What Does It Take To Become A Millionaire? About 11.1 Percent

Owen Winkelmolen

Advice-only financial planner, CFP, and founder of PlanEasy.ca

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What does it take to become a millionaire? Surprisingly, not much, as long as you follow certain principles…

There’s something alluring about being a millionaire. Becoming a millionaire is not a traditional financial planning goal. There’s absolutely no reason to aim for a round $1,000,000. In fact, $1,000,000 might be too much! But there’s something appealing about it, alluring even. It could be the simplicity. It could be the many references to millionaires in movies, tv, music and social media. I have to admit, there’s just something interesting about having a 7-figure net worth.

Becoming a millionaire isn’t too difficult, if you start early enough and follow some basic principles. It’s a formula that’s been proven to work time and again.

So, what does it take to become a millionaire household in Canada? About 11.1%.

By using the right accounts, you can invest your way to $1,000,000 pretty easily, all it takes is time and discipline. The average household income in Canada is around $94,833 per year based on research by Statistics Canada and adjusted for inflation. That means to become a millionaire household by the time you hit retirement at age 65 you need to save about 11.1% per year. That’s it.

If you can save 11.1% of your gross household income from age 25 to age 65 you have a good chance of becoming a millionaire. And this is a million in today’s dollars. With inflation, you’ll actually have over $1.6M in future dollars.

This might be a bit lower during the beginning of your career when your income is lower, and it might be a bit higher later on when your income is higher. But by saving 11.1% of your income per year you should have a reasonably good chance of becoming a millionaire!

The key is to start early, be consistent, avoid unnecessary fees, and avoid the many mistakes investors tend to make.



How To Become A Millionaire Tip #1: Start Early!

Starting early really is the key to becoming a millionaire. All it takes is time, discipline, and patience.

If invested properly, a dollar today is worth over $10 dollars in the future. Even Warren Buffett understood this at a very young age. Young Warren Buffett knew that saving and investing early, combined with a solid rate of return, would be all that’s needed to become extremely wealthy. Young Warren Buffett was famously frugal and entrepreneurial in his younger years precisely for this reason. Earning money any way he could, and making sure not to spend it but invest it instead.



How To Become A Millionaire Tip #2: Be Consistent.

Consistency is key if you want to become a millionaire. Millionaire households are all around us but we’d never know. They don’t spend lavishly, they don’t buy big homes, they have good incomes and save consistently for a long period of time.

The book The Millionaire Next Door talks about common factors among millionaire households and there are seven main factors that they believe millionaire households have…

  1. They live below their means.
  2. The put time, energy and money towards building wealth
  3. They strive for financial independence rather than material wealth
  4. They weren’t financially supported by their parents and learned good money habits young
  5. They similarly don’t support their adult children financially either
  6. They take advantage of opportunities as they arise
  7. They earn a good income, not huge income, but they have one or two good incomes



How To Become A Millionaire Tip #3: Avoid Unnecessary Fees

It used to be that if you wanted to invest you had no choice but to pay 2-3% per year in management fees to your investment advisor. Those days are thankfully over and low-cost, passive index investing has been gaining ground on high-fee mutual funds.

A millionaire with a high-fee mutual fund portfolio could be paying $23,500+ per year in mutual fund fees on average. It’s hard to build wealth when there is such a large drag on your portfolio.

On the other side of the spectrum, a millionaire in a low-cost ETF portfolio could be paying $1,600 per year, less than 1/10th. With less money going towards fees its much easier to build wealth over the long-term.



How To Become A Millionaire Tip #4: Avoid Common Investing Mistakes

Unfortunately, although the fees are low, individual investors often underperform the index their investing in. The performance of individual investors has been repeatedly shown to lag the index in which they invest. Morningstar does an analysis called ‘Investor Return’ whereby they measure cash inflows and outflows for different funds.

These cash inflows and outflows are essentially investors trying to time the market. Individual investors sometimes don’t behave rationally. They sell investments during a crisis and then when things get better they buy back in. Essentially the buy high and selling low, the opposite of what they’re trying to do. This causes individual investors to have investment returns lower than the fund in which they’re invested. They would be better off buying and holding but sometimes they can’t help themselves and they try to time the market.

How large is the gap between investor return and the fund return?

Vanguard has summarized the gap for some of their largest funds. The gap can be anywhere from -0.33% to -2.61% depending on the fund.

The best way to avoid timing the market is to make an investment plan and stick to it. By sticking to your plan you’re less likely to time the market and can avoid this lag. The result is that you can build wealth faster.



Becoming A Millionaire

Becoming a millionaire household isn’t your traditional financial goal, it’s not tied to any specific outcome, but it is a nice round number and easy to target. If becoming a millionaire is motivating for you then by all means make that your personal finance goal (Just be warned that you might be saving too much!)

Becoming a millionaire isn’t necessarily hard, it just takes time and patience. Make a plan and stick to it and you’ll be a millionaire household before you know it!

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Owen Winkelmolen

Advice-only financial planner, CFP, and founder of PlanEasy.ca

Work With Owen


Join over 250,000 people reading PlanEasy.ca each year. New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...



Join over 250,000 people reading PlanEasy.ca each year. New blog posts weekly!

Tax planning, benefit optimization, budgeting, family planning, retirement planning and more...



  1. Bob Lin

    I was thinking about the very question this post answers.

    As my kids are in their early 30s they’ll need to step up their savings rate, especially if they want to retire earlier.


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