Now is the best time to invest. There are thousands of stocks to choose from in the stock market. In any stock market, there’s always some stocks that are worth investing in. It’s even more so when there have been market corrections in certain parts of the market.
Cash is king but…
Cash is king. It can be used to pay the bills. It can also be used for buying assets or investing. When you invest in businesses, you can benefit from their profits, but you may get hurt by their losses as well. Stocks are a liquid asset that investors can build wealth from.
Cash earns very little interest income right now. Investments can compound at a higher rate. The longer you invest, the clearer the difference in wealth creation gets. Below is a table showing the compounded annualized returns of a $500 per month investment for the rate of returns over the periods.
| Year | 2% | 6% | 10% | 12% |
| 5 | $31,224 | $33,823 | $36,631 | $38,117 |
| 10 | $65,693 | $79,085 | $95,625 | $105,292 |
| 15 | $103,760 | $139,656 | $190,635 | $223,678 |
| 20 | $145,784 | $220,714 | $343,650 | $432,315 |
| 25 | $192,182 | $329,187 | $590,082 | $800,003 |
| 30 | $243,408 | $474,349 | $986,904 | $1,447,996 |
Here are a few observations. Saving regularly and as much as you can help tremendously in the early stages of wealth building. In the first five years of investing, the rate of return you get doesn’t seem to matter much. However, the longer you invest, the bigger the difference in wealth creation will be. This is why it’s a good idea to invest as soon as possible (i.e., right now) if you find any attractive stocks.
You can also think of it this way — the sooner you invest, the less you have to put in in later years for the same “magic number” for retirement you aim to achieve.
Stocks historically provide the highest returns among the different asset classes. However, they also come with volatility. So, when you put money in stocks, make sure you have a long-term investment mindset. Buy shares of businesses you believe will do well for the next +10 years.
Attractive stocks today
Growth stocks, including tech stocks, have had a major correction, as have industrial stocks. Some value stocks also look attractive or at least fairly valued. Interested investors can begin investigating in those areas. Big Canadian bank stocks like TD Bank are fairly valued and can deliver long-term rates of returns of about 7-10%. They are valuable in that they pay perpetual dividends that are expected to grow in most years. They provide decent yields of 3.5% or better.
CCL Industries stock is cheap according to analysts. Analysts have a 12-month price target that suggests 33% near-term upside potential from $58.35 per share. The industrial stock also yields 1.6%.
Shopify stock has 160% 12-month upside prospects, according to the average analyst price target.
You never know which ones the market is going to favour next. So, consider diversifying and spreading your capital to buy quality stocks across different industries and sectors. Getting safe dividends periodically also helps with holding stocks.
