May 13, 2008, 6:00 am

At What Age Do You Want To Become A Millionaire?

by: The Financial Blogger    Category: Personal Finance
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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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You obviously started too late. 49K at age 27 is good compared to Joe Sixpack, but nothing fancy compared to what diehard savers might have. Tip: Increase your $400 a month to $2000 a month and you will have a million when you are 40, assuming a 7% return. Could you change jobs, get a second one or start a side business?

by: The Financial Blogger | May 13th, 2008 (6:36 am)

Pete: $2000 a month is about what I make net (I live in Qc, so I’m taxed at 50% 🙁 ). I think the side business would definitely become my alternative. At least, I’m on pace to become a millionaire at 50 😉

“So even then, I would not be a real millionaire”

Yes you will, but $1 Million will not be worth what it is today.

I may draft a similar post on my blog to attempt to extrapolate when I’ll reach the million $ mark. I might simply just use the average value that I have been able to increase my net worth per month and extrapolate that out. This should be a conservative estimate though because as numbers get larger, investment returns get larger and this would not take this growth into account. I think you’ll probably reach your goals sooner than you think you will because you are dedicated to this goal. You are likely not accounting for windfalls, and raises in your income over the years…

FB, when I was your age (not that long ago 😉 ), I think I had a negative net worth so I think you’re doing great.

Remember that your salary will increase, and possibly substantially since you’re quite young so the $400/mth, the RRSP contribution AND the pension will increase and compound as well. That right there will probably be enough to get you to $1MM by 40 if you keep or increase your savings rate.

I’ll likely stop working before I can become a millionaire (outside of retirement accounts and home owned value). I think I can make enough investing before I have $1 mil. to keep me happy and that’s all I want.

For me, I think maybe by the time I’m 35 (that’s in 10 years), but it won’t be just my money since I’m married. The hubby and I have around 240k now and we’re saving maybe 80k a year. I want to quit working before then and just manage my portfolio and write.

I made the $1m mark around age 46 with a similar plan to yours. If I’d wanted to become a millionaire by 30 I would have had to start earning money sooner (I stayed at Uni till my mid-20’s and continued studying part-time after that) and either started a business or invested with lots of gearing in real estate. I would have either made a million by 30, or been broke at that age. I chose the “slow and steady” route 😉

My eldest son has just turned 8 and has a NW similar to yours – I invested a few thousand for him in shares that have done really well (the opposite to diversification sometimes pays off!) and he earned about $10K doing a paper round for two years (with a LOT of help from dad) which invested in an online savings account paying 7%. Since this investment is “earned” income, he is entitled to the usual $6K pa tax-free threshold, so it’s tax free. I expect he’ll make $1m NW by the time he turns 30, even following the “slow and steady” route. Goes to show the massive benefit of starting early.

To get to $1m sooner I’d suggest you look at moving to a higher paid job (maybe get higher education qualifications) and a lower taxed locality. Paying 50% tax on an income of $24K is insane.

For example,iIn Australia the typical starting salary for a graduate is around $36K and the marginal tax rate is 30% at that income level, and the average tax rate is only 17% (ie. you pay around $6150 tax on $36K taxable income). If you used leverage to invest, having tax-deductible interest greated than the investment income (negative gearing) would reduce your income tax even further. You’d end up paying capital gains tax on the investment growth instead, but the CGT rate is half the income tax rate for investment held for more than 12 months.

by: The Financial Blogger | May 19th, 2008 (8:53 am)

Enough Wealth,
thx for the tips ; I already did a few moves though:
– Got a job with a high bonus potential (which cannot be calculated now)
– Leverage to invest so my mortgage will become tax deductible
– I can’t move elsewhere for now. We pay a lot of taxes, but I really like where I live…
– I will definitely start investing for my children so they get their first 1M$ before their daddy did 😉

[…] I have been given the opportunity to write for The Financial Blogger about when I expect to become a millionaire. Mike asked me to write about this topic as to complement his article on when he expects to be a millionaire. […]

My only tricks are reinvesting dividends. Yep, so far that is my only “trick.” Of course, that includes things like saving and not spending money on junk, etc. But my income just isn’t high enough yet for larger investments like RE.

Since I’ll need 26 mil (at least) by the time I’m “retiring,” I have to get working…. since I’m still in negative net worth.

