Becoming a millionaire through the stock market doesn’t necessarily require finding the next explosive growth stock. In fact, one of the most powerful wealth-building tools available to investors is something far less exciting: compounding.
Consider this. Over the past 10 years, the iShares S&P/TSX 60 Index ETF (TSX:XIU), with distributions reinvested, delivered a compound annual return of about 12.8%. Of course, investors shouldn’t assume that return will continue indefinitely. But it illustrates what can happen when you give quality investments enough time to grow.
Assume you start with $5,000 and invest another $5,000 every year, earning an average annual return of 12%. Under those assumptions, you could reach $1 million in roughly 27 years. Keep this going for another seven years, and the portfolio would grow to more than $2 million.
That’s the magic of compounding. Early on, your contributions do most of the work. Eventually, your portfolio’s returns can dwarf the amount you’re adding each year.
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Could this stock help you get there?
XIU offers diversification across some of Canada’s largest companies. But investors willing to take on the additional risk of owning individual stocks could potentially target businesses capable of delivering stronger earnings growth.
One stock worth serious consideration is Brookfield Asset Management (TSX:BAM).
The global alternative asset manager has an asset-light business model and targets double-digit long-term compound annualized returns and earnings growth. Importantly, management expects to double its fee-bearing capital and earnings in five years through 2030.
The recent results have been encouraging. In the 12 months ended in the second quarter of 2026, Brookfield Asset Management grew fee-related earnings by 19%, while distributable earnings increased 12% on a per-share basis.
And there’s another reason income-focused investors may find the stock appealing.
Brookfield Asset Management aims to distribute approximately 90% to 95% of its free cash flow or distributable earnings through dividends. That supports its goal of increasing the dividend at a double-digit annual rate. Since its late-2022 spin-off from its parent company, it has delivered that level of dividend growth.
At roughly $73 per share at writing, the stock yields about 3.8%. The analyst consensus price target also suggests the shares are about fairly valued.
Don’t bet your million-dollar goal on one stock
Could Brookfield Asset Management make you a millionaire? It certainly could play a role — but investors shouldn’t expect any individual stock to do all the heavy lifting.
Even excellent businesses can experience steep declines, and there’s no guarantee Brookfield Asset Management will achieve its ambitious growth targets. A diversified portfolio can help reduce the risk associated with any single investment.
The millionaire example is also just that — an example. Your starting capital, annual contributions, investment returns, and time horizon will all affect the outcome. Generally, investing more, starting earlier, and allowing investments to compound for longer can dramatically improve your odds.
The bottom line
You don’t need to find a stock that turns $5,000 into $1 million overnight. A more realistic path is to consistently invest in quality businesses, reinvest your returns, and give compounding decades to work its magic.
Brookfield Asset Management looks like an intriguing candidate for investors seeking long-term growth and rising income — but it should be viewed as one potential piece of a diversified millionaire-building portfolio.
