Deputy Prime Minister Lawrence Wong delivered his Budget 2024 Speech on 16 February.
One of the major changes announced was the closure of the Central Provident Fund (CPF) Special Account (SA) for those 55 and above.
Instead of funnelling your money into the SA, the government wants you to sock more money into a Retirement Account (RA).
The key word here is retirement.
In particular, the Enhanced Retirement Sum, or ERS, will be further raised from the current three times the Basic Retirement Sum (BRS) to four times by next year.
This means that you can park up to S$426,000 in your RA and receive an estimated monthly payout of S$3,300 when you stop working.
This amount is much higher than the estimated S$2,530 monthly payout if the ERS was set at three times the BRS.
Growing your retirement funds
Why is the government boosting the ERS limit?
It’s a response to the growing realisation that retirement savings must keep pace with rising living costs due to inflation.
Lately, securing a comfortable retirement is becoming harder.
Relying solely on earned income and bonuses will not suffice.
While hard work is essential, making your money work harder is even more important.
One effective strategy is investing in growth stocks to build wealth and achieve retirement goals.
The beauty of this approach lies in the abundance of growth stocks available in the US market.
It is crucial to carefully select stocks that align with your comfort level.
Over time, gradually expanding your portfolio with more growth stocks can enhance its potential.
Blue-chip stalwarts
If you prefer the comfort of big, reputable names, there are the blue-chip stalwarts you can look at.
Amazon (NASDAQ: AMZN) is a US$1.8 trillion e-commerce company that still managed to increase its sales by 11.8% year on year to US$574.8 billion.
Net profit came in at US$30.4 billion for the year.
Speaking of trillion-dollar companies, both Meta Platforms (NASDAQ: META) and Alphabet (NASDAQ: GOOG), the parent company of Google, also managed to post growth in both their top and bottom lines.
Meta Platforms grew its revenue by 16% year on year to almost US$135 billion for 2023 while net profit surged 69% year on year to over US$39 billion.
Alphabet saw its revenue rise 9% year on year for 2023 to US$307.4 billion with net profit climbing 23% year on year to nearly US$74 billion.
Software-as-a-service
If you are feeling adventurous, you can check out the software-as-a-service (SaaS) sector.
Companies within this group earn recurring income through subscriptions but many are still growing their revenue.
A good example is Salesforce.com (NYSE: CRM), which supplies its customer relationship management platform to its clients.
For the first nine months of fiscal 2024 (9M FY2024) ending 31 October 2023, total revenue increased by 11.3% year on year to US$25.6 billion with net profit soaring more than eightfold year on year to US$2.7 billion.
Need another example?
Or if you believe in the future of cybersecurity as more of the world digitalises, you can turn your attention to Crowdstrike (NASDAQ: CRWD).
The cybersecurity SaaS company posted a 37.8% year-on-year jump in revenue for 9M FY2024 and announced a net profit of US$35.6 million, reversing the loss registered a year ago.
New kids on the block
For those who prefer stocks of a more speculative nature, you can look at several new kids on the block with interesting business models.
Lemonade (NYSE: LMND) is a digital insurance company powered by artificial intelligence, offering home, car, pet, and life insurance.
From 2020 to 2022, the insurance outfit grew its revenue rapidly from US$94.4 million to US$256.7 million.
The first nine months of 2023 (9M 2023) saw its revenue jump further to US$314.3 million.
The business, however, remains cash flow negative, thus earning itself a riskier rating.
Then there is also Toast (NYSE: TOST), a cloud-based restaurant management platform that helps food and beverage businesses organise all aspects of their business.
The SaaS company saw revenue grow 41.5% year on year to US$3.9 billion for 2023 but incurred net losses for both 2022 and 2023.
It did, however, turn free cash flow positive for 2023.
Get Smart: Building blocks
With the plethora of growth stocks out there, it is up to you to construct whichever portfolio you like to enable your wealth to grow.
Those mentioned above are just some of the examples in a growing universe of stocks.
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Disclosure: Royston Yang owns shares of Meta Platforms and Alphabet.
