It’s normal to wish you were one of the 52 million millionaires around the globe. However, the brutal truth is that relatively few people are willing to make the necessary sacrifices to get rich.
It isn’t true that only people born with a silver spoon get to become rich. If you are willing to put in the work, learning how to get rich in Canada is the first step you need to achieve an affluent future.
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What Is A Rich Canadian?
One percent of Canada‘s population holds about a quarter of total Canadian wealth at almost $3 trillion. That’s nearly $8 million to each of the wealthiest Canadians. However, that may not be an adequate definition of a rich Canadian.
Some Canadians are asset-rich. They may have a home worth more than a million dollars but not enough liquidity or a decent income. Others might have a really high-paying job or a business but not enough tangible assets to their name.
For me, a rich Canadian has enough income-producing assets (e.g., dividend stocks, rental properties, other investments) to sustain them even if they are not actively working.
An example would be having $3,000,000 in income-producing assets. Even at 4% a year, they can get you $10,000 a month. If you already have an income source, you might be considered rich at just one-third of that. And it’s aside from your own home, which reduces your housing expenses quite drastically.
Another definition of a rich Canadian is by income threshold. As per Statistics Canada, people belonging to the top one percent income group have a $244,800 yearly income as of 2018.
Eight Ways to Get Rich in Canada
Apart from winning a lottery, receiving a sizeable inheritance, or finding a genie in a lamp, there are almost no practical and predictable ways of getting rich quickly.
Most ways of getting rich usually take time. This is why you will find very few self-made millionaires and billionaires under the age of 35.
However, here are eight ways that you can use to get rich in Canada:
1. A Unique Idea and the Ability to Turn It Into a Viable Business
Time Frame: Three to five years (maybe even less)
Skills Needed: Creativity, technical genius, business acumen, management skills
Getting rich from a unique idea that no one had thought of before or had turned into a viable business has been the most tried and trusted way of getting rich for centuries.
From inventors like Thomas Edison and King Camp Gillette to Bill Gates, Jeff Bezos, Mark Zuckerberg, and Garrett Camp, almost every era and every country in the world has had its fair share of people who got rich off a unique idea.
The problem with this way of getting rich, however, is that it’s a financial unicorn that you might not immediately find if your only goal is to create something that can make you rich.
One thing that all such success stories have in common is that those people were trying to create something new and unique to solve a problem or provide tremendous value to their target consumers.
However, you don’t have to set your eyes too high when it comes to unique ideas. The accidental invention of the Slinky and play dough is an example of how simple and even ridiculous ideas can be worth millions.
Remember, too, that the Japanese selfie stick patented in 1984 was called one of the most useless inventions of its time. Yet, over a decade after its patent ran out, the selfie stick market reached billions worldwide.
This tells you that even a great idea at the wrong time, where the other necessary ingredients and catalysts are not present in the market, can be worth nothing.
If you want to get rich with a unique idea nowadays, a revolutionary software or technological idea might be your best bet.
The reason this is high-risk is that the probability is high that someone else (most probably your partners, investors, or even your employees) will use your idea to get rich. This is especially true if you don’t have the skills and ability to turn your idea into a viable business yourself.
McDonald’s history is an important example because the person who turned McDonald’s into the world’s largest fast-food chain did not have the McDonald surname.
2.Grow as a Professional, Save, and Invest
Time Frame: Three to four decades
Skills Needed: Consistency, organizational skills, financial discipline, field expertise, negotiation skills, a fast learner
This is another of the most tried and tested ways of getting rich. It’s painfully long, but if you are moderately hardworking, have landed a decent job, and are growing in your profession at an above-average rate, you might be able to get rich before you retire.
Let’s say you started earning a decent sum of money when you reached 30, and you decided that you will put away at least 10% of your yearly income in savings. You also created a relatively safe and modest investment plan that would see your investment grow at a 5% rate every year.
