So you want to be rich.

So you want to be rich, eh?

Well, this may come as a bit of a shock to the trust-fund babies in the back row, but most of the 'rich' in North America (which I personally define as having over $500,000 in net worth), do not come by their money by ways of inheritance or gifts.

Actually, the largest majority of the rich are working class folks such as your tradesman neighbour.

Ye of little faith, check out 'The millionaire next door'.

Although this book is a little old, having been published in 1998, I personally believe that many of the tenets within have held true.

By working a steady job, earning a decent wage (much like most trades will provide), early in ones life, living below ones means, and investing patiently, I believe that anyone can retire at an earlier date, and with more assets then most.

For example, we can take a person such as myself:

Age: 26
Occupation: I.T. - soon to be Welder
Expected Wages:
   I.T. - ~$40,000 /year
   Welder - ~$45,000 / year + Overtime

I will work hard and make $50,000 take-home, with raises of ~$2000 /year as I gain experience and education.
I will invest as much as comfortable (~$25,000 + $1000 /year)
I will seek investments that are >2% dividend yield.
If I realize a return of ~4% after inflation (~3%), I will see a growth of ~7%.

Over the next 14 years, this investment will grow to over ~$733,000!

This means that when I am 40, I will have 3 quarters of a million dollars to my name.
Does this take into account taxes? No.
Does this take into account large raises or significantly higher wages? No.
Does this take into account market volatility (up or down)? No.
But, it does show that if you have the balls, and some luck, you can be rich before you're 40.

Will it be easy? No.

But it is possible, and as a wise man once said:

"The first hundred-thousand was hard. After that, it got easier."


----

Want to see the math in action? I've posted the results of my spreadsheet calculations below, and also ran them out to the usual '40 year' working period:


Bonus Calculation Chart:

Year	Invested	Rate Of Return	Result
1	25000.00	0.07	26750.00
2	52750.00	0.07	56442.50
3	83442.50	0.07	89283.48
4	117283.48	0.07	125493.32
5	154493.32	0.07	165307.85
6	195307.85	0.07	208979.40
7	239979.40	0.07	256777.96
8	288777.96	0.07	308992.42
9	341992.42	0.07	365931.88
10	399931.88	0.07	427927.12
11	462927.12	0.07	495332.01
12	531332.01	0.07	568525.26
13	605525.26	0.07	647912.02
14	685912.02	0.07	733925.86
15	772925.86	0.07	827030.68
16	867030.68	0.07	927722.82
17	968722.82	0.07	1036533.42
18	1078533.42	0.07	1154030.76
19	1197030.76	0.07	1280822.91
20	1324822.91	0.07	1417560.52
21	1462560.52	0.07	1564939.75
22	1610939.75	0.07	1723705.54
23	1770705.54	0.07	1894654.92
24	1942654.92	0.07	2078640.77
25	2127640.77	0.07	2276575.62
26	2326575.62	0.07	2489435.91
27	2540435.91	0.07	2718266.43
28	2770266.43	0.07	2964185.08
29	3017185.08	0.07	3228388.03
30	3282388.03	0.07	3512155.20
31	3567155.20	0.07	3816856.06
32	3872856.06	0.07	4143955.98
33	4200955.98	0.07	4495022.90
34	4553022.90	0.07	4871734.51
35	4930734.51	0.07	5275885.92
36	5335885.92	0.07	5709397.94
37	5770397.94	0.07	6174325.79
38	6236325.79	0.07	6672868.60
39	6735868.60	0.07	7207379.40
40	7271379.40	0.07	7780375.96

Want to use this spreadsheet for your own calculations? Comment below and I'll e-mail it to you!

Planning Ahead - How to make goals for your future - Pt 2.

Yesterday, I talked about the levels of goals I use.
Today, I'll talk about how to use those levels to speed your progress to making your dreams come true!



Jack, Dreams are silly. 
Dreamers are lazy and always fail.

This is incorrect.
Dreamers are the visionaries of the future.

Many of the most successful (and famous) people in the world are dreamers.
CEO's, actors, inventors, pilots, astronauts, scientists, etc.

These people use their passion to do something that isn't commonly thought possible, and make that dream come true by following through.

I believe passion for dreams is at the heart of every goal (and success).

If you can't feel a warmth in your heart for a goal (or the payoff of that goal), then I believe it's nearly impossible to achieve it.



