If you are like many Canadians, you are working a 9 to 5 job and looking to pay off your mortgage. But did you know there are steps you can take to improve your finances and even think about achieving financial freedom one day?
This article won’t provide any information on how to get rich overnight. Instead, here is our list of things you can do to improve your financial situation in the future. Here are 10 ways to become a millionaire in Canada by the time you retire.
- If you want to become a millionaire in Canada, it will take hard work and time.
- Investing in a wide range of assets can provide you with a well-diversified portfolio.
- Creating multiple streams of income is a great way to increase your financial independence.
- It all starts with your finances and controlling how much you spend. A budget can help, especially if you want to pay off your debt.
- The fastest way to improve your financial situation could just be to apply for a higher-paying job.
10 Ways to Become a Millionaire in Canada
1. Investing in Stocks and ETFs
The first way to become a millionaire in Canada is likely one that most of us already partake in: investing in the stock market.
This can be as complicated as day trading or as simple as investing in low-cost index funds or ETFs. Long-term investing in the stock market has proven to be one of the greatest ways to accumulate wealth.
The challenge with long-term investing is holding through market ups and downs. Studies have shown that the less you trade your investments, the more time and compounding can work their magic.
Even Warren Buffett has said that for most people, investing in low-cost index funds is the best way to build wealth. Remember: time in the market beats timing the market.
With all-in-one ETFs now readily available, you can build a well-diversified portfolio with only a few clicks while paying very low management fees.
Buying individual stocks requires more time and work on your part. Investing is not just blindly buying companies but finding valuable ones and holding these investments as they grow.
You can also purchase dividend-paying stocks like banks or energy companies in Canada. These will pay you a portion of the company’s income through quarterly dividends, which you can use to buy more shares or other stocks.
Compounding dividends is another way to grow your wealth by the time you retire, and they also make for a great income stream as well.
Related: Top Canadian Index Funds.
2. Improve Your Job
A lot of Canadians never consider improving their employment. If this is your primary source of income, then instead of looking to add other income sources, why not work to improve this one first?
Many people find a certain level of comfort in their careers. Why aim for a higher salary if it means taking on more responsibilities or work?
Even a small increase to your annual salary can make a major difference over the long term. Adding a few thousand dollars to your salary each year can mean increasing your power to invest in wealth-building assets.
You might be surprised to see how much a few thousand more dollars invested into the stock market each year can add up over time.
3. Build Multiple Income Streams
If you are certain you are happy in your job, then you can think about adding some more income streams.
What is an income stream in Canada? It is basically anything that can add additional, recurring income on top of your annual salary. This can be anything from buying dividend-paying stocks or ETFs to writing and selling an eBook to hosting an Airbnb to rent out to guests.
What is so powerful about building multiple income streams? It’s like giving yourself a raise at your job. Adding multiple streams of income can compound your ability to invest and help you to pay off debts like a mortgage in a shorter amount of time.
It might take a bit more work and time to set these streams up, but think of it as an investment in your future self.
4. Reduce Your Debt
Before you can ever think about becoming a millionaire in Canada, you will want to reduce or eliminate your debt. For many of us, this will likely be the mortgage on our real estate.
Now, paying off your mortgage might not be realistic, but trying to pay it down fast will get you one step closer to financial freedom.
Debt comes in all other shapes and sizes as well. This could be a loan or a line of credit you are paying off. It could also be credit card debt, a student loan, or even a hefty monthly car payment.
To truly begin accumulating wealth, you will need to learn to minimize your costs, starting with reducing the amount of bad debt in your life.
5. Make a Budget
One of the most important ways to improve your financial situation is to learn how to make and stick to a budget.
The less money flowing out, the more money you can keep to diversify your investments. Making a budget might seem simple and tedious, but it can go a long way in helping you gain control over your finances.
Making a budget does not mean not spending altogether. But be smart about how your make purchases. Cooking at home and not always buying new clothes can be a great way to save each month.
The other part about making a budget is the difficult part: sticking to it. This certainly takes some control, but like with most things, building your budget into your routine can make it easier over time.
