There are many Canadian investors who might think that they need to be rich to get richer. While it’s true that having money certainly helps when it comes to investing, it is certainly not a necessity — even if you’re saving for retirement.
Instead, the most important thing about investing is consistency — consistency in staying focused on your goals, both short- and long-term ones, and in your investment strategy. Here at Motley Fool, we like the long-term approach to investing. This can lead to riches by retirement, even if you only hold $5,000 in two stocks.
Creating this cash flow
Let’s say you’re starting from scratch when it comes to investing for retirement. You have exactly $0 to invest and need to start saving. To create $5,000 for investing in something like your Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA), you’ll need to come up with a strategy.
The first thing you should therefore do is create a budget. This will allow you to figure out how much you can afford to put towards investments each month. Then you can put that aside each paycheque to make that $5,000 investment. Should you be able to do this every year, that alone will help save for your retirement goals. To reach $5,000 in one year, that would mean putting aside about $417 per month.
Two stocks to buy and hold for retirement
Then there are the stock to consider on the TSX today. Now is actually a fantastic time considering the market is down. You’re therefore getting a deal on some stellar long-term holds. But which of these should you consider?
I would go with long-term dividend stocks with proof of growth behind them. In this case, I would look to a bank and infrastructure stock. For this example, we’ll consider Canadian Imperial Bank of Commerce (TSX:CM) and Brookfield Infrastructure Partners (TSX:BIP.UN).
Both CIBC stock and BIP stock have a long history of growth, both in share price and dividends. CIBC stock may fall during recessions, but it comes soaring back thanks to provisions for loan losses. Just be careful should you enter a recession when you want to retire, as shares may fall at that time. It also has a strong and high dividend yield, which is currently at 5.93%.
BIP stock has grown steadily thanks to long-term assets that allow the company to continue growing and expanding. These assets come with long-term contracts, that will continue to produce cash flow thanks to their essential service. Further, it operates these assets around the world, providing you with diversification as well. Then, of course, comes the dividend yield at 4.57%.
CIBC stock and BIP stock are both stellar options for investors looking for long-term growth towards retirement. Both have proven time and again that you can hold them even during a recession and see your shares on the other side. What’s more, each offers strong, stable, and relatively high dividend yields that you can look forward to growing year after year. So, when it comes to long-term stocks to hold until retirement, these are definitely two I would consider.