Whether we want to admit it or not, everyone eventually ages. A lot of the time, we focus mainly on how this means one day we’ll be able to retire. But what about after retirement? What about when we need care? How on earth are we going to fund that, especially in retirement?
That’s why today we’re going to focus on not just bringing in cash flow during retirement but during our golden years. Those where we don’t have the energy to make investment decisions. When perhaps our main focus is our own health or that of our spouse. Money may be needed more than ever at this point. So, let’s get right to it.
First, set yourself up for success
If you’re going to set yourself up for immense income all the way through retirement, you need to set yourself up for success. If you’re on the younger side, grab some of Guaranteed Investment Certificates (GIC) and lock up the great rates.
In fact, as of writing, the average five-year GIC rate is at 5%! That’s guaranteed income of 5% each and every year. There are many dividend stocks out there that simply cannot meet that amount. So, please, no matter what age you are, make sure you’re taking advantage of these rates while they last.
From there, you’re going to want to open up a Tax-Free Savings Account (TFSA) if you haven’t already. Granted, also have a Registered Retirement Savings Plan (RRSP), but the TFSA is important. There aren’t age limits or withdraw limits, and it’s all tax-free.
Create automatic contributions
When you’re aging, you don’t want to worry about missing a date every month to make a contribution to your TFSA. Instead, make it automatic. By creating automated contributions, you’ll be able to sit back and watch your portfolio grow without even thinking about it.
What’s more, you can also make automated contributions to certain stocks, bonds, exchange-traded funds (ETF), or whatever you want! By doing this, you can also minimize the risk of missing out on a great share price and by buying at a higher share price. It averages out through a process called dollar-cost averaging.
But, of course, you don’t want to purchase just any stock. You want one that will last, and that will ideally do well even during an economic downturn. So, here is one to consider.
It might seem counterintuitive to invest in a tech stock for sustained value. However, in the case of Constellation Software (TSX:CSU), trust me. This one will last and indeed grow. That’s because the company invests in software companies that are proven to be necessary in the world.
This has only become more true in the decades since coming on the market. And yes, I mean decades. The tech stock has proven to be incredibly good at identifying software companies that could do even better under Constellation stock. And it’s why the stock has grown substantially over the last few decades.
What’s more, you can grab a dividend as well of 0.20% while shares trade up 35% in the last year but down 7% from 52-week highs. That doesn’t sound like much, but it amounts to $5.35 per share annually. Add in returns, and you can achieve substantial passive income — especially through your golden years.
The post Retiring? Here’s How to Keep Cash Flowing in for Life appeared first on The Motley Fool Canada.
Before you consider Constellation Software, you’ll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in October 2023… and Constellation Software wasn’t on the list.
The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 25 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks
* Returns as of 10/10/23
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