This is where your finance takes place

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 40^th 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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I am almost done with my second full time MBA session and I thought it would be interesting to give you an idea of what life with a MBA looks like. It could be of great help for people who are not quite sure if they should start one or not. The goal is not to discourage anybody However, I am being honest, I like living this way!

 

5:15 AM

As the radio goes on, I am wondering what the hell I am doing; waking up before birds start signing! I grab a bagel and sit in front of my computer; I have readers to take care of I work on TFB while I’m having breakfast and I read emails sent overnight by my other MBA colleagues. Then I got to go in order to catch up my bus at 6:15.

 

7:10 AM

I’m sweating like a pig, trying to run faster than that stupid piece of rubber rolling below my feet. In order to keep my mind clear, I go to the gym three times a week (but most of the time it’s twice a week as I can’t always wake up at 5AM!). I’ve been writing in the bus for a good 40 minutes, it’s time to change my mind before I start working.

 

8:30 AM

I get in the branch; it’s almost empty as most people start around 9. I get my things set up and I print one or two things regarding my MBA. While I prepare my day, I look at my next presentation on the next Saturday.

 

5:00 PM

What? The day is gone already? Did I forget to tell you what I do for lunch? Not really; it’s because I take only 20 minutes and then I go back to work. With a young family, I don’t want to come back home late. It’s time for another bus ride. I won’t be able to write as my brain crashed in a brick wall a few minutes ago. I’ll open my accounting book instead It is much more relaxing!

 

6:00 PM

Time is up for my second shift: being a daddy from 6 to 8 and then disguise myself as a hubby for another 2 hours. I really enjoy this part of the day as I can play with my kids and I completely disconnect from the rest of my crazy life.

 

10:00 PM

Back to my computer. Everybody is asleep and I can start working on my MBA. I always cheat a bit and spend about half an hour on TFB before I get to my stuff. Last week I wrote my accounting paper; we had to go through 4 years of RIM financial statement in order to determine what are their accounting policies in term of litigation estimates, stock options cost, presentation of intangible assets, pressure of performance from the stock market and the effect of a stronger Canadian dollar on their business mostly done in US dollar.

 

12:00 AM

It’s time to pull off the plug and get some sleep. I obviously won’t be able to wake up at 5 tomorrow morning. I’ll skip the gym and wake up at 6:30. Anyway, even if I would like to sleep-in, I have 2 alarm backups that wake up at anytime between 5:30 and 6:30

 

So If you have a young family and you are eager to succeed in your career while doing a MBA, this what is waiting. I personally don’t think it’s too much. It’s all about time management.

 

image source : flickr.com 

 

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Yippee! In exactly two weeks, I’ll be canoeing on the lake with my son during our frugal vacation. I must admit that the idea of taking vacation was the main source of motivation for the past few weeks. I am usually not really looking forwards to take my vacation since.

But this time is different, I went through a lot over the past months and I need to settle down and do a complete disconnect. I guess that St-Victor sounds far away to do so!

 

I attended to a weird conference the other day. It is funny as it was a real professional conference along with funds managers and other spokespersons. But this last guy came with the goofiest assumptions about the market.

In a very professional and technical way, he explained us that the market will start going up around June 2008 for another year. All right, nothing too incredible so far. However, he declared that the economy is going to go down right afterward around June-July 2009. Until then, everything is pretty defendable.

BUT, he kept going and said that the market will crash for three years in a row. 3 years of bear market. This sounds like a depression to me! Most of his theory was based on graphic and technical analysis. So if we see markets going up for 12 months and than flinching in mid 2009, you can take the guess of short selling for 3 years

I don’t know if we could really it such depression. On the other side, everything is possible with the North Americans inability to put money aside for the darker days…

Carnivals:

Carnival of Personal Finance

 

Carnival of Money Stories

 

Image source: Flickr.com

 

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