Thirty years can forgive a lot of investing mistakes.
Start by 35, and you don’t necessarily need the next 10-bagger, a six-figure salary, or perfect timing. You mostly need money invested early enough that compound growth gets decades to do the heavy lifting.
Consider $500 invested every month until age 65. At an illustrative 7% annual return, that could grow to roughly $610,000. Wait until 45? The same monthly investment reaches only about $260,000.
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Ten years matter
The Financial Consumer Agency of Canada makes the point simply. Starting retirement saving earlier can mean contributing less each month because investments have longer to earn returns on previous returns. Here’s what $500 per month could potentially become with that same 7% growth each year.
| STARTING AGE | YEARS INVESTED | YOUR CONTRIBUTIONS | VALUE AT 65 |
|---|---|---|---|
| 35 | 30 | $180,000 | $609,985 |
| 45 | 20 | $120,000 | $260,463 |
| 55 | 10 | $60,000 | $86,542 |
These figures assume a steady 7% annual return compounded monthly. Markets won’t cooperate that neatly. Still, look at age 35. Only $180,000 of that roughly $610,000 came from contributions. About $430,000 came from growth. Time eventually starts contributing more than you do.
Keep it invested
That doesn’t mean someone turning 36 missed retirement. It means every year invested has value.
Automating contributions can help remove the temptation to wait for the “right” market. Investors with sufficient contribution room could also put long-term investments inside a Tax-Free Savings Account (TFSA), allowing eligible investment growth and withdrawals to remain tax-free.
Then comes the harder part: owning businesses capable of growing for those decades. One I’d consider is Alimentation Couche-Tard (TSX: ATD).
ATD
Couche-Tard operates convenience stores and fuel locations around the world, including its Circle K brand. Convenience stores aren’t exactly technological marvels. Yet selling coffee, food, fuel, and everyday essentials across an enormous network has created one of Canada’s stronger long-term growth businesses.
The latest quarter kept that story moving. Adjusted earnings per share (EPS) increased 15.4% year over year to US$0.90, while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) climbed 10.5%.
Its next growth move could be much larger. Couche-Tard agreed to acquire Poland’s Żabka Group in a deal valuing the company at roughly US$8.6 billion. Żabka operates more than 13,000 stores across Poland and Romania and handles about 4.3 million transactions per day.
Considerations
The acquisition is also the biggest in Couche-Tard’s history. Management expects net debt to adjusted EBITDA to reach roughly three times at closing, so integration and debt reduction matter.
There’s valuation risk too. At $79.65, Couche-Tard trades around 17 times forward earnings. That’s reasonable for a quality compounder, but hardly bargain-bin pricing.
I’d therefore build a position over time rather than bet an entire retirement on one purchase. Diversifying among quality Canadian blue-chip stocks can make those next 30 years considerably easier to sleep through.
Bottom line
Starting at 35 doesn’t make retirement automatic. It makes time considerably more useful. $500 per month could potentially grow into roughly $610,000 by 65 under a 7% return assumption. Start 10 years later, and the same monthly effort produces less than half as much.
Retirement investing gets easier when your portfolio eventually starts doing more work than your paycheque. The sooner that process begins, the longer you get to let it happen.