6. Start a Business
Starting a business isn’t for everybody. Of all the things on our list, this probably takes the most work and dedication. But it also has the highest potential payoff.
If you have the tenacity, time, and money to start a business, it can be one of the most rewarding career paths you can choose.
Did you know that starting a business does not have to be as complicated as it seems? It can be as simple as selling crafts on a site like Etsy or turning your photography hobby into a business.
If you are successful, starting a business will allow you to be your boss. If it really takes off, that decision could change your life forever.
7. Get a Side Hustle
This can go hand-in-hand with starting a business and building multiple income streams. During the pandemic, side hustles became a popular way to generate extra income.
If you stick with it, chances are you are closer to turning that side hustle into a legitimate business opportunity.
Having a side hustle implies you still have a 9 to 5 job. Balancing the two can be tricky, especially if your side hustle has grown over the past few years.
What exactly is a side hustle? You can be a freelancer or deliver food for a company like Skip the Dishes or Uber Eats. You can even use your career skills like graphic design or website building.
The gig economy is turning into full-time employment for millions of people, and having this extra income can bring you one step closer to reaching your financial goals.
8. Invest in Real Estate
Real estate is a major investment asset in Canada, especially in cities like Vancouver and Toronto. Owning a property can be expensive, but in the long run, it can be one of the surest ways to become a millionaire in Canada.
Just because it is a sure way to build your wealth, it still comes with some risks. Rising property costs in Canada have made a fairly high barrier to entry. You need an initial downpayment which can be a significant amount of money.
When interest rates rise, it can soften the value of your property and even raise your mortgage payments. Ensure you know all the pros and cons before getting involved in the real estate market.
9. Invest in Cryptocurrencies
Okay, this one definitely isn’t financial advice. Cryptocurrencies are as volatile as it gets, and the markets are not as predictable as equities. The golden rule with cryptos is: to invest only what you are willing to lose.
There is always an outside chance that any cryptocurrency can go to zero. Even worse, it can happen while you are sleeping as the markets are open 24 hours per day and 365 days per year.
There are plenty of crypto exchanges in Canada where you can get started. Before getting into crypto investing, we recommend doing your research and learning about how to buy cryptos and how to store them.
This isn’t for everyone, but trading cryptos might be the fastest way to becoming a millionaire in Canada. Just know that you could also lose everything just as easily.
10. Invest in Alternative Assets
What are alternative assets? These can be anything outside of the standard definition of a financial instrument. They can be anything from sports cards to NFTs to classic cars. If you can collect it and it has a resale value, then it can be considered an alternative asset.
Are alternative assets a good way to become a millionaire in Canada? Not as fast as real estate or even cryptocurrencies.
But for many people, investing in alternative assets can be a hobby or a hedge against the ups and downs of the stock market. They can truly be a part of a well-diversified investment portfolio.
There are many ways to get rich and become a millionaire in Canada. If you don’t want to put in the extra work, you might want to consider applying for new jobs that will make you rich in Canada.
If you are willing to put in some effort, then your financial freedom goal can come to fruition much faster.
This depends on several things, including which city you live in. A general rule of thumb is a net worth of $1 million which would certainly put you into the top 1% of Canadians.
The fastest way to become a millionaire in Canada is likely real estate. Technically, the fastest way could be trading cryptocurrencies, but that’s a bit risky for most people.
As of March 2023, Stats Canada states that to be in the top 10% of Canadian salaries, you need to be making between $150,000 to $175,000 per year.
It’s not easy without money, but if you follow some of our tips, you can certainly get on the right track. Budget your spending, eliminate your debt, be consistent with investments, and create multiple income streams.
In Canada, the top 1% of earners in 2023 will bring in about $500,000 in annual salary. In terms of assets and investments, the top 1% are well into the seven figures.
If you have discipline and a work ethic, it is entirely possible to become a self-made millionaire in Canada. There is no shortcut or overnight way to do this, though. It will take tremendous effort and a good number of years to accomplish this feat.