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5 Financial Principles from a 34 Year Old Millionaire Investor

I asked regular reader Philip to share his story of how he grew his net worth to over $1M before the age of 35.  Enjoy!

I was recently with a group of good friends out for a charity golf tournament, enjoying a nice day on the links instead of being at work.  As usual, I had a few amazing shots, but many more horrible ones that I just wanted to get out of my mind.  Despite my mediocre golf play, it was a great day to have fun and relax.     At the end of the round we grabbed dinner at the clubhouse and chatted about various things.

At one point during dinner, the conversation somehow turned to finances, where the majority of my friends were unified in complaining about taxes, the cost of life and the stress of debt.  Most of them are in the same stage of life I am: mid 30s, living in suburbia, 10 years into their careers and married with kids. From what I know of their careers, some of them make very good money, some of them have more modest incomes. Regardless of their incomes, they all seemed to give me the impression that things were tight and saving was a luxury most don’t have right now due to young children, daily expenses and big mortgages.

On the way out of the clubhouse and back to our cars, I couldn’t help but notice that most of them had really nice golf bags, filled with the newest and hottest wedges and drivers.   To match that, many of them headed back to newer SUVs and higher end sedans.   My walk back to the car was no different, with the exception of my old set of golf clubs and my 7 year old car.

I have been teased a few times about my old set of  “executive OSI” bi-metal technology wedges.  Yes, my golf clubs are 16 years old.  While I might play a bit better with a new set, but for me, my set works just fine.  I don’t seem to play golf much worse than my friends who buy a new set every year, so I figure it isn’t worth spending a ton of money just to buy something new.

My old golf clubs are a good representation of how I manage many things in my life.  I’m careful with my money, and I’m usually pretty happy with the material possessions I have.   I’m in a really good position, where I don’t have a lot of the financial stresses that my friends are facing right now.  I was lucky to get really good financial advice early in life, and I’ve followed it religiously through the years.

At this point, I’m 34 years old, married for 7 years and have a 4 year old child.  Our net worth is now $1.35M.  Our home is worth about $350K with no mortgage, and our other assets (RRSPs, TFSAs, and Non-Registered portfolios worth approximately $1M) I manage myself.   Both my wife and I work full time. We both earn about 100K per year individually which has been a big contributor to our savings success (note though that our salaries weren’t always as high as they are today).  We also have never inherited anything, so  we started from scratch early on and made it from there.

I think the biggest contributor to our savings and future savings is in our lifestyle, that’s essentially where we save the most money.

Related: 25 Ways to Save Money

Our financial strategy has been fairly simple, almost boring, but it has paid off for our family.  Yes, it means I play golf with older clubs and drive an older car.  But that’s a choice that I’m comfortable with and I’m happy with what I have.

The financial and lifestyle management strategy we follow is based on five really basic principles.  We don’t get much more complicated than this in our financial planning, and it works for us.

 1.      Geography

I am well diversified by geography, with no more than 10%-15% of my portfolio in Canada.

My rational for this is:

  • Canada is less than 3% of the total world stock market;
  • In the past 10 years, the Canadian market has only been the top world performer once; and,
  • Only 10 companies make up 41% of TSX exchange, so it’s pretty small:5 banks.  4 energy stocks.  1 rail stock.  More info:  http://www.world-stock-exchanges.net/top10.html.

2.      Asset Class

I carefully track what asset classes I invest in, with an overweight on stocks (instead of real estate, bonds etc).

My rational for this is:

  • Generally, since 1926 stocks have outperformed bonds and other investments by a factor of about 30:1   More info:  http://www.investorsfriend.com/asset_performance.htm
  • In Canada, the 25 year average house price gain is 5.3%.  Meanwhile, inflation was running at 3.03% over the same period.
  • Over the same period, the TSX composite would have returned 10.75% annually, bonds 10.9% and the S&P 500 13.5%.

3.      Portfolio costs

I’m very careful on my portfolio costs.  I do most things myself through self-directed accounts, buying ETFs or low cost mutual funds.

My rational for this is:

  • The “average” investor (like me) expects to earn (before fees) 6% per year on their portfolio of stocks/bonds/real estate – over a 25 year period.
  • If I am paying a 2% fee to someone who is managing this portfolio for me, it can cost me a large portion of my overall portfolio growth.
  • I also think most mutual funds are just enriching themselves and not their clients.  Therefore I stay away from most of these financial products.

