How to Fast-Track Retirement Through Smart Investing (Even in Today’s Market)
April 21, 2025
Written by Kay Ng at The Motley Fool Canada
Retirement may seem like a distant goal, especially when today’s financial obligations are pulling in every direction — mortgages, car payments, rising grocery bills. But here’s the real secret: the earlier you start investing, the less you need to contribute over time to achieve the same comfortable retirement lifestyle. That’s the power of compounding — and it can be your greatest ally, even in today’s uncertain market.
Compounding is what happens when your investments generate returns, and those returns then generate their own returns. Over time, this snowball effect can turn even modest contributions into substantial wealth. But to benefit fully, you need to give your investments time to grow.
Starting early means you don’t need to chase risky, high-flying stocks to see great long-term returns. Instead, you can focus on stable, high-quality companies with solid track records and strong business fundamentals. Think blue-chip stocks with dividends, reliable growth, and predictable earnings.
Investing smartly doesn’t mean betting big on the next tech unicorn. In fact, spreading your money across different sectors, industries, and risk levels is the smarter way to invest. Diversification helps smooth out the bumps in volatile markets and keeps your portfolio growing steadily.
Blue-chip dividend stocks are excellent anchors. They’re typically more resilient in downturns and provide income through dividends — an important component of total returns over time. A solid starting point for evaluating a stock’s potential is checking its analyst price targets and fundamentals on platforms like Yahoo Finance.
Reserve only a small portion (say, 0-10%) of your portfolio for higher-risk opportunities. These might be turnaround plays, growth stocks, or companies in cyclical industries. When they perform well, consider locking in gains — especially when valuations get stretched.
Let’s explore two contrasting stock examples to illustrate this strategy in action.
Royal Bank of Canada (TSX:RY) or RBC is a textbook example of a blue-chip dividend stock that fits perfectly in a long-term retirement portfolio. As Canada’s largest bank by market cap, RBC operates across five core segments: personal and commercial banking, wealth management, insurance, capital markets, and investor and treasury services. This broad base helps the bank generate stable earnings across economic cycles.
RBC has a long history of dividend growth — 7% annually over the past decade. Because of a recent dip in share price, bringing it about 11% below its 52-week high, the stock offers an attractive 3.7% dividend yield. Analysts currently believe the stock is undervalued by around 13%, with a potential 15% upside in the near term.
Even with conservative assumptions — such as a fairly valued stock and 5% annual earnings growth — RBC investors could expect long-term returns of around 9% per year. That’s a strong and steady pace for compounding into retirement.
For investors willing to take on a bit more risk, Premium Brands Holdings (TSX:PBH) could be an interesting addition to the speculative part of a portfolio. This mid-cap company manufactures and distributes packaged foods across North America through two main divisions: specialty foods and premium food distribution.
PBH serves around 22,000 customers, including convenience stores, hotels, and specialty grocers. Its product range spans everything from meat snacks and deli items to sandwiches and baked goods.
Despite recent headwinds and flat dividends over the past five quarters, PBH has delivered a 10.5% dividend growth rate over the past 10 years. At under $78 per share, it yields 4.4%, and analysts believe the stock is trading at a 24% discount with 32% potential upside. Still, it’s important to recognize PBH’s sensitivity to economic slowdowns, which can temporarily dent earnings and pressure margins.
Fast-tracking retirement doesn’t mean racing into high-risk trades. It’s about starting now, investing consistently, and letting your money do the heavy lifting over time. A smart mix of reliable blue chips and carefully selected growth opportunities can go a long way — especially when paired with a long-term mindset.
Even in today’s market, smart investing is still the most effective way to build wealth and retire on your own terms.
The post How to Fast-Track Retirement Through Smart Investing (Even in Today’s Market) appeared first on The Motley Fool Canada.
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Fool contributor Kay Ng has positions in Premium Brands. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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