Take your big goal and make it smaller.

No, I don't mean moving to Idaho instead of Australia.

I mean you should break down your big goal into smaller, and more easily accomplished 'pieces'.

If you try to 'move to Australia on only $380.50' then you will be sorely disappointed when you fail to succeed on that goal.

But if you put that $380.50 a week into your 'move to Australia' fund, then you have accomplished a 'piece' of that larger goal. You can feel proud of that. You will be moving towards meeting your goal. And every time you do it, and see the balance increase, you will feel empowered and accomplished.

This sense of accomplishment helps drives us to our goals!



Build 'sub-goals' from the pieces of larger goals.

Take all of those large goal 'pieces', and make them into small 'sub-goals'. Smaller goals are easier to follow through on, and still give you a sense of accomplishment.

Plus, many small efforts will nearly always provide a better result then one large effort.

This is true in goals, and also in investment.



Putting it all together.

Let's run with the example about the person that wants to move to Australia.
Imagine that the person created sub-goals when she:

• Broke down the saving into a weekly amount.
• Concentrated on searching for good, discounted housing in Australia, instead of moving into a more popular, expensive area.
• Worked hard to lineup a job for her when she gets there.

All of these smaller 'sub-goal's have a positive effect on her chances of success.

Immediately
Cost to move to Australia immediately (housing, travel costs, no job): $ 200,000
Cash in pocket this week: $380.50
Immediate goal success rate: 0%

3 year deferral
Cost effect of deferring move 3 years: $120,000
(hunting for discounted housing, travel, and lining up a job in Australia)
Cash in hand from saving $380.50 a week (@ 1.5%) for 3 years: ~$60,780
Goal success rate: ~50% - She is short by approximately half. She may be able to make it, but maybe not.

5 year deferral
Cost of deferring move 5 years: $110,000
(hunting for discounted housing, travel, and lining up a job in Australia +1)
Cash in hand from saving $380.50 a week (@ 1.5%) for 3 years: $102,945
Goal success rate: ~92% - She has almost the entire amount in full, and has and excellent chance of making a good life in Australia.

By saving up, and achieving sub-goals, she has changed her chances of success from 0% to over 90%.

It's very similar if you have any sort of 'overwhelming' large goal, like paying off a house, or investing for passive income.



Moral
If your goal is overwhelming, break it up into smaller pieces that are easier to accomplish. 

Then get out there, and Start Accomplishing!



EJ

Hate working? Invest in passive income!

I'd like to talk about why I put nearly 85% of my income into passive income investments.

The fact of that matter is: I hate working.

I dislike the idea of being under someones thumb so much, that I will suffer in a dead-end, decent wage job for a long time, if it means I wont have to work for someone else ever again.

Every time I plunk down some of my paycheque on a passive investment, I feel like a little piece of me has ascended away from the daily 'rat race' toil, and if I just sock a little more away, I just might be able to get away from the god-forsaken hell that is full-time work.

So, I watch my investments, I view the market as a key to a problem that I have never been able to solve - Living without having to work for that living.

Will my $19.74 this October allow me to live without a care? No.

But it will make a small difference, and if enough of those small differences stack up, it just might allow me to live the way I've always wanted:

Professionally Unemployed.

Dividend Income Update - October 2011

This month, I jumped in on some more SLF (Sunlife Financial) because I believe them to be a bargain price for such a well-run financial firm.

I purchased 45 units at $24, which makes the $.36 quarterly dividend approximately a 6% yield. I believe this to be excellent for a company that has never dropped it's dividends.

This month is probably going to be one of my slowest months ever for dividends. Add that to the fact that the weather is pretty rainy and depressing makes for more of a slog then a slide into dividend-funded happiness.

I'm going to add an additional Dividend Income Update for the end of October, and show what I truly received as opposed to what I'm estimating to receive this month like I am here.

Here's hoping that I'm able to add another great position this month! :-D

Equity (Stock, Bond, ETF, etc)	Amount (In Shares)	Dividends Paid This Month
Artis REIT (AX.UN)	200	$18
Canadian REIT(REF.UN)	1	$.12
Bank of Montreal (BMO)	1	$.70
Bank of Nova Scotia (BNS)	1	$.52
Emera Inc. (EMA)	1	$.33
Pengrowth Energy (PGF)	1	$.7

Total Dividends for month of October: $19.74