4.      Tax

I think pro-actively about tax and what it means in my investment choices.    I always think about how to best structure myself for tax efficiency (see portfolio allocation).

My rational for this is:

  • Capital Gains tax: Basically, you’ll pay a max of 23% tax on these in most cases.
  • Canadian Dividends tax:  you’ll pay a max of 30% tax on these.
  • Income / Interest / Bonds tax:  you’ll pay a max of 46% on these.

 5.      Lifestyle management

  • I enjoy my life.  I invest in hobbies, annual vacations, and luxuries.  However I do this within the context of what I earn, so that I always can save a good portion of my income, aiming for 20% per year.
  • I learn how to do things myself (renovations, car maintenance, home maintenance).  If I need a new deck, new driveway, new bathroom, new flooring:  my first question is how can I learn to do this myself and get it done.
  • For any new purchase, the first thing I consider is if I can buy it used.  Most times I can and do. This saves me an incredible amount of money.  I rarely buy things new.
  • I really take care of my things.  I’ve had my golf clubs for 16 years; I’ve had my BBQ for 12 years, etc.  I basically just take care of things and give them the maintenance they need to avoid issues.  Overall I tend to save a lot of money here – I just don’t often find I need to “buy stuff”.
  • I have a wife who shares my values and we are both happy and comfortable with our lives.

So that’s my financial story in a nutshell.  It’s a bit boring, but somehow it’s working and we really find ourselves in a fortunate position.  We have a great life, we’re happy, and we have what I think is a good financial plan.

Thanks for sharing your story with us Philip!  Do you have a financial success story that you would like to share?  If so, contact me!

If you would like to read more articles like this, you can sign up for my free newsletter service below (we will not spam you).

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About the author: This is a guest post. You can read more about the author in the biography above.

{ 82 comments… add one }

  • Dwilly October 15, 2013, 5:01 pm

    (To be clear, I am not suggesting that someone who earns $50k after tax, and spends $30k – leaving a $20k annual surplus – will accumulate millions in his lifetime. But someone who has become accustomed to living in that manner does not need millions in order to retire and live happily. “Wealth” is a relative term.)

  • Con October 15, 2013, 5:57 pm

    This article is highly unrealistic, lets assume the couple both started working 10 years ago with an income of 50k each and have had 8 increase in pay annually to the present, with an after tax rate of 70% they would have earned 1 million dollars between the two of them, lets assume they invest all there money and have no living expenses and get 10 % per annum, thats another 100K before tax, even with no expenses and 10 percent return the couple could only accumulate 1.1 if all they did was invest thier money.

    I just dont believe the senario he’s described, something extraordinary must had happened to advance the couple’s financial fortunes

  • Mark October 15, 2013, 6:48 pm

    The message from The Wealthy Barber is that even people of modest incomes (e.g. a barber) can become wealthy if they are disciplined enough to adhere to a forced savings plan. Those savings, over time with the magic of compounding, can grow to make you wealthy (a relative term for sure). Start too late and you forgo that magic.

    As for the Idiot Millionaire referenced above, I just realized that that’s Derek Foster. He’s the guy that got lucky early playing options to gain a good sized nest egg and then goes on to recommend stable dividend paying stocks using that nest egg. Talk about irony (hypocrisy?) He’s also the guy who bailed at the market lows after the 2008 financial crisis and recommended that others do the same. He’s just a salesman selling books instead of snake oil and gaming our social system at the same time. Can’t respect a guy like that.

  • Philip October 15, 2013, 7:04 pm

    Hi skeptical

    Thank you for your comments. The answer on
    our returns is related to what we did during market dips in 2008 and 2011
    We essentially doubled down, using any available cash
    and or fixed income investments during the dips to buy equities at bargain
    prices. In 2008 our equity purchases were overweight on US and canada ( mainly canadian banks), in 2011 we purchased a lot of EU equity at bargain prices. This gave us excellent returns boosting our portfolio in a short time span.

  • Morty October 15, 2013, 11:14 pm

    Hi Philip

    Sorry dude, still not buying it.

    As everyone else has said, you are leaving out key information.

    Nice try though

  • O October 16, 2013, 3:48 pm

    This still does not add up. Assuming you started 10yrs ago with a household income of 100k and got a raise every year until your current salary, and assuming you saved 20% of your gross income every year, in 2008 you would have had about 200k saved – and that is assuming 10% return every year.

