I’m constantly amazed at the stories I hear about average, everyday folks using the magic of compound interest to get rich. I know a man who is the living embodiment of slow and steady wins the race. Over the years, he held a bunch of mostly blue-collar jobs. He worked on the railroad. He became an appliance repair man. He even tried his hand at selling real estate, although the brutal interest rates of the early 1980s made that difficult. But through it all, he worked hard and never turned down a shift of overtime. He kept investing, and lived a…
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I’m constantly amazed at the stories I hear about average, everyday folks using the magic of compound interest to get rich.
I know a man who is the living embodiment of slow and steady wins the race. Over the years, he held a bunch of mostly blue-collar jobs. He worked on the railroad. He became an appliance repair man. He even tried his hand at selling real estate, although the brutal interest rates of the early 1980s made that difficult.
But through it all, he worked hard and never turned down a shift of overtime. He kept investing, and lived a frugal lifestyle. He invested in Canadian blue-chip stocks, real estate, and, eventually, his own business.
Now, in his 70s, he’s finally able to enjoy the fruits of his labor. He still goes to the office each morning, but only because he wants to, not because he has to. His afternoons are spent with friends, family, and planning the latest weekend getaway in his massive RV. He spends the coldest months of the year in a tropical paradise, I’m assuming with a huge smile on his face.
That’s the retirement I aspire to, and I bet you do, too. Fortunately, it’s not that hard. As long as you have time on your side, you can even do it on just $50 a week.
Time is on your side
We can all spare a few bucks a day. Whether the vice is expensive coffee, eating too many meals out, or cutting back on alcohol, it’s shouldn’t be too difficult to scrounge up an additional $7 per day.
I can do it, and I know you can, too.
The key is to start early, keep it up every single week, and pick good, solid Canadian companies to invest in. As an example, let’s look at Bank of Montreal (TSX: BMO)(NYSE: BMO).
BMO was Canada’s first bank, founded in 1817. The company has been through confederation, two world wars, the Great Depression, countless other recessions, and everything else you could possibly throw at it. It emerged through all these crises intact, and mostly unscathed.
Even from 1999 to 2014, it experienced the popping of the Internet bubble, two nasty recessions, the virtual collapse of the U.S. banking system, and the bull market that followed. It performed surprisingly well throughout, giving investors a return of 11.83% annually, assuming dividends were reinvested.
Will BMO return 11.83% annually going forward? It may or may not, but don’t count the company out. It would have been easy to say 20 years ago that BMO couldn’t possibly keep up the growth it saw for the first 175 years of its existence, but it did. So let’s assume the stock matches the performance of the past 15 years.
At 25, let’s say you start putting just $50 away each week, using it to buy BMO shares. (We’ll ignore commissions, but they’re minimal these days anyway.) Through thick and thin, you keep putting that $50 away each week, and you never bother to open up your statements to see how the investment is doing.
Fast-forward 35 years, and you’re 60. Your kids are grown, you’re a little sick of work, and you’re looking to retire. Luckily, you’ve got your stash of Bank of Montreal shares, set aside just for the occasion.
You open up the last of your statements, and take a look at your position.
It’s worth $1.2 million.
Is getting rich easy? Of course not. You have to invest consistently, even during times of hardship. It takes time, patience, picking the right investment, and even a little luck. But the important message? It doesn’t take a mountain of capital to become a millionaire. You can do it slowly. Time is on your side.
What’s stopping you from taking the steps to secure your retirement today? It’s easy to get started. We’ll show you how.
Want to get rich? Then buy Canadian bank shares!
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Fool contributor Nelson Smith has no position in any stocks mentioned.