No Savings? Try These 3 Steps to Grow Your Nest Egg
The Motley Fool
Published Oct 25, 2021 12:05
Updated Oct 25, 2021 12:15
No Savings? Try These 3 Steps to Grow Your Nest Egg
Retirement worries have escalated due to the uncertainties brought by the COVID-19 pandemic. Soon-to-be-retirees with no savings suddenly feel the need to secure their financial futures. Fortunately, it’s not yet the eleventh hour if you’re a few years away from retirement.
The Canada Pension Plan (CPP) and Old Age Security (OAS) are your foundations in retirement. However, it would be best to supplement the pensions. Follow three steps to grow your nest egg and ensure a problem-free retirement.
1. Start saving money Start by actually saving money. Leverage your income by setting aside a portion for retirement savings. Allocations per individual vary, although they must be consistent. But since the CPP and OAS don’t replace more than 50% of the average pre-retirement income, retirement experts suggest filling the income gap.
2. Clear your debts Debts prevent people from saving, but if you have the opportunity to deal with them soonest, do so. You can free up your budget and have more cash once you clear your debts. Furthermore, avoid obtaining new ones, or else it could set you back by months or even years.
3. Utilize available investment accounts Utilize available investment accounts like the Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP). Both accounts are also tools to shelter or save on income taxes. Contribute regularly if possible because it harnesses the power of compounding.
Anchor stock Most TFSA and RRSP account holders won’t store cash but instead, use their savings to purchase dividend stocks. Balances grow faster if you reinvest the dividends and not touch the principal. Your money would compound over time with less effort on your part.
A bank stock of choice in Q4 2021 is the National Bank of Canada (TSX:NA). Canada’s sixth-largest lender continues to impress this year. After three quarters in fiscal 2021 (July 31, 2021), net income is $2.4 billion. The growth from the same period last year is 51%.
In Q3 fiscal 2021, its U.S. Specialty Finance and International segment posted the highest increase in net income (+85%) versus Q3 2020. The rest of the business segments, such as Personal & Commercial (+48%), Wealth Management (+30%), and Financial Markets (+21%) made significant contributions to the bottom line.
Regarding stock performance, National Bank outperforms the Big Five banks. At $103.54 per share, the year-to-date gain is 47.91%. The Bank of Montreal is second with +44.01%. Last, the $34.38 billion bank pays a 2.74% dividend.
More income support A cheaper option but a high-yield stock is Fiera Capital (TSX:FSZ). The current share price is $10.72, while the dividend yield is 7.84%. Any investment amount will double in a little over nine years. Also, $150,000 worth of shares can produce $11,760 in passive income.
Get The App
The $1.11 billion independent asset management firm offers customized multi-asset solutions to financial intermediaries, institutional and private wealth clients. As of June 30, 2021, its assets under management (AUM) stand at $179.5 billion. Fiera incurred $2.3 billion in losses in the first half of 2020. However, business is thriving again, as evidenced by the $36.8 million net earnings after two quarters in 2021.
Act to catch up Building a substantial nest egg takes time. However, it’s not too late to catch up. Start saving money consistently today, then invest in assets that can grow it faster.
The post No Savings? Try These 3 Steps to Grow Your Nest Egg appeared first on The Motley Fool Canada.
Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
This Article Was First Published on The Motley Fool
Written By: The Motley Fool
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.