Canadian Money Forum banner

How to MAKE a million bucks!

48K views 116 replies 51 participants last post by  ibli 
#1 ·
Inspired by the thread on how to invest $1 million, here it is.

I'd love to hear from any who have assets (other than their principal residence) with a value in excess of $1 million. I'd also love to hear from those who have solid plans for getting there, or even just hopes of getting there.

I know many won't want to comment on their net worth, or even come out and say they have $1 million+, and that's okay. Anyone willing to contribute details, it would be much appreciated and I think extremely interesting for both those who are already successful, and those trying to become so.

The more details the better. Rather than say "Real Estate", tell us if you built houses, flipped houses, rented houses, burned down houses and claimed insurance on them ;).


I'll kick it off as best I can.

I've been working odd jobs since I was ~12 years old (coaching camp, mowing lawns, shovelling driveways, raking leaves etc.) and have always been a saver. I was taught the power of money to grow and compound on itself from a young age, and have ever since been fascinated with how money works, how markets work and how to grow wealth.

Went to university for finance while working throughout, graduated and got a job on Bay Street. As it stands right now, I'm hoping to build my wealth the old fashioned way of working a job, earning more than I spend and saving the rest. In the longer term, I plan to expand my wealth primarily through the market. Holding stocks/bonds, selling options, collecting dividends etc. You can follow the beginnings of that journey here:
http://canadianmoneyforum.com/showthread.php/9529-My-income-statement

I'm also constantly exploring various options more entrepreneurial in nature, which may or may not be viable down the road. I'm currently way to busy to consider anything that will take more than 10-20 hours out of my week, so it is mostly limited to ideas in my mind or on paper.

I hope to stay the course of my current career path for at least 5-7 years, at which point I will likely be able to step up to the next level with a very steep increase in pay and responsibility. It is likely then that I will have to make a choice between remaining in the industry, or pursuing alternatives.

I hope to make my first million by 30, which gives me 7 years to do so. Lofty goal, but I hope to be up to the challenge.


Hope to generate some interest. Would love to hear from anyone who:

Started a business
Saved and invested
Started a blog(s)
Bought a franchise (how did you get the seed capital?)
Inherited $$ (what did you do with it afterwards?)
Invested in real estate

Would also like to hear from anyone else with goals and plans to achieve them.
 
See less See more
#41 ·
It occurs to me that the key to accumulating wealth is to play both a good offense and defense.

1 - Make good money
2 - Don't spend it all

I haven't heard of any millionaire single mom with three kids making $20K per year who saved all the money.

I haven't heard of people who make a mint but spend more making it to wealth either.

The way I look at it is you have to think like a beaver. (Canadian Eh!)

Water (Money) flows into your pond and you build a dam to keep it there. But you can never build a dam that doesn't allow any water to flow out because it will bust (your will power lets you down). Some of your money has to flow out, but if you can build a decent dam...you'll keep a lot of it. The bigger and more powerful the river flowing into your pond is...the more water you let out but you can also keep more water to use.

Now if you have no water (income) flowing into your pond, it'll dry up in no time. If you don't build a dam to keep the water from running away...there is no accumulation.

You need a good flow of water and a good strong dam to make it as a beaver. Also no one ever accused beavers of being lazy.
 
#43 ·
Beruberland, I love that analogy of saving like a Beaver. Yeah! eh?

Where the dam is will power, what about those unexpected things along the way.
In my case I have accumulated some wealth but have no expertise how to invest it.

Do people recommend the Banks wealth management people or with private firms like Ed. Jones or something similar?
I am not in Toronto.
 
#47 ·
Beruberland,


Do people recommend the Banks wealth management people or with private firms like Ed. Jones or something similar?
I am not in Toronto.
Most on here are here because they enjoy self-directing their own investments through simple purchase of stocks, index funds/EFTs, DRiPs, and more complex instruments like options. The goal is to not lose a VAST percentage of your eventual wealth through the fees that one pays to an advisor working for one of the investment companies/banks- they sell you their products, not what is necessarily in your best interests. You could, however, find a 'fee-only' financial planner who will look over your current and future needs and help you to construct a plan- so you might pay $300 for a couple of hours of advice tailored to your goals that you can implement yourself. Whereas with an investment firm, you will pay ongoing fees and sales charges that eat away huge percentages of your returns over time. That 2% or whatever is taken out of your returns, every day, robbing you of the opportunity of compound interest on that money.

