Revealed: These 3 Easy Steps Will Help You Get Your 1st Million

With dedicated saving, support from those who matter most, and great investments like TD Bank (TSX:TD)(NYSE:TD) shares, your first million is closer than you think!

| More on:
edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.

Image source: Getty Images

They all say the first million is the toughest. After that, it gets much easier.

I recently discussed that statement with my friend Jerry, a real-life millionaire next door with a portfolio that has recently surpassed $3 million. He certainly agreed, regaling me with stories about how, as a much younger man, he and his wife would avoid nights out with friends or intentionally turn down the thermostat, just to help them get closer to their goal of a $1 million net worth.

In fact, getting to the first million is so tough that many folks who are on the right path just give up. They’re unwilling to see the goal through. They lose motivation and are relegated to a life of financial mediocrity.

I don’t want to see that happen to you. Financial freedom is one of the best feelings in the world. You can choose to do anything, knowing you have the capital to back it up. That’s truly empowering.

Let’s take a closer look at three strategies you’ll want to use if your goal is to become a multi-millionaire.

Save aggressively

This one is a no-brainer, but it needs to be said. To become rich in a hurry, you’ll need to create a big savings rate.

This requires a relentless quest to slash your expenses. Nothing should be sacred. You’ll get the best bang for your buck by focusing on the big three household expenses — housing, transportation, and food. Minimize those, and you’re well on your way to creating the massive savings needed to become wealthy.

Of course, slashing costs is just one piece of the puzzle. The other way to maximize savings is to increase your top line. Some folks can do this easily by taking on additional shifts at work. Others might have to start a side hustle or get some further education to qualify for a promotion. You might even have to switch jobs.

Marry well

Jerry is quick to give his wife much of the credit for their family wealth. He says without her dedication and support, his goal of financial independence would have become overwhelming decades ago.

Some people don’t really care about accumulating assets. They’d rather have the things money can buy today. There’s nothing wrong with living life like that. But if you want to amass wealth, it’s best to avoid ending up with someone who has differing goals.

There aren’t many things sweeter than celebrating financial independence (or possibly retiring early) with your spouse after years of hard work. That feeling makes all the scrimping and saving worthwhile.

Invest well

You don’t have to find the next sexy growth stock to make your first million. Many Canadians have used boring ol’ blue-chip stocks to become fabulously wealthy.

Take Toronto-Dominion Bank (TSX:TD)(NYSE:TD) as an example. The company is Canada’s second-largest bank, and one of North America’s 10-largest financial institutions. It has quietly become a leader in important banking categories like mortgages, credit cards, and wealth management up here in Canada, and then it has reinvested those profits into growing operations in the United States.

It’s been a powerful combination for long-term investors. A $10,000 investment in TD shares made 20 years ago is now worth $85,348, assuming all dividends were reinvested along with way. That’s an annual return of 11.31%. If TD continued those kinds of returns going forward, it would take 22 years for a $10,000 annual investment in the stock to surpass $1 million.

TD’s future prospects look bright, too. It has a well-regarded management team — folks who are relentlessly pursuing profitable opportunities. There’s great growth potential helping to consolidate the fragmented U.S. banking system. And soon-to-be retiring baby boomers will help boost the wealth management business.

The company’s shares pay a 3.8% dividend — a payout that has been hiked at least once per year since 2011.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Nelson Smith owns shares of TORONTO-DOMINION BANK.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »