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 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.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
