Can you still save for your retirement even though the market is so unstable? The answer is yes, and you can get there for as little as $5!
I know that the title might sound like clickbait. But I want to reassure Motley Fool readers that it is absolutely possible to turn just $5 into $50,000 before retirement. And I’m going to explain how it works today.
First of all, let me explain why I chose $5. Even when the market is down and everyone is barely getting by, anyone can save $5 for investment. Most likely, there is at least one thing you could cut from your budget to save that $5.
Now, I usually tell people who want to invest to put away 5% to 10% of their salary. But that doesn’t work for everyone right now. So, if you want to start investing now, when share prices are very low, even starting with just $5 is better than nothing.
The next step is to do this every time you get paid. So that means you should be putting away $5 every two weeks. All of this adds up! You’ll have $115 ready to invest by the end of the year. And if you keep doing that, it adds up to a lot. You can always put more in, but even $115 will help you reach your retirement goals.
Pick a good stock.
This part is the hardest. Put that $115 to good use if you want to invest for your retirement. That means you have to find a safe stock that will pay dividends. Dividends are a good way to invest a small amount of money. You can keep putting the dividend back into your strong stock choice.
Oil and gas companies were once good investments, but if you’re young and looking ahead a few decades, I’d pick a different energy stock. Even the Organization of Petroleum Exporting Countries (OPEC+) says oil and gas prices will go down a lot by 2040.
I would rather invest in companies that use renewable energy, like Brookfield Renewable Partners LP (TSX: BEP.UN) (NYSE: BEP). It has assets all over the world and owns almost every kind of renewable energy asset there is. It has also been making more deals with European countries that want to stop getting their oil from Russia.
Everything adds up.
So, let’s see how long it would take to turn $115 a year and $5 every two weeks into $50,000 for retirement. All the while, he bought Brookfield stock and put dividends back into the company. In the first year, you will only get about $4.30 in dividends, so your gains will be small at first.
But Brookfield is a stock that is growing and has a lot of potentials. In the last 20 years, its shares have grown at an average rate of 15.6% per year. During that time, its dividend has also grown by 5% per year on average.
Altogether, this way of investing would take you 28 years to build up $57,560 in your portfolio. All of this is based on how things have worked in the past, and you only need to save $5 from each paycheck.
Should you give Brookfield Renewable Partners $1,000?
Before you think about working with Brookfield Renewable Partners, you should know this.
Our market-beating analyst team just announced what they think are the 5 best stocks for investors to buy in September 2022, and Brookfield Renewable Partners wasn’t on the list.
Their online investing service, Motley Fool Stock Advisor Canada, which they have been running for almost a decade, is 21 percentage points better than the TSX. And they think there are five better stocks to buy right now.
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