Cash feels wonderfully responsible. The trouble starts when “I’m waiting for a better opportunity” quietly turns into years.
Consider $10,000 earning nothing for a decade. It would still be $10,000 at the end, which sounds harmless enough. Yet if that money instead earned an average 8% annually, it would grow to about $21,589. That’s roughly $11,600 in potential growth left behind.
That 8% is an illustration, not a promised stock-market return. Actual returns bounce around considerably. The point is what happens when time and compound growth get to work together.
Source: Getty Images
The job of cash
Investors absolutely should keep some cash available. An emergency fund, upcoming house purchase or money needed within the next few years doesn’t belong riding the stock market like a roller-coaster without a seatbelt.
Long-term money is different. The Bank of Canada targets inflation of 2% over time. Even at exactly that rate, prices would rise roughly 22% over a decade. So, money sitting idle isn’t really standing still. The purchasing power is gradually slipping backwards. Now look at what compounding can potentially do with the same $10,000.
| YEAR | CASH AT 0% | INVESTMENT AT 8% |
|---|---|---|
| Today | $10,000 | $10,000 |
| 5 | $10,000 | $14,693 |
| 10 | $10,000 | $21,589 |
The interesting part isn’t merely earning 8% in year one. It’s earning returns on previous returns in the years that follow. Waiting interrupts that process, and time is one ingredient investors can’t buy back later. So, what would I actually consider owning with money meant to stay invested for a decade?
DOL
Dollarama (TSX: DOL) is hardly a hidden Canadian stock. Yet it’s a useful example of the sort of company I’d rather own for the long haul than leave money indefinitely waiting for the “perfect” market.
Dollarama stock operates its familiar discount stores across Canada while expanding internationally through The Reject Shop in Australia and its investments in Dollarcity, including expansion into Mexico. It earns money from something wonderfully uncomplicated: selling inexpensive everyday products at enormous scale.
That simple model continues to produce some very simple growth. First-quarter fiscal 2027 sales jumped 21.4% year over year, helped by international expansion. More importantly, comparable-store sales in its core Canadian business grew 5.6%, with transactions up 3.5%.
Dollarama stock also repurchased almost two million shares for $339.1 million during the quarter. Reducing the share count means future earnings are spread across fewer shares, another way a profitable company can compound value for long-term owners. For Canadians still getting comfortable with buying stocks in Canada, that combination of a straightforward business and repeatable growth is appealing.
Considerations
Dollarama stock currently trades around $189 per share and roughly 39 times earnings. Nobody is going to mistake that for the clearance aisle. Australia is also pressuring margins while management converts stores and introduces Dollarama stock’s sourcing model. First-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) margin slipped to 31.6% from 32.6% a year earlier. Paying a premium valuation means investors need that expansion to work.
That’s why I wouldn’t argue investors should toss every spare dollar into Dollarama tomorrow. I would argue against allowing long-term money to sit permanently in cash because investing suddenly feels uncomfortable. Ten years gives good businesses an enormous amount of time to grow earnings, repurchase shares and expand.
Bottom line
The market will undoubtedly hand investors some ugly years along the way. Missing all of them means missing the compounding years too. In the case of Dollarama stock, that could mean missing out on even more future growth.