If you earn $60,000 a year when you are 30, and your income keeps growing at a 4% rate every year, stick to your savings and investment plan, and you can easily have over a million dollars in liquidity in the course of 35 years.
|Age||Yearly Income (4% Growth)||10% Savings + 5% Growth|
Suppose you have a decent career and keep learning and growing as a professional. In that case, you might earn a significant side income by applying your expertise to consultancy and a side business as well. But even if you are simply growing as a professional, it’s not unrealistic that your job earns you over $250,000 in the latter half of your professional life.
The top tier of company VPs, senior managers, doctors, and specialists easily take home over $300,000 a year. And even if their job and social circle require them to maintain a high and costly living standard, stashing away 10% is relatively easy.
If you want to get rich this way, the most crucial variable you need to consider is time. This is the most secure of getting rich, but it also takes about three to four decades.
Other essential factors to consider are competency and the demands of your profession. To earn such a high income, you would need to be in the top 10% of the professionals in your field and a high-demand market.
3. Frugal Living Coupled With Aggressive Savings and Investments
Risk: Low to high
Time Frame: One to two decades
Skills Needed: Financial discipline, field expertise, risk tolerance, investment acumen
A variation of the method above would be keeping a frugal lifestyle and saving aggressively despite earning a decent yearly income. With this, you can have two simple paths to getting loaded:
- Conservative investments
- Aggressive investments
Let’s say you start putting away 30% of your income every year. Your accumulation of wealth will depend on your investment growth rate.
- Relatively Conservative (5%): You might hit $1 million in investment assets and savings before you turn 52.
- Aggressive (10%): You might hit $1 million before you are 47.
There is not much difference between the two, but that’s both the curse and bounty of compounding. Once it gets sizeable enough, it starts growing at an aggressive pace. If it keeps growing at the same rate, you might hit $2 million by the time you are 53.
But what makes this strategy both safe and incredibly risky is that it comes with its own risks.
Suppose you create a relatively safe and conservative investment portfolio. In that case, you may need to spend more years living frugally and saving aggressively to meet your goal. On the other hand, if you invest in risky yet growth-oriented investments, you increase your probability of losing everything.
4. Start a Business
Risk: Low to Moderate
Time Frame: Varies based on the nature of business
Skills Needed: Management, communication, marketing, hard skills associated with the business you are starting
There are certain financial advantages of starting a business in Canada, but that’s by no means a one-way ticket to wealth. How much you can make from your business and how risky it is, depends upon several factors. However, it will primarily be governed by the type of business you are starting.
You need a lot of things to start a business, but let’s oversimplify:
- A business idea or a plan (it doesn’t need to be unique or groundbreaking)
- Relevant hard and soft skills
- Capital, which might vary drastically based on what business you are planning to start. A simple internet business might only cost you a few hundred bucks. In contrast, a business that requires a physical space (like retail) might need a lot of capital.
- Detailed market research
I added luck because COVID has taught many business owners a lesson the hard way: even if you do everything right, things can still go wrong because of reasons beyond your control.
You may or may not need to leave your day job to start a business. It depends upon how demanding your business is, your financial obligations, and your other income streams.
How much money you will make in how much time will also depend upon several factors. If you focus more on growth rather than funding an expensive lifestyle, you might be able to scale up and get rich faster.
If your goal is to live rich without running a business, you can eventually sell a successful business for enough money to live upon comfortably.
5. Become a Freelancer or Consultant
Time Frame: One to two decades
Skills Needed: Organization, self-marketing, creativity, multiple hard skills, tenacity, and emotional fortitude
This is different from starting a business or growing as a professional. When you are free from the constraints of formal work, you have more freedom and opportunities.
Take note, however, that there are also more challenges. If you can keep up with the highly competitive freelancing market and have a few of the most in-demand and marketable skills, you might be able to earn more and faster than you could in a day job or a business, with relatively less responsibility.
You might need to put in more hours, but you can also take breaks at your leisure and won’t have to wait for weekends or certain times of the year to decompress.
