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.
