One of the most underrated ages for Canadian investors is age 45. At that point, you’re not at the beginning of your working life, but you’re not close to retirement either. What makes it interesting is that age 45 is a great time to perform a checkpoint on your TFSA and RRSP accounts to see if they are doing enough.
Understanding where your TFSA and RRSP accounts stand at 45 can shape the next two decades of retirement planning.
Recent estimates suggest Canadians in this age range may have TFSA and RRSP savings in the tens of thousands. Some may have more or less. Ultimately, the answer varies by circumstance.
But one key takeaway is often overlooked. There’s still enough time to boost your TFSA and RRSP accounts, provided that you pick the right investments.
That’s where the portfolio itself matters. Investors who want their TFSA and RRSP accounts to keep growing need a mix of income, diversification, and long-term compounding.
Fortunately, here’s a trio of picks that can do just that, even for a 45-year-old’s portfolio.
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BMO offers bank dividends and long-term compounding
Canada’s big bank stocks are strong long-term options. And in the case of Bank of Montreal (TSX:BMO), that appeal is huge.
BMO is Canada’s oldest bank, with a history that stretches back nearly two centuries. During that time, the bank has continued to grow and reliably pay its quarterly dividend.
Today, the yield on that dividend works out to 2.9%. The bank has also provided annual upticks to that dividend for over a decade. For investors reinvesting dividends, BMO’s yield and dividend history are major advantages.
Turning to growth, the big banks have turned to international markets to fund growth. In BMO’s case, that growth market is the U.S.
BMO currently operates in 32 state markets, resulting in billions of loan deposits across millions of customers.
In short, for investors considering how to bolster their long-term TFSA and RRSP accounts, BMO can provide both the growth and income-earning potential needed.
This combination of dividends and long-term compounding makes BMO a natural fit for TFSA and RRSP accounts.
Emera adds defensive utility income
Like the big banks, utility stocks represent another segment of the market known to provide both defensive appeal and income. In this case, Emera (TSX:EMA) adds that more defensive layer into the mix.
As a utility company, Emera operates in a sector less exposed to changes in consumer behavioUr. The company’s operations are backed by long-term regulated contracts that often span decades.
Adding to that appeal is the sheer necessity of utility service. No matter how the market is performing, people still need electricity. This gives Emera a unique defensive appeal that few companies can match.
The result is a recurring and stable revenue stream that allows Emera to invest in growth initiatives while paying out an attractive quarterly dividend. As of the time of writing, Emera offers a yield of 4%.
And like BMO, Emera has an established cadence of providing annual increases to its dividend going back nearly two decades. This makes the stock an ideal addition for investors looking to build their TFSA and RRSP accounts.
Add some monthly income and diversification
Rounding out the trio of investments to add to TFSA and RRSP accounts is an income ETF.
Specifically, BMO Monthly Income ETF (TSX:ZMI) is the option for investors to consider. The fund is designed to provide a monthly cash flow while offering potential for long-term capital growth.
The fund is a fund-of-funds, drawing from other income and bond-focused ETFs. In terms of income, BMO Monthly Income offers a yield of 4% that is paid out on a monthly cadence.
For 45-year-olds not ready to draw income, that monthly payout can provide more frequent compounding. The fund also reduces the need to pick every holding yourself, making it an ideal set-and-forget option.
Build your TFSA and RRSP accounts with intention
A typical 45-year-old still has decades to build their TFSA and RRSP accounts and ensure that they are moving in the right direction.
That’s where regular contributions, dividend reinvestment, and diversification can help.
Fortunately, the trio of options mentioned above can provide the income and growth potential as well as defensive appeal.
Buy them, hold them, and watch your TFSA and RRSP accounts grow.
