$5,000 Invested in These 3 Stocks Could Make You Rich in the Next 20 Years
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The key to successful investing is giving your portfolio enough time to grow. However, it is very important that you start. Even with just $5,000, you can put yourself on the road to financial independence. With smaller amounts of capital, investors need to be very careful about where they invest their money. This is because you have less and you should try to get the most out of every dollar.
In this article, I will discuss three TSX stocks that could make you rich in the next 20 years.
A constant compound of wealth
Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) is a stock that all investors, whether new or experienced, should consider for their portfolios. With over US$750 billion in assets under management, Brookfield is one of the world’s largest alternative asset management companies. Over the past four years, his portfolio has grown at a compound annual growth rate (CAGR) of 26%. At this rate, it could have US$1 trillion in assets under management within a few years.
Since its initial public offering (IPO), Brookfield shares have performed very well. It has gained over 4,000% since then, representing an average annual gain of 14.8%. This means that a $10,000 investment would be worth over $400,000 today. Brookfield Chief Executive Bruce Flatt noted that current economic conditions could cause turbulence in Brookfield shares. However, he added that there are still many great opportunities that Brookfield can take advantage of in the near term to help continue its growth.
This stock beat the market by a wide margin
One action that has never ceased to amaze me is Constellation Software (TSX: CSU). At first glance, its business is not much different from that of other holding companies. Except maybe Constellation Software is focused on acquiring vertical market software companies. What separates Constellation Software from all other companies that operate similar businesses is the process with which it conducts acquisitions.
When Constellation Software acquires a business, the business must first be “good”. Constellation Software defines this as having an exceptional manager, consistent profitability, and above-average growth. Once it identifies a possible acquisition target, Constellation Software will provide the company with the coaching and resources necessary to help transform it into an outstanding business unit.
This strategy has worked for nearly three decades, helping Constellation Software shares grow at a compound annual growth rate (CAGR) of 32.6% since its IPO. Constellation Software is a company that has been on my watch list for years. This will likely be the next stock I add to my portfolio, and I urge other investors to keep looking into this stock.
My first choice for the next two decades
Of all the stocks currently listed on the TSX in my portfolio, Shopify (TSX:SHOP)(NYSE:SHOP) is the one that excites me the most. I believe the next two decades could well reward shareholders if the company stays on track. Since its inception, Shopify has grown from a small tech startup to one of the largest e-commerce companies in the world. It is estimated that over a million merchants use Shopify. This includes names such as Pepsi, netflixand Staples.
Shopify’s business runs on recurring payments. It collects income in two main ways. First, merchants can subscribe to different packages, providing them with certain features that can be used to optimize their online stores. Over the past five years, this recurring revenue stream has grown at a CAGR of 35%.
Second, Shopify takes a percentage of every sale made on its platform. In other words, getting more merchants to use Shopify’s platform would be very beneficial for the business. It aims to continue to attract new merchants by increasing the visibility of its stores (via its network of partners) and by offering innovative solutions.