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 up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
