Everyone should save money for retirement, since programs such as Social Security aren't meant to replace workers' entire income and face potential cuts. Building a big nest egg for your post-work life by buying stocks is very possible, but it requires patience, investing in the right companies, and a disciplined buy-and-hold approach.
Which stocks should you consider that could help you grow your wealth to several million dollars by the time you retire (assuming a 30-year investment horizon)? Let's consider one biotech company that's worth a second look: Vertex Pharmaceuticals (VRTX 1.63%).
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Why Vertex can pull it off
Now, assuming an initial investment of $100,000, it would take a compound annual growth rate (CAGR) of 10.5% to grow it to $2 million in 30 years. Maintaining a CAGR of that size over three decades is no easy feat, but buying a stock like Vertex Pharmaceuticals, which has excellent prospects, is a good start.
Consider the company's commercial opportunity over the next 13 years or so. Vertex dominates the market for drugs treating a rare disease called cystic fibrosis (CF), which causes thick mucus to build up in the lungs and disrupts breathing.
The biotech company's most important products in this niche, Trikafta and Alyftrek, will lose patent exclusivity in 2037 and 2039, respectively. True, CF is a rare disease with only about 112,000 patients in the geographies Vertex targets. However, those patients are now living longer, partly thanks to the company's breakthroughs, and they typically take medicine for their entire lives, so they remain in Vertex's ecosystem. And there are still quite a few patients Vertex can target through new approvals and label expansions.
NASDAQ: VRTX
Key Data Points
Before the sun sets on Vertex's vast CF opportunity, it will launch several new products that should drive growth beyond the next 13 years. Its newest non-CF approvals -- Journavx for acute pain and Casgevy, a gene-editing medicine for beta-thalassemia and sickle cell disease -- should slowly ramp up their sales and contribute somewhat to its financial results.
The company has several late-stage candidates targeting diseases with few or no treatment options. Vertex's zimislecel could help restore the ability of Type 1 diabetes patients to make their own insulin, while inaxaplin for APOL-1-mediated kidney disease could be the first approved medicine to target the underlying causes of this disease.
Beyond any single product, Vertex Pharmaceuticals has shown itself to be an incredibly innovative company with a management team that's planning far ahead and addressing potential challenges -- like patent cliffs and too much exposure to its CF franchise -- early enough. That makes the stock an excellent candidate to perform well over the long run.
The strategy to adopt
Although Vertex looks like a great long-term bet, it wouldn't be wise to invest your entire starting capital in this single company. With $100,000 (or whatever amount you have), you should buy many stocks across various industries, including Vertex Pharmaceuticals, and probably add an exchange-traded fund or two to track the performance of major indexes. You should also make sure, if you can, to increase your holdings or buy entirely new stocks fairly regularly, while staying put when equities experience significant downturns.
It's that kind of disciplined, patient strategy that can help turn you into a multimillionaire by the time you retire. Investing in a stock like Vertex Pharmaceuticals is just part of the package.
