3 Mistakes Keeping You From Your First Million in Canada

You can make your first million in Canada with financial discipline and strategic planning, although some mistakes can derail your journey.

Anyone can be a self-made millionaire before retirement and in post-retirement. However, the journey to a million isn’t a stroll in the park. You can accomplish the task but not in a leisurely manner. There are things you must avoid; if not, they will keep you from your first million.

Saving but not investing

Saving is good, although saving and investing are more important if you desire to retire rich or live comfortably. Idle cash, or unspent money, gives instant liquidity. Sadly, it loses value due to inflation and rising costs of living. Money can only grow in value if you make it productive by investing in income-producing assets like dividend stocks.

No mindset to create income

The mindset of the wealthy is to create income at every opportunity. For example, borrowing can be advantageous, but you must have the smarts to distinguish between good and bad debt. Your continuous use of credit spells trouble. A debt is only good if it benefits your long-term financial health. The advice is not to use borrowed money to purchase assets that depreciate rapidly or earn zero returns.

Taking the risky approach

The get-rich-quick mentality is fatal because it can make you poor instead of rich. Inheritance is instant wealth, but most are not unlucky and can’t be millionaires overnight. You can’t fast-track the process by investing in high-risk investments like cryptocurrencies and penny stocks.

The better approach is to take a long-term view and not panic when investing in stocks. Long-term investing can help you ride out the market’s ups and downs while maximizing the growth potential of your stock investments. The power of compounding also comes into play when you reinvest dividends and wait to collect them in the future.

Rock-steady dividends

Emera (TSX: EMA) is a popular buy-and-hold long-term investment. This utility stock trades at $44.84 per share. For less than $50, you can partake in the lucrative 5.92% dividend. With the quarterly payouts, you can reinvest the dividends four times a year. A $24,220 position (500 shares) today will compound to $58,479.53 in 15 years.

The $13.3 billion company primarily invests in regulated electricity generation, and electricity and gas transmission and distribution in Canada, the U.S., and three Caribbean countries. Emera is a dividend grower. It has a dividend growth rate target of 4% to 5% through 2026.

Reliable income provider

Transcontinental (TSX: TCL.A) underperforms in 2023 (-23.5% year to date), but the high dividend yield (8.23%) compensates for the temporary weakness. The $960.9 million company is the leader in the flexible packaging industries of Canada and the U.S., and Latin America and Canada’s largest printer. The $10.94 per share is a good entry point.

Its President and CEO, Thomas Morin, said demand in the packaging and printer segments has softened due to the current economic conditions. However, quarterly dividend payments remain uninterrupted. Morin adds Transcontinental is working to reduce costs, improve operational efficiencies, and increase cash flow generation.

Next millionaires

Many people in every generation, beginning in the 1900s, have become millionaires. In today’s world, you can earn your first million in Canada with financial discipline and strategic planning. Millennials, Generation Z, and Generation Alpha could be the next millionaires.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Emera and Transcontinental. The Motley Fool has a disclosure policy.

More on Dividend Stocks

shopper checks her receipt
Dividend Stocks

Your OAS Increase May Not Keep Up With Your Real Retirement Costs

OAS is rising with headline inflation, but individual retirement expenses can increase much faster than the national average.

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Dividend Stocks

The Next AI Winners May Own Trusted Data: I’d Watch This Canadian Stock

As AI models become widely available, trusted professional data could become a more valuable competitive advantage.

Read more »

man in bowtie poses with abacus
Dividend Stocks

How Much Would You Need in a TFSA to Earn $500 a Month?

A $500 monthly TFSA income target requires $6,000 annually, and higher yields dramatically reduce the capital required.

Read more »

people sit in two wooden beach chairs facing the Caribbean ocean holding drinks and making a toast
Dividend Stocks

2 Canadian Dividend Stocks I’d Buy and Hold for Life

These two Canadian dividend stocks offer an attractive mix of dividend income and future growth, making both worth a closer…

Read more »

person with spyglass looks at ocean horizon
Dividend Stocks

This 5.9% Dividend Stock Is One I’ll Never Sell — Here’s Why

This Canadian dividend stock has a great combination of a 5.8% dividend yield, resilient cash flow, and billions of dollars…

Read more »

concept of growth
Dividend Stocks

The Dividend Stock I’d Never Sell, Even in a Downturn

Fortis is a dividend stock I'd hold through a downturn. Its regulated utilities and dividend growth support a patient approach…

Read more »

frustrated shopper at grocery store
Dividend Stocks

2 Dividend Stocks Retirees Can Count on for Decades

These two Canadian dividend stocks offer a great mix of essential businesses, regular dividends, and long-term growth investments that could…

Read more »

customer comparison shops in liquor store
Dividend Stocks

How Much Income Triggers an OAS Clawback?

The OAS clawback is based on net world income, with a 2025 minimum recovery threshold of $93,454, not on a…

Read more »