The recipe for retiring comfortably requires three key ingredients. First, you must have money to invest, of course. Second, you need assets that will grow your money. Third, you need time to allow your investments to grow.
The more money you have to invest, the less time you’ll need to build a solid nest egg — and vice versa. But the right assets can help tremendously. Want $1 million in retirement? Invest $300,000 in these three stocks and wait a decade.
1. Brookfield Renewable
By my calculations, it will take a compound annual growth rate (CAGR) of 12.8% to turn $300,000 into $1 million over the next 10 years. I think that investing one-third of that upfront amount in Brookfield Renewable(NYSE: BEP)(NYSE: BEPC) should get you a long way toward achieving that goal.
Brookfield Renewable’s name hints at what the company does. It’s a leading provider of renewable energy with hydroelectric, wind, solar, distributed generation, and storage facilities across the world.
The company is confident that it will be able to deliver total returns of between 12% and 15% per year over the long term. Brookfield Renewable doesn’t even need to hit the midpoint of that range to meet our required CAGR. But can the company pull it off? I think so.
It’s no secret that the demand for renewable energy is soaring. Countries and major corporations have set ambitious carbon reduction targets. More electricity will be needed with the rising adoption of electric vehicles. Brookfield Renewable is ready to help meet that demand with its large and growing development pipeline.
2. Microsoft
Microsoft(NASDAQ: MSFT) might seem to be an odd choice for our list. It’s already the second-largest company in the world, with a market cap of nearly $2.8 trillion. If Microsoft grows by our 12.8% CAGR target over the next decade, it will be worth roughly $9.3 trillion.
I nonetheless think that investing $100,000 of the initial $300,000 in Microsoft and waiting 10 years could pay off handsomely. And I can sum up my rationale in two words: artificial intelligence (AI).
Arguably, no other company is in a better position to profit from the AI boom than Microsoft. The tech giant owns a large stake in ChatGPT developer OpenAI. Microsoft has integrated OpenAI’s GPT-4 throughout its product lineup. As a major software developer, the company is also poised to benefit from productivity improvement by using AI.
Several AI leaders (including OpenAI CEO Sam Altman) predict that artificial general intelligence (AGI) could be developed within the next decade. If they’re right, any company that is at the forefront of AGI should be wildly attractive to investors. I’d bet that Microsoft will be one of them.
3. Vertex Pharmaceuticals
Vertex Pharmaceuticals(NASDAQ: VRTX) commands a monopoly in treating the underlying cause of the rare genetic disease cystic fibrosis (CF). But CF isn’t the main reason why investing the final one-third of an initial $300,000 and waiting 10 years can help you retire as a millionaire.
This big biotech is rapidly expanding beyond CF. Vertex has already won U.S. approval for Casgevy to treat (and effectively curing) sickle cell disease. It awaits a second approval decision for the gene-editing therapy in treating transfusion-dependent beta-thalassemia. The consensus projection for Casgevy’s peak annual sales is around $2.2 billion, but some analysts think it could make a lot more than that.
Vertex has high hopes for its experimental non-opioid pain drug VX-548. The company plans to report results from three late-stage studies in early 2024. It’s evaluating inaxaplin in a pivotal clinical study targeting APOL1-mediated kidney disease, which affects more patients than CF. Vertex’s pipeline also features multiple programs in early-stage testing that hold the potential to cure type 1 diabetes.
CF will still be important to Vertex’s fortunes, though. The biotech is set to soon announce results from late-stage studies of a new triple-drug combo that could be its most powerful and most profitable CF therapy yet.
There are always risks
I believe that investing $300,000 spread equally across Brookfield Renewable, Microsoft, and Vertex and waiting a decade truly can help you retire with $1 million. However, there are always risks with investing in stocks that can cause problems.
The growth in renewable energy could be slower than many predict and hobble Brookfield Renewable’s prospects. AI breakthroughs could be fewer and farther between in the coming years, holding back Microsoft. Vertex could experience major pipeline setbacks.
Still, you can’t expect to obtain significant returns without taking on some risk. I think that Brookfield Renewable, Microsoft, and Vertex offer attractive risk-reward profiles for aggressive investors.
Where to invest $1,000 right now
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TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