The catch here is that you won’t just need the hard skills and be good at multiple things; you will also need to convince potential clients that you are. But if you can pull it off, you might be able to make a decent amount of money, save a lot of it, and grow it to reach your financial goal within two decades.
There are several “ifs” attached to this way of getting rich in Canada, but it’s not as challenging to pull off as most people think.
6. Become an Internet Celebrity
Risk: Very high
Time Frame: two to four years
Skills Needed: self-promotion, artistic skills, presentation, extreme creativity, interpersonal skills.
Only a handful of Canadian YouTubers and other internet celebrities have a net worth of millions. So, the odds of becoming rich by becoming an internet celebrity—even though YouTube is no Hollywood—are just as high as becoming a famous actor.
The good news is that it won’t cost you too much to try this path, mostly just your time and effort.
It’s a risky way to become rich in Canada not because you might lose a lot of money doing it, but because if you hang all your hopes on this one pathway to affluence, you are highly likely to fail.
There is a silver lining, though: you might be able to become an internet celebrity by doing something you love, coupled with a stroke of luck.
Take Twitch Steamers as an example. The richest Twitch Steamers became famous for playing video games.
There are other ways of becoming an internet celebrity. But you can either become controversial and downright deplorable, or create great content, attract, and engage your viewers.
7. Do What Others Don’t Want to Do or Can’t Do
Risk: Moderate to very High
Time Frame: Varies drastically based on “what” it is
Skills Needed: Spirit of adventure, flexibility, fast learning, genius.
Apart from conventional businesses and levering mainstream skills to make money as a professional or freelancers, there are two more ways of becoming rich using your skills or starting a business:
- Become a virtuoso and climb to the very top of your field or your skill. If you have an innate marketable talent, hone it to perfection and establish yourself as a brand. Mastercraftsmen and great artists are two common examples. This would require you to dedicate a lot of time, effort, and focus to honing your skills. Ideally, it would help if you had a “gift” for it.
- Do something that others won’t. Businesses and jobs that are dangerous, “dirty,” or socially taboo usually have less competition, and you might have a better shot of getting rich.
8. Save and Invest in Startups
Risk: Very High
Time Frame: Five to ten years
Skills Needed: An eye for talent or groundbreaking ideas, a high risk tolerance, and smart financial management skills
Investing in startups is radically different from investing in assets like stocks and real estate. It requires a lot of risk tolerance and an eye for spotting the next most profitable thing.
If you do not yet have your desired level of wealth, you may not have enough capital to hunt down tech-oriented startups like venture capitalists do since they usually require significant production and marketing investments.
However, you can look for people who want to start simple businesses: a new food-cart, cat café, or simple e-commerce business. These small startups might need amounts less than $100,000 to get off the ground. It’s a reasonable amount that you can save aggressively from a decent job in a few years.
Unlike other investments where you get a small percentage and more security, you can claim a decent portion of the profits if the business takes off.
To mitigate the risk, you will need to study the business proposal and business plan of the startup you want to invest in. You will also need to create an iron-clad deal to ensure you are getting the maximum benefit for your risk.
Investing is another way that you can build wealth. My two favourite platforms to invest in Canada are the following:
- Questrade – Canada’s leading discount broker, I use Questrade to trade most of my stocks. It has a desktop and mobile trading platform. All Canadian ETF purchases are commission-free, but be aware that selling ETFs will cost a small fee. With this special offer, you can also get $50 of commission-free stock trades here.
- Wealthsimple Trade – Better known as a robo-advisor, Wealthsimple has now released this fantastic trading platform that now comes in both desktop and mobile versions. All Canadian stock and ETF trades are commission-free. Get a $10 signup bonus when you sign up here.
I hope you enjoyed this list, and I sincerely apologize if I crushed any “get-rich-quick” fantasies you might have had before reading this.
However, if you are willing to work hard and make some difficult choices, this “how to get rich in Canada” list can help you achieve your goal—or at least shortlist the ways you can consider pursuing.