Want to Be a Millionaire? All You Need Is 13 years and $50,000 Today

High-growth stocks can turn your $50,000 investment into a million within 13 years.

Two hands holding champagne glasses toasting each other with Paris in the background

Image source: Getty Images.

Data published by Stats Canada earlier this week showed that the average Canadian family earned $61,400 a year after taxes. The data also seems to suggest that less than 4% of the country’s population has more than $1 million in liquid assets. In other words, most families are earning a decent income, albeit barely any are becoming millionaires. 

That got me thinking whether it would be possible for the average Canadian saver and investor to start off with a nominal amount of savings, say $50,000, and become a millionaire within a reasonable time frame.

As it turns out, it’s possible, but requires a few extreme saving and investing strategies along the way. Here’s a closer look. 

Save aggressively

The reason developing countries like India and China are creating millionaires at a faster pace than developed countries like Canada is because of the wide difference in the relative saving rates. 

Households in developing economies tend to save much more aggressively. The savings rate in India at the moment is 30.1%, while the gross savings rate in Canada is a paltry 3%. No wonder most Canadian households don’t stand a chance of entering the millionaires club. 

If you’re looking to beat the odds, boost your savings rate to 10% or 15% of income, it could mean adding roughly $10,000 to your portfolio every year.

By deploying this extra cash into tax-advantaged accounts like the Tax-Free Savings Account (TFSA) or the registered retirement savings plan (RRSP), you could significantly improve your chances of reaching the million-dollar mark.  

Invest aggressively

A high rate of savings is a great first step, but it won’t make you a millionaire. The return on investment is just as important. If you invest your $50,000 in starting capital and $10,000 in annual additions into a high-interest savings account, it could take you 60 years to become a millionaire! 

Instead, focus on high-growth stocks and aggressively expanding technology companies to get there sooner. Stocks like Shopify and Kinaxis have already delivered stunning returns over the past few years and seem to have plenty of room left for the foreseeable future. 

Constellation Software, for example, has delivered an annually compounded growth rate of 40% over the past 10 years alone. Even if the company delivered growth at half that rate (20%) it could turn your $50,000 nest egg and $10,000 annual additions into a million dollars within 13 years.    

I suggest tracking and investing in high-growth stocks like these to reach your wealth goals faster. 

Bottom line

You can’t expect extraordinary results if you follow an ordinary income and savings strategy. Most Canadian families save too little, invest too conservatively and never reach millionaire status in their lifetime.

In fact, the average Canadian family has just $213,800 in assets, much of which is the value of their primary residence. 

In order to beat the odds and become wealthier than your neighbour, aim for a higher savings rate and invest aggressively in high-growth stocks with robust long-term prospects.

A 15% rate of annual savings coupled with $50,000 in capital and a portfolio of high-growth stocks is all you need to reach $1 million in less than 13 years.   

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.

Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Constellation Software, Shopify, and Shopify. The Motley Fool recommends KINAXIS INC. Fool contributor Vishesh Raisinghani has no position in any of the stocks mentioned. 

More on Investing

money cash dividends
Stocks for Beginners

Where to Invest $10,000 in April 2024

If you've already created a diversified portfolio and are looking for more options from a windfall, here is where I…

Read more »

data analyze research
Investing

The Ultimate TSX Stock to Buy With $1,000 Right Now

Brookfield Asset Management (TSX:BAM) is one of the best Canadian stocks to buy for those looking to put capital to…

Read more »

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

3 CRA Benefits Most Canadians Can Grab in 2024

You can save on taxes by claiming the dividend tax credit on Fortis Inc (TSX:FTS) shares.

Read more »

A cannabis plant grows.
Cannabis Stocks

Canopy Growth Stock Is Rising But I’m Worried About This One Thing

Canopy Growth stock is soaring as the legalization effort makes real progress in both Germany and the United States.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Investing

3 Roaring Stocks to Hold for the Next 20 Years

These top TSX stocks are excellent long-term buys, given their multi-year growth potential and solid underlying businesses.

Read more »

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 »

grow dividends
Investing

Here’s My Top 3 TSX Stocks to Buy Right Now

Even though the TSX has been rising, there are still some good bargains out there. Here are three top compounding…

Read more »

Target. Stand out from the crowd
Investing

Prediction: This Canadian Growth Stock Could Double by 2030

Alimentation Couche-Tard (TSX:ATD) is a top growth stock that could do well over the next six or so years.

Read more »