A great place to start is with the "Wealthy Barber Returns, released last year. Great, easy to read book on finances for the average Canadian.
 
#45 ·
Hi Red,

I've been hanging around here for a while now and this is what I've learned.

1 - You are probably best off hanging out here for a while and listening in the investing forum for a while

2 - After a while you will start to understand different approaches to investing. One will start to appeal to you as something that sounds interesting. Maybe you like the idea of dividend stocks or the couch potato strategy

3 - Get a self directed investment account

4 - Try out some strategies in a virtual account

For Instance I can tell you that I "bought" the 10 highest dividend paying stocks in Canada about 2-3 years ago in a virtual account and I'm still evaluating the results which are not as bad as you would expect.

5 - Dip your toe in and give it a shot.

Prosper :)
 
#48 ·
Thank You, Berubeland and Indexxx for your kind information.

I have to make the transfer soon on a T2151 and it must go to a registered plan, my pension plan or an annuity to avoid taxes.
I need to do this soon as it is just a year now since my husband died. It is his commuted value of his DB pension.

I can't afford to wait any longer so if I transfer to say RRSPs at a Bank and let their Wealth Mgmt look after it for now.
Would that be a huge mistake? I know I would have fees to transfer the funds at a later date to an annuity or something like that.
I am not that savvy yet and may never be.
I haven't been able to find anyone that will give me advice for a fee of say $300.
They all just want to manage the amount.

I have read Pensionise Your Nest Egg, recently, which has opened my eyes to some of the products out there.
I am still not confident that I could manage the funds myself yet.
I will read the Wealthy Barber Returns next, its just I need to take some action soon. I have been stalling and trying to decide for 9 months now.
I welcome any suggestions as to my next step.
 
#49 ·
Redrose if you just go to the bank or some name brand investment firm, they might dump your money in some mutual funds that skim 2-4% off your yearly return. (which is bad IMO)

You would be best finding a fee only advisor (might cost $500-$1500) and tell him you will only invest in products that have expense fees less than 1% with out any other strings attached. (ie holding fees, account fees, front load, rear load fees, etc)

At least you will not be getting hosed on fees and getting un-biased financial advice.
 
#51 ·
Oh Wow! Thank YOU All.
As you may have gathered with all my anxiety and vascilating over this decision.
I am at my wits end trying to navigate in this 'unknown to me' world.
Thank you for your advice.
I was heading to TD to one of their Wealth Management officers.
She is a CFP and a CIMM not sure what the later stands for.

If I transfer to a TDW efund can that be a registered plan account.
Do I do it online or call a person at the bank?
I am not computer savvy either.

The only discount broker I have seen is Ed Jones.

Thank you again for pointing me in the right direction and helping me avoid the pitfalls.
I sure hope I can do this.
 
#53 ·
RedRose

Looks to me like you may want to look into a Couch Potato investing plan as advocated by Moneysense Magazine (www.moneysense.ca).

You can have registered accounts through TDW. Most banks will help you set up your account, since it makes them money, but you can also do it on-line or over the phone. Registered accounts may need something special done, I talked to my banker and he set up mine.

You may want to watch your fees when you start. They should give you discounted fees when you reach a certain point, and it's the total of ALL your trading accounts. They missed the total when I opened a new account and it had the full fees.

Also, remember that the people speaking at banks are A) trained by the banks, and B) there to make money for the banks. If you make some money, that's okay but their advice makes a lot of money for the banks usually, so take the "free seminars" with a grain of salt.

I'd read Moneysense magazine if I were you...personally I didn't like the wealthy barber returns...his first book was good, the second pretty old advice rehashed so he makes more money.
 
#58 ·
The issues in a decumulation portfolio are very, very different from an accumulation portfolio. All the discussion of licensing, fee arrangements, and investing fees are not central issues. Even estate planning is not the issue here.

