Taking advantage of the tax-sheltered status of retirement accounts like the Tax Free Savings Account (TFSA) can be part of an excellent retirement plan. A well-stocked, self-directed TFSA portfolio, combined with smart and disciplined long-term investing, can help you turn your dreams of becoming a retired millionaire into a reality.
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Rome wasn’t built in one day
You cannot immediately save everything you need for your retirement, or come up with an exact formula for this. You first need to consider how much you actually need to be financially comfortable in retirement. Experts often say that you should aim to have a retirement income that totals about 70% of your pre-retirement income.
Suppose you earn approximately €100,000 per year. In that case, you should have about $70,000 per year in retirement. Assuming you retire at 60 and live until 90, that’s 30 years of living your best life. With a 5% annual return, you’ll need to save more and save around $1 million to be comfortable.
This is where the TFSA can come into play. Unlike the Registered Retirement Savings Plan (RRSP), the TFSA has tax-free withdrawals. After the 2026 update, the cumulative contribution room will be $95,000 for those who have been eligible for the account since its creation in 2009.
If you maximize your TFSA contributions and invest wisely, you can grow your savings significantly to build your retirement nest egg.
Topicus.com
In view of this, Topicus.com (TSXV:TOI) seems like an excellent growth stock to consider. Topicus is a spin-off from Constellation softwarea large technology company that specializes in acquiring software and IT services companies for the vertical market and furthers their success under its belt by contributing to its own success.
Constellation has been a successful investment for many Canadians over the years, and Topicus serves as the operating arm in Europe. Topicus also works in a high-demand sector by helping companies streamline their operations with solutions tailored to their needs. Like Constellation, Topicus does not gamble on risky and speculative startups. Instead, it acquires proven companies that have a track record of steady revenue growth and profitability.
Looking ahead, the company is well positioned for further growth. One of the recent acquisitions was a Belgium-based IT service provider that is strengthening its presence in the European markets.
Silly takeaway
Remember, putting all your eggs in one basket isn’t the wisest decision. I would advise building a well-balanced portfolio of high-quality blue chip stocks and injecting growth with investments such as Topicus shares. This way you can offset potential losses from risky investments with the stability of the shares of reputable companies. By diversifying your portfolio, you can manage the risks to your investment capital while ensuring steady growth. While Topicus is an attractive option for long-term investors, combining it with other mid-cap stocks from different sectors may be the wisest way to use it to contribute to your self-directed retirement fund.
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