Some people will keep their job indefinitely and live a modest life. Others that are less fortunate will be condemned to flip burgers and seek for payday loans all their lives. And, there is a small part of this world who is trying to make more money and become millionaire. So asked myself that question: At what age do I want to become a millionaire?
The easy answer is “as soon as possible” but that is not a goal, it’s a dream. In order to transform a dream into a goal and eventually into reality, I need to setup a plan, I need to look at all my possibilities.
So today I am trying to see what I can do to worth 1M$ by the age of 40. This means I have 13 years left to achieve my goal. My present net worth is about 49K so I am far behind my goal!
My first way to the top would be my Smith Manoeuvre account. Counting a $400 month deposit with a 7% return, I should get about 120K in investment on my 40th birthday. That’s a great start, I am at 170K now 😀
On my RRSP side, I can put roughly $2,500 each year since I have a pretty heavy pension plan. Counting an investment of 2,5K every year with a 7% return, my rrsp account should worth about 65K with what I have in my account as of today. We are now at 235K, it’s almost 25% of my objective 😀
Even though I am doing a Smith Manoeuvre, I am still paying a part of my mortgage as well. With a rough calculation, I should be able to pay down my mortgage by another 65K by that time. This would make 300K net worth at the age of 40… still short by a lot of money right?
But wait, I am not done yet! My house will also grow in value (hopefully!). According to an increase in value of 3% per years (the housing market historically raises by 4 to 5% in average per year), my house would worth about 405K. Since it was appraised at 275K last year, my net worth would grow by another 130K. 430K net worth and still increasing!
Wait! I do have a pension plan as well! While this is very difficult to assess (it is a determined pension plan), I would make the following assumptions: It is now worth about 4K and would grown by 7K in capital every year at a 7% return. I used the 7K since I have 9,000 in RRSP room contribution less 7K in Equivalence Factor due to my pension plan. So that would create an additional 150K. 580K total net worth.
This really not going to make it for 40…. However, the good news is that if I wait until I’m 50, it becomes really easy. It would bring me to a net worth of about 1,3M$, well diversified between property, registered and non registered investments.
There is one more thing to think about; inflation rate. All my calculations were made with today’s dollar. So even then, I would not be a real millionaire… So in the end, I better off revising my plan so I can make more money faster!!!
Do you have any tricks to become a millionaire sooner?
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