The issue is that someone who has very little investing experience - I'm not sure RedRose has ever had her own investing account - is making the decision to take a large lump sum and she needs to convert it into a stream of income that (1) is sufficient for her needs, (2) has a high probability of lasting for as long as she is alive, and (3) meets her estate goals. In addition, by taking this approach she is taking on the requirement to make investing decisions for as long as she is alive (unless she converts most or all of the lump sum into an annuity of one form or another).

All of these issues involve tradeoffs - "if I spend less, by how much do I increase the probability my income will last as long as I do?" etc. - and she needs and deserves someone who doesn't just have a passing familiarity with these issues, but is extremely well-versed - because the stakes are too high otherwise. I am extremely skeptical that a "regular" bank advisor would have the expertise required, and a discount brokerage is worse still. RedRose's concern is not "how do MAKE a million dollars?" but "how do I make my [lump sum] last?"
 
#59 ·
the lasting capacity of the assets is not quite so critical a problem when one remembers that there are at least 4 of them. In addition to the late husband's looming pension distribution, Rose has an rrsp of her own, a pension of her own from her employment (she was a nurse) and a house with no mortgage.

i would like to see a responsible member of the family assisting Rose with finding an advisor. Rose seems to be having difficulty searching all by herself, so a trustworthy family member who would accompany her to appointments, take notes & discuss the issues with her afterwards would be a huge help.
 
#60 · (Edited)
Thank YOU all so very much.
My daughter and son are not experienced in financial matters either.
Both are deep in debt. They have come along with me and understand less than I do.

I did find one fee advisor but he wanted $1250 to $1500 to look at my options offered by the CV.
The fee advisor said he would waive the fees if I invested with his company and products.
He was beginning to sound more like the bank and insurance sales man, so I declined the service.

Will I ever get there? Thank you all so much again for your input.

Here are my choices: (and my conclusions so far)

1. Lump sum, taxable right away (no)
2. Transfer to RRSP (++fees, from what I am hearing from you all, especially if mutual funds right?)
3. Transfer to my existing pension with OMERS (buy back is possible and Voluntary Contribution, with lower fees but they manage the funds) all my eggs in one basket? the fund made 3% last year)
4. Transfer to an annuity (no legacy, unless I take riders that are more expensive and reduce the income stream, also riders on indexing, hybrid annuity but again more fees)

Ideally I would like to diversify as I have been reading but have to take the first step.
Not sure if it becomes locked in to where ever I put it once its there.
 
#61 ·
This is the problem with recommending "family members" as intermediaries - there is no certainty they are better-informed than the primary family member (RedRose in this case).

I have suggested before and will continue to suggest you find a fee-for-service financial planner who DOES NOT manage investments, who either works with or is an actuary (and thus can understand and evaluate DB pension plans and longevity risk), and who specializes in retirement income planning. There is a long learning curve associated with developing a plan and jumping in haste may lead to regret later on. You will not find anyone to do this competently for $300 and you are probably realisticly looking at 10x that amount.

You are unlikely to be able to buy back OMERs pensionable service with the entirety of your husband's DB pension lump sum - I doubt your option 3 is truly an available option.

You don't have to do an "all or nothing" option - as you have set out in Option 4. Also I note that ALL privately-purchased annuities will be "more expensive" than the existing DB income - you will not be able to buy the same income stream with the lump sum, for a variety of reasons. I'm not suggesting you keep the DB pension (clearly you have decided against that) but you should know that ALL your options will be "expensive" in one dimension or another, whether it is MERs on mutual funds, riders on annuities and financially-engineered products, the much higher general cost of privately-purchased annuitized income, the cost of buying professional advice to help you understand your options and develop a plan of action, or the cost of acting without understanding what you are doing.

As for Humble's point about the money "not running out" - it really depends on the amounts of existing pension, their guarantees and indexing, RedRose's expected spending amounts and the chance of encountering extraordinary expenses. Just because there are four sources of income doesn't mean there is sufficient sustainable income. What if we have another sustained equity market drop?
 
#64 ·
Not to rain on anybody's parade but although this is all very good and I sincerely hope RedRose gets the help she needs, should this not be brought over to another thread? The original thread was pertaining to "How to Make a Million Bucks" and I think somewhere we've strayed from the topic. I don't think this was DMoney's original intention. Sorry, just an observation.
 
