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Your tax-exempt savings account (TFSA) has a contribution limit of $6,500 in 2023. And probably this restriction will last for a long time. Is it possible to invest $6,500 a year and become a millionaire?If you use the power of compound interest to reinvest your investment income, you can turn your $6,500 investment into $1 million in 19 years. I can. As the saying goes, don’t time the market, spend your time in the market.
On the Journey to a Million Dollar Retirement
It doesn’t take a genius to get rich investing. Patience is required. See the simple calculations in the table below.
|Year||investment||ROI @ 20%||total amount|
Start with $6,500 this year and invest another $6,500 next year. With only four months left in 2023 and slower growth for the rest of the year, we calculated an average return of 20% from 2024. If a $13,000 investment ($6,500 x 2) produced his 20% return, he would have earned a tax-free investment of $1,300. Earnings at TFSA. Instead of withdrawing profits, if you invest in stocks and reproduce a 20% return, you can hit your $1 million goal by 2041.
Build a $1M Retirement Plan with Two Stocks
Twenty years is a long time, but so is retirement. No stock produces a guaranteed return of 20% each year. There are ups and downs, but the long-term compounding average gives him a 20% return.
If you have 20 years left in your retirement, you can invest in the following growth stocks that could generate a 20% compounded average return over the next 5-7 years.
Cartesian system (TSX:DSG) has posted a profit compound annual growth rate (CAGR) of 22% over the past five years, which has been a rollercoaster for the company. 2018 was the year of the US-China trade war, Brexit, the e-commerce boom that followed the pandemic, the resurgence of air travel, and the supply chain disruptions of the Russia-Ukraine war. At every level, Descartes supplies increased demand for his chain solutions.
Over the past five years, Descartes’ net profit has improved from 11% to 21%. It’s just the beginning. As global trade becomes more efficient and the volume of e-commerce increases, Descartes could benefit from offering logistics solutions such as last-mile delivery.
Now is a good time to buy stocks as the market is sluggish and the stock is below $100. An increase in trade and e-commerce volumes during the holiday season could boost Descartes’ stock price. But Descartes stock could fall if a recession is imminent. This stock is likely to recover if the economy does well, so we might buy more if it drops further.
Nuvei (TSX:NVEI) is also an e-commerce stock. The stock fell 47% in early August as it reported lower-than-expected gains and undercut earnings. Outlook for 2023. The company has cut ties with large customers and lowered its outlook as new business from Paya is taking time to gain momentum.
Amid this downturn, Nuvei announced its first-ever cash dividend of $0.10 per share, demonstrating confidence in its business. The stock is down almost 50%, but I’m still bullish because it has strong fundamentals. The company is focused on paying down debt and returning excess capital to shareholders.
Now is a good time to buy stocks as they are trading at record lows. Value stocks are found in difficult times. Stocks may remain sluggish for a few months, but could grow multiple times as the economy recovers.
These two stocks have the potential to grow several-fold over the next five to seven years to meet future business needs. These will strengthen your retirement portfolio and help millionaires retire.