and investment holding company run by a brilliant value investor named Prem Watsa, a man that some may refer to as Canada’s Warren Buffett.
With a diversified book of businesses and an improving insurance operation, Fairfax is a pretty diversified one-stop shop for Canadian investors looking for ways to outdo the TSX Index over many years. In the past five years, shares have more than tripled to a 236% gain. Though past performance may not suggest what’s up ahead, I like the momentum, valuation (8.65 times trailing price to earnings), and dividend (1.01% yield).
Of course, Fairfax may not be able to work its way into the TSX 60 Index anytime soon. Either way, I think the name will be a worthy addition if its winning streak continues for another year.
At just shy of $2,000 per share, you’ll probably only be able to pick up one share of the stock. However, I think it’s a great place to start if you’re looking to invest under one of the most respected investors in the country.
Alphabet
Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) is a U.S. tech firm in the Magnificent Seven that I still view as a strong buy for Canadian investors at today’s modest multiples. The artificial intelligence (AI) and search giant recently impressed Wall Street with its quantum computing chip “breakthrough” named Willow. Even Elon Musk sounded impressed by the innovation.
Indeed, Alphabet has many innovations up its sleeves, AI being just one of them. Whether we’re talking about quantum computing innovations, its autonomous vehicle business Waymo, or its Gemini language model, you’re getting so much forward-thinking innovation from the name.
For now, Google Search and YouTube are cash cows, but in a few years’ time, look for new money-makers to step up. Either way, the stock’s absurdly cheap at 24.7 times trailing price to earnings, making the $2.2 trillion firm worth looking at even with today’s unfavourable Canadian dollar to U.S. dollar exchange rate.