But I’m an optimist when it comes to age. I started young, but I wasn’t able to start with much. I have more and more confidence going forward, and that starts to snowball too.

by: James-Montreal | June 17th, 2008 (1:58 pm)

I live in the Montreal area. I have been saving money for years. I am 28 and have in the area of 60,000 +/- mostly RRSP and mutual funds. We have a lot in common. Keep it up. 2000/month is completely unrealistic in Quebec or most of Canada. Living in Quebec is a disaster from a taxable point of view. I was working a few evenings a week and managed to increase my 250/month to 1000/month in the past few months.

Here are a few tips
-Make sure you trust your financial advisor and the firm he/she works for
-Make arrangements to transfer funds directly from your bank account to your Investiment account
-Make sure the funds you own are low-fees. When you owe several funds and have less then 100,000$ in the market, these fees can add up to a significant amount.
-Be patient, you have many years ahead of you

When I turn 30 I thought by the time I am 45 I will be a millionaire or close. 4years as past and I am only worth 6k. I bought four houses in Michigan which was a bad investment because I lost about 35k on both house. Now I am buy another house in CT which is 30k discount. I only make 53k a year. Would I still be able to make my Goal in ten years?

by: The Financial Blogger | January 6th, 2009 (7:01 am)

Mr. Bello,

If you keep your 5 houses, you will probably hit 1M$ in 10 years.

I guess it could be a good timing for those who have liquidity to purchase properties in the States.

by: james-Montreal | January 22nd, 2009 (3:26 pm)

Forget the million for now at least. Just put food in the plate and roof over your head. Be ready for a recession like we haven’t seen in a few generations. Cash is the future. Blame it on corporate greed and the former Bush-Cheney administration. Cash will come in handy just like 1930’s.

I don’t think we are going to be anywhere closed to the end of the world.
it’s a recession like any others…

by: james-Montreal | March 20th, 2009 (10:09 am)

Where do we go from here? Minor improvements in the stock market but economy is shrinking and Obama admin- printing more money then it has so it is forced to borrow. We need an update on what we should do, even my financian adviser has been wrong on nearly every issue in the past 6 months.

by: The Financial Blogger | March 20th, 2009 (6:33 pm)

Hey James,
you are right, this is a very though situation for investors. You know what? I think I will write again about this topics shortly so I can give you my own update on the situation and how can you make your financial work it out still 😉

take care,


by: james-Montreal | March 21st, 2009 (2:15 pm)

Corporations like AIG (Arrogance, Inconpetence, Greed) and Nortel and “folks” like Madoff running things like Nasdaq and his own ponzi scheme have conviced me that the US, Canadian and Worldwide Financial system needs a lot more review before any serious investiment considerations can be taken. We all had big expectations from Obama and his new administration but reality is that he got there because of a Bush administration that kind of made poor decisions on issues we are all aware of. I have noticed something when I commute to work and back home daily. There is a lot less congestion on the highway even thou gas prices have dropped significantly. I still have a job like many other people. Without looking into real estate, where can we invest? What is the safest investiment besides gold ect… What are the funds that will survive and even thrive eventually one day when markets rebound? How prepared should we be if governemnts fail stimulating their economies?

Also, I have visited Asia over a dozen times in recent years and every time I go there I see the enormous potential Western Companies can make like NYSE:WMT / HEL:KNEBV / NYSE:MCD . Is there a fund out there that has this exposure or should I consider the stocks instead?

by: The Financial Blogger | March 25th, 2009 (7:55 pm)

James, the safest investment will be the one you know something about.

Some people make money with the market, some other with real estate or they start their own business.

I decided to try my chance on the market and on the internet. If you don’t want too much trouble, indexes and ETF’s might be your best bet (however, you must have a solid hearth 😉 ).

I read an interesting article from james o’shaughnessy that was saying that we are in the middle of a lifetime opportunity.

I would not get too much into stock picking when I can be sure to get the index 😉

[…] my previous plan to become a millionaire, I started with the assumption of getting a 7% annualized returns. Since I am heavily invested in […]

by: james-Montreal | April 15th, 2009 (12:22 pm)

I am more optimistic then I was a few weeks ago. There are a lot of companies that are still profitable that are trading lower then where they should be. Banking sector is doing well and I am sure energy sector will be worth buying soon, as long as we don’t see a new low.

Almost everyone has the chance to be a millionaire as long as you spend less than what you have earn, earn more than you spend, live within your means, saving money and investing for business and at the end you will be able to achieve your goals.