How Can I Be a Millionaire in 10 Years?

Growth stocks will take a much shorter time to build a million-dollar portfolio as compared to defensive stocks. Here are some of the top TSX growth stocks.

| More on:

There have been increasing recession fears amid the pandemic and record-low crude oil prices. However, the TSX Index has surged more than 25% recently since its record lows last month. Amid these uncertainties, is it prudent to throw in fresh money in the stock market? How can one use this market weakness to build a robust retirement corpus?

To build a healthy retirement corpus in a relatively shorter time, one needs to invest in high-growth stocks. One top growth stock that has defied any recession jitters or pandemic weakness recently is top tech giant Shopify (TSX:SHOP)(NYSE:SHOP).

Is Shopify a millionaire-maker stock?

While market pundits are expecting a bleaker picture for the global economy, this TSX stock has recently surged to all-time highs. Pandemic-driven lockdowns have rather supported Shopify’s rally in the last few weeks.

The stock has surged more than 85% since last month and traded at $925 at the time of writing. With almost $106 billion of market capitalization, Shopify became the second-biggest company in the country.

Shopify provides establishments a platform to set up their online stores. The company is witnessing record-high traffic, as many small- and medium-sized businesses are struggling globally due to lockdowns and trying to go online.

Shopify’s unique business model and increasing online shopping trend will enable stronger revenue growth for it in the next few years — not just during the pandemic — and these factors have largely driven the stock in the last five years.

Shopify’s revenues jumped to US$1.6 billion in 2019 from just US$205 million in 2015. Analysts expect strong revenue growth to continue for the next few years.

If one had invested $100,000 in Shopify at the beginning of 2016, they would have accumulated approximately $3 million as of today. That’s more than 90% return compounded annually in the last five years.

Race to a million: Growth stocks versus defensive stocks

If one invests $100,000 in growth stocks like Shopify today, it needs to deliver a little higher than 25% to make the corpus worth $1 million in 10 years. A longer investment period will allow lower returns to generate a similar corpus. That return assumption is on the higher side, but considering Shopify’s strong growth prospects and historical returns, it could be feasible.

Let’s see how this equation notably changes with defensive stocks. Let’s say a conservative investor wants to be a millionaire. They invest $100,000 in a diversified basket of top TSX stocks. Expecting an optimistic 10% compound annual growth rate, it will take approximately 25 years to accumulate a corpus of $1 million.

This is where taking a high risk will pay off. Growth stocks will take a much shorter time to build a robust retirement portfolio as compared to defensive stocks.

Bottom line

You can’t expect sky-high returns with recession-proof, divided-paying stocks. One has to assume higher risk to turn an investment into a seven-digit figure in a relatively shorter period.

Shopify is one of the top growth stocks on the TSX, and diversification will play a big role in long-term investing. Some other high-growth names like Kinaxis and Constellation Software have also significantly outperformed broader markets in the last several years. Along with defensive names, putting some of the investable amounts in growth stocks will give the much-needed aggressive tilt to your portfolio.

Investors should note that these growth stocks are trading at a significant premium at the moment. Investors with above-average risk appetite and those okay with excessive volatility can consider adding these growth stocks to their portfolios.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Constellation Software, Shopify, and Shopify. The Motley Fool recommends KINAXIS INC.

More on Tech Stocks

think thought consider
Tech Stocks

Is CGI Stock a Buy Even With No Dividend Yield?

CGI stock may not have a dividend to speak of. But does that necessarily mean you should ignore this top…

Read more »

A robotic hand interacting with a visual AI touchscreen display.
Tech Stocks

Why Now Is the Time to Invest in Canadian AI Stocks

Are you looking for one of the most solid Canadian AI stocks out there? This one is probably your best…

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

Why AI Stocks Should Be in Every Canadian Investor’s Portfolio

AI stocks continue to be one of the best options out there for long-term investing, especially when considering Canadian options.

Read more »

money goes up and down in balance
Tech Stocks

1 “Magnificent 7” Stock I’d Buy Over Nvidia Right Now

Here's why Meta Platforms stock is a better choice for Canadian investors compared to Nvidia in November 2024.

Read more »

A data center engineer works on a laptop at a server farm.
Tech Stocks

3 No-Brainer Data Centre Stocks to Buy With $500 Right Now

Data centres are going to be a huge growth opportunity in the next decade. And these are the top buys.

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Is OpenText Stock a Buy, Sell, or Hold for 2025?

OpenText stock has fallen in the last few years, but that could mean this top tech stock remains an undervalued…

Read more »

AI microchip
Tech Stocks

Celestica Stock: Buy, Sell, or Hold?

Celestica's stock price has rallied 950% in the last five years. Will the AI boom send it even higher in…

Read more »

data analyze research
Tech Stocks

2 Ridiculously Cheap Growth Stocks to Buy Hand Over Fist in 2024

Well Health Technologies is a cheap growth stock to buy for its record-breaking results, massive revenue growth, and profitability.

Read more »