“Is it too late to plan for retirement?” wonders Samantha, who is in her mid-30s and has achieved stability in her career. There is a notion that one should set their career by age 30, start a family, buy a house, and work on their own venture by 35, or they will fall behind peers. Life doesn’t work the same for everyone. While you live life at your own pace, a question about retirement arises. Is 35 the right time, or is it too late?
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When is the right time to kickstart a retirement plan?
The answer depends on when you want to retire. How much debt do you have? What are your financial needs? Do you have any dependents or other sources of pension, such as an employer pension?
There is no standard answer to when to plan retirement. However, 35 is an age at which you have ample time to kickstart a retirement plan, as it takes a minimum of 15–20 years to build a sufficient portfolio from which you can live off.
I have $10,000 for a retirement plan; where should I begin?
If you have been employed or self-employed, you have been contributing to the Canada Pension Plan (CPP). But depending solely on it is not a wise option. You can begin retirement planning with $10,000 and build from there. Dividend stocks alone do not make up your retirement pool. If you have a 20-year investment horizon, you could consider some long-term growth stocks like Shopify (TSX: SHOP) and Topicus.com (TSXV: TOI) to build a portfolio.
Shopify stock
Considering a 10-year horizon, e-commerce could see technological revolutions where your fridge automatically orders groceries, or houses are bought online, something Opendoor Technologies is offering. They have even hired Shopify’s CEO, Kaz Nejatian, to do that job.
No matter how e-commerce shapes up, its roots will be the core platform on which brands, from your neighbourhood retailer to multinational chains, are building their online store. Take the case of Amazon; Shopify could not replace it. And Amazon stock was a buy even in 2015 when it had already reached every household.
Today, Shopify is where Amazon was in 2015, having achieved 20–25% revenue growth and positive operating income for eight quarters in a row. Stable growth alone can help you double your money in two to three years if you buy the dip. Accumulating the stock during its seasonal dip from March to September can help you accelerate your returns.
Ten years is a long time. The market can absorb bubbles and a busines can turn around from a near bankruptcy to profitability if the stock is fundamentally strong. A $5,000 investment in Shopify 10 years ago would have bought you 110 shares, which are now worth $22,330. And if you were vigilant enough to have booked profits during the 2021 peak when it was trading above $1,800, your $5,000 would be $198,000. Staying vigilant around bubbles can give you an advantage.
Topicus.com
While Shopify stock is banking on large-scale adoption for growth, Topicus.com is making growth a precursor to its acquisitions. Topicus.com keeps acquiring companies with stable and sustainable maintenance cash flows. It ensures sustainability by picking companies operating in niche markets with little to no competition and catering to mission-critical applications. They are like the system you can’t afford to malfunction, and thus spend on maintaining it.
The cash flows are reinvested to acquire more companies. Such an effect of compounding absorbs a few bad deals and a few years of negative cash flow in return for long-term growth.
Topicus.com has been trading on the TSX for less than five years and has already converted $5,000 to $12,900. It is currently where Constellation was 10–12 years ago. Once the effect of compounding gathers momentum, the capital appreciation could grow your $5,000 to $50,000 in 10 years.
Where to build a retirement pool at age 35?
Such stocks are better invested through the Tax-Free Savings Account (TFSA), as it ensures your retirement pool is tax-free. A TFSA pension can also help you get the maximum Old Age Security (OAS) pension at age 65 by keeping your taxable income lower.
