How to MAKE a million bucks!

[Dmoney]

Causalien.... Too complicated, I'm buying GICs

[RealCanuck]

I don't understand why would anyone willingly pay 40% taxes, no mater the income bracket. There are so many ways to reduce that percentage, especially for the rich, but even the middle class can optimize it.
Here's a few numbers:

(a) Two $60k incomes, with rrsp maximized => $15.8k taxes (in BC) => $44k to live on
$60k investment/year -> $1M in 11 years at 8% growth (net of capital gains taxes on the non-registered part of investments)

(b) Two $100k incomes, with rrsp maximized => $35.2k taxes (in BC) => $65k to live on
$100k investment/year -> $1M in 8 years at 8% growth (net of capital gains taxes on the non-registered part of investments).

Please demonstrate how to achieve an 8% average annual net return for 8-11 years running. Thanks.

[Causalien]

Yeah, I am not known to be good at teaching.

[Square Root]

"Buy low and sell high"

People need to stop spewing this nonsense.

Meant to be a joke. ie advice which may on the service seem reasonable but in reality is totally useless. Another example, plant your corn early. I was trying to poke fun at a previous post.

[Mall Guy]

I don't understand why would anyone willingly pay 40% taxes, no mater the income bracket. There are so many ways to reduce that percentage, especially for the rich, but even the middle class can optimize it.
Here's a few numbers:

(a) Two $60k incomes, with rrsp maximized => $15.8k taxes (in BC) => $44k to live on
$60k investment/year -> $1M in 11 years at 8% growth (net of capital gains taxes on the non-registered part of investments)

(b) Two $100k incomes, with rrsp maximized => $35.2k taxes (in BC) => $65k to live on
$100k investment/year -> $1M in 8 years at 8% growth (net of capital gains taxes on the non-registered part of investments).

Sorry, little slow tonight . . . need to break down the numbers
2 x $60 =$120K;
less 2 x contribution@18% = $21.6K;
less 2 x taxes@$17.2K (or your $15.8 - no matter);
less 44K to live on
= $37.2K to invest in taxable or TFSA ?

$37.2 + $21.6 = $58K

now unless you want risk, or pushed $$$ into the market in 2009 where's the new 8% investment come from year after year ? (my 2009 bank stocks etc are doing ok!)

And there are those with lucrative company pensions (even DC), which restrict RRSP contributions, get bonuses and hover around the 45% tax bracket . . . good reasons to stay married, and own your own company !!!

[1.5M]

Sorry, little slow tonight . . . need to break down the numbers
2 x $60 =$120K;
less 2 x contribution@18% = $21.6K;
less 2 x taxes@$17.2K (or your $15.8 - no matter);
less 44K to live on
= $37.2K to invest in taxable or TFSA ?

$37.2 + $21.6 = $58K

now unless you want risk, or pushed $$$ into the market in 2009 where's the new 8% investment come from year after year ? (my 2009 bank stocks etc are doing ok!)

I am not saying that one can get 8% growth using GICs or mutual funds. And of course mandatory pensions are not compatible with a plan of becoming financially independent as fast as possible. Also I am not saying one would get 8% growth (or even above 0%) every year. That's an average over a longer period.

The average annual return rate of SP500 (SPY) since 1950 was 11% before inflation, including dividends (SP500-historical-real-total-returns). The return of other indexes like Russell 2000 (IWM) is slightly better. A covered call strategy in SPY or IWM would reduce the volatility (in rrsp or tfsa).
Also if one learns to speculate using derivatives, higher returns are attainable with relative low volatility using hedge-fund type strategies in non-registered accounts.

[ibli]

Doing fairly well. I would estimate about 30% is from getting lucky and buying a house in hot housing market simply because we were having kids. We wouldn't have been able to buy the house if we hadn't been saving diligently for several years. Another 30% is due to working hard and saving, spend less than you earn. We both went to university, got practical degrees with good jobs. The remainder comes from starting and selling a company which required huge amounts of work and stress and came very close to failing.

Having money hasn't changed our lives except we worry about money less and get nicer hotels when we go on vacation. We still buy used cars, our house isn't beautifully renovated, and I still cut our lawn myself. We still get stressed about our jobs, worry about our kids, get frustrated when we're stuck in traffic or burn dinner. Overall having more money hasn't made us that much happier than we were 15 years ago.

Our assets are invested in a mixture of high interest savings accounts, ETF's (VTI and XIU) and dividend stocks along with our primary residence.

My advice would be to work hard and get jobs in fields that pay well and you enjoy, work hard and save. Once you've got that sorted out read, learn and think about other investment opportunities. I've thought about real estate investments for years but never took the plunge. I read and research tons about investing and have done reasonably well in the markets. I dipped my toes in the water with some consulting and working for a small company before taking the plunge and starting a business with some partners.