#65 ·
I agree with these concerns raised. The type of financial advisor will be comfortable with spreadsheets and will build a personal financial plan for a fee. They will not sell you any products. The lump sum will be just another part of the puzzle. Stay away from any Wealth Manager. They will manage their own wealth at your expense.

The use of TD eFunds is just a piece of the puzzle that can only be completed once a plan that you are comfortable with has been built.
 
#67 ·
Guys, just be a little patient & understanding! :rolleyes2:

So what if topic got derailed a little, it is what happens more often than not! And no worries, the discussion will get back on track and you'll be able to focus on that very important topic of all, that of how to make a million bucks! :)
 
#70 ·
slow & steady you are right, of course, but there has been a slight emergency intervention. It's for valid reasons, so i'm trusting you will understand & be patient with this brief excursion outside the topic.

a member who has been troubled by one issue for a year now has wandered into this topic. This time, senior members are giving her very specific & sound advice, for example she needs to consult an actuary. They are hoping she will read & take some action, so that the problem can finally move onwards towards its resolution.

then the interlopers will be out of your way, promise !
 
#71 ·
Just so I'm clear, I wasn't trying to ruffle anyone's feathers, and I certainly do hope the senior members can help this member in her plight, but the thread was started by another member looking for information. The "All important topic of "How to make a Million Dollars" isn't my concern although there could have been some interesting threads attached to it. I just feel it got sidetracked and the topic has been lost for this member. Perhaps there could be a more effective way to directly deal with RedRose and her problem on a side forum or something set up by CMF where members could take on Hot Topics with perhaps a panel of experienced Senior members to tackle such problems. I'm sure the expertise given by such people would be very informative and I'm sure some topics would be very well read by other readers. I for one find the answers to her problem quite interesting and a good read, but like I said, the original thread has been lost. Forgive me if I have stepped on anyone's toes, TG, and I hope RedRose, that the forum gives you the information you need.
 
#73 ·
You know what's worse than complaining about how the How To Make A Millon Dollars thread got hijacked by a member's very serious issue ? Hijacking the thread to point out that it's been hijacked.

Anywhooo...

I don't disagree with moneygal and the others about Redrose's situation however I do know what happened to my own parents. My mom was diagnosed with a brain tumour and we had no idea if she would survive. In her situation she had to take as much of her pension out as possible. (In case she died and my dad would get a very minor pension)

They hired Scotia MacLeod and the "financial adviser" came right to the boonies to "advise" my parents on their investments.

One stinking year later they had in the hands of this "trusted respected educated professional advisor" lost over $100,000.

No one should listen to anything I have to say about investing. (Especially older people) however...my wish is that one of you that know a decent responsible honest fee only financial adviser send a PM to Redrose. I do not know one.

My parents would have been far better off buying GIC's. Furthermore since they fired this financial adviser and started managing their own portfolio they have done very well for themselves for these old fogeys that had never used a computer to trade stocks. My mother despite my best efforts still doesn't know what a limit order is. But she did buy Teck-B in her TFSA when it was $8-9. So maybe I should shut up.

Anyways. After what happened to my parents it would make me feel warm and fuzzy if someone would send a pm with someone's name.
 
#78 ·
You know what's worse than complaining about how the How To Make A Millon Dollars thread got hijacked by a member's very serious issue ? Hijacking the thread to point out that it's been hijacked.

Anywhooo...

You're right Berubeland, forgive me, a junior member for attempting to get things back on track for another member of the forum and diminishing the plight of RedRose and her problem. This was insensitive of me and as a wise man once said to me, "if you keep your mouth closed, you will learn. If you open it, you are just repeating something you already know." I have been a member of other forums and usually a broken thread is just moved to another thread and both are carried on. I must get used to the ways of CMF if I ever wish to become a senior member. RedRose, I hope these fine people can help you out and solve your problem and I will stay in the background as a forum reader. By the way, an actuary is a great idea.
 
#75 ·
berubeland your warning is excellent.

however one absolutely trustworthy member of this forum - the very best - has already supplied Rose with a sterling actuarial contact reference.

would everyone else please refrain from sending PM suggestions to Rose. Please refrain strictly from recommending advisors, etc.
 
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top