It has taken me about 21 years to accumulate $500,000. While my achievement may not seem spectacular, I am incredibly proud of it.
I have been in Canada for 26 years (I arrived in 1998) as an international student. Since I didn’t have much money, I had to go to school during the day and work many odd jobs in the evening and during the summer.
I did all the low-paying jobs that immigrants typically do. I worked as a janitor, stocked shelves, made sandwiches, worked as a busboy in a restaurant, and held many other positions.
My university studies took a bit longer (five years) because I had to learn French. However, my French was never good enough for Quebecois employers, and I had a hard time finding a job.
During my school years, I used to dance salsa as a hobby. In my home country, Colombia, I was never a good dancer, but here in Canada, I wanted to get closer to my Latin roots. I dedicated more time to becoming a better dancer. In addition, my girlfriend at the time wanted to learn to dance salsa as well, so we took a few dance classes and practiced a lot.
It turns out that dancing has been the one constant thing in my life since I arrived here. In the beginning, my friends from Concordia University would ask me how to do certain moves. This developed into the occasional dance class, a regular activity, and eventually the creation of our dance school, Dance Conmigo with my dance partner and business partner Cheryl Williams.
I always had the desire to save money. At the same time, I had a hard time getting a job because I found it difficult to work for “the man.” So, I have never been a high earner.
I started investing $25 a month when I was earning minimum wage. I didn’t know how to invest, so I bought all the mutual funds sold by my bank—the same mutual funds I now recommend people NOT to buy.
After I had saved a few thousand dollars, I started watching a lot of investment shows on TV and believed all the recommendations pitched by the TV personalities. It turned out to be one of my biggest learning mistakes. Today, I tell people not to watch business news. The whole purpose of business news is to capture our attention to sell advertisement space to brokers who make the most money when people make lots of transactions.
Finally, I got tired of losing money and discovered index investing, index funds, and index ETFs. Since then, I have allowed the market and the magic of compound interest to do the job while I continued adding money to the machine.
This year, 2024, I stopped contributing to my account and started withdrawing. My plan is to follow the 4% rule, which means that I can withdraw 4% of my account in perpetuity, this is $20,000 per year, adjusted for inflation. I will also continue working on my part time photography business.
Although $500,000 is not a lot of money and probably not enough to retire on, I feel lucky compared to most North Americans. According to some statistics provided by the New York Times:
- 49% of people in the 55 to 65 age bracket have nothing saved for retirement.
- 10% to 20% of seniors are already living in poverty.
- For many people, retirement is an unobtainable aspiration.
Looking forward, if it took me 20 years to bring my capital up to $500,000, I think it will take me less than 10 years to bring my capital up to $1 million. Yes, I know that with inflation it will not be the same, but I am confident that I will be ahead of more than 50% of the population.
You’d think that after all those years of saving and cutting back my life would be miserable, especially watching everyone else blow through their money. But the fact is, money has given me a lot more confidence in the future and the piece of mind of not having to worry about how to pay my rent.
If you want to build wealth, whether it’s your first $100,000, your first $500,000, or your first million, assuming that you are a low-wage earner like me, here are some tips:
Don’t carry any debt
Debt is the enemy. Debt is compound interest fighting against you. If you have a credit card, never hold a balance. If you need to own a car, buy it with cash. Don’t get a car loan. I can’t emphasize enough how detrimental debt is to your financial well-being. Just don’t do it.
Choose a career where there are job opportunities
If you don’t know what to do with your life, please don’t choose a career where there are no job opportunities. If you like philosophy, gender studies, or any of those social sciences with few job opportunities, take those classes in your free time. If you like philosophy, there is nothing wrong with reading Friedrich Nietzsche on your own, but please don’t go into debt to study it. If possible, study something with many job opportunities, like accounting, engineering, or nursing.
Spend less than you earn
Whatever you earn, spend less than you earn and invest the difference in the stock market. Many of my low-income-earning friends have savings plans as small as $25 a month and have no debt. I am sure you can do it too.
Automate your savings
If you are in the United States, make sure you contribute automatically to your 401(k) and your Roth IRA.
If you are in Canada, make sure you contribute automatically to your RRSP and TFSA.
Always continue learning
Find opportunities to learn a new hobby or skill. You never know when your newly acquired knowledge will come in handy. At the very least, learning will keep you mentally engaged. YouTube is a wonderful learning tool—I owe so much of my education to YouTube.
Try to find people who think alike
We are greatly influenced by the people around us. If you spend time with people who are not trying to improve themselves, you will have a harder time making something better out of your life.
Try to spend time with people who care for you and will try to help you out. Look for people who will inspire you to be a better version of yourself.
Thank you for joining me on my journey. I hope you stick around and stay with me in my journey to $1 million. You can help me out by subscribing to my YouTube channel and watching some of my new videos.