    That means you would have had to, say, double your money in 2008 and then get almost a 50% return in 2011. All the while maintaining 10% returns along the way, and avoiding any loss in your existing investments in 2008 through 2012.

    All of this sounds unlikely. However, if that is generally what happened, then it is disingenuous to say that your financial situation is due to cutting back on expenses.

    Your situation, in this case, would be based on taking a lot of risk, and beating the market by massive margins for a long period of time – which is not really advice that is useable.

    I would love to believe your story, because it would be great to know that it is possible to save 1.35M in ten years just by cutting back on lattes – so please enlighten me as to the specifics if I have got them wrong.

  • Evan October 16, 2013, 5:15 pm

    O, why do you make the assumption ‘save 20% of your gross income’? why not 40 or 50%? And that’s at a starting salary of 50K/person. As that increases, the percent that you can save goes up too as the bare minimums to live on don’t increase that much.

    If they could live on 25-30K, while making 50Kea, that would allow 50%gross savings. and then increase that savings rate to 50-70% of gross when making 100K each.

    So then, it is a matter of controlling spending. But it sounds like a lot of people are just looking for a reason to not take a hard look at their expenses.

    There have been lots of stocks that have returned >10% on average for the last 10 years, particularly when you include dividends. Look at the BNS 10yr chart for example, and factor in a double down in early 2009

  • O October 16, 2013, 8:04 pm

    Hi Evan,
    he said “I invest in hobbies, annual vacations, and luxuries. However I do this within the context of what I earn, so that I always can save a good portion of my income, aiming for 20% per year.”

    So maybe some years it is higher, but it seems his general approach has been 20%. Since he claims to have vacations and luxuries, I don’t get the feeling that he is investing 50%.

    I don’t disagree that cutting expenses is important, but I don’t think it is the secret to Philip’s success.

  • Sjr October 17, 2013, 12:51 am

    The numbers don’t add up, with average market gains over the last 10 yrs being basically flat… Paying off the mortgage, then accumulating that much… Highly unlikely, even if they saved like mad… Sounds like bs!!

  • Evan October 18, 2013, 1:19 pm


    You are correct, I forgot about the 20% comment. I don’t doubt that the numbers are correct, but it would appear that the success was more a result of a timely gamble, rather than living well below one’s means. For sure, that would give a solid foundation, but it was probably something a la Derek Foster which created the majority of the wealth. Perhaps heavy use of margin at the downturn, or options. Or both. It is conceivable that this could be achieved without those things, but he would have to be a pretty astute trader to achieve it.

  • FrugalTrader FrugalTrader October 18, 2013, 1:23 pm

    Remember that cash savings provides opportunities. The difference with the writer is that he took action when everyone else was fearful in the market. Not many of us have the same conviction in the market.

    As well, note that there are other variables. Savings before his 10 year growth plan, and increased savings as their income increased. I’m guessing that 20% was just a ballpark average over the years.

  • Stats October 18, 2013, 2:22 pm


    Jeez – the commenters here must be a ton of fun to hang around. Nit-picking at every single detail from this guy who clearly is saying a positive message of “be frugal, practical, and balanced”.

    Yes – he has above average income.
    Yes – he took advantage of a once-in-a-decade market opportunity.

    No – 99.9% or more of you will not follow this type plan to get to $1.3M… but that’s not the point!

    The point is: match your lifestyle to your financial plan. That’s it.

    Is that an offensive message?

  • Stats October 18, 2013, 2:30 pm

    And – the numbers do add up.

    Let’s say that this couple had a $300k portfolio and $300k house in 2009.

    Then – let’s assume in 2009 that the $300k was invested 100% in the S&P 500 in 2009… maybe when the S&P was around 700-800.

    The S&P today is at 1730, making the $300k worth say $700k in 2013.

    Then, add in the house ($350k) = $1.05M

    Then, add in another $40k a year in savings for 2009, 2010, 2011, 2012, 2013 = $200k… assume some investment gains on that money, and you get say $250k-$300k.

    And, voila, add the $300k to the $1.05M you get $1.35M.

  • BadCaleb October 18, 2013, 11:51 pm

    Pretty sad that so many took out calculators to question this guy’s story. Forest for the trees…..

  • SST October 19, 2013, 1:12 pm

    On the contrary, it’s called being skeptical.

    Capitalist society has set the psychological bar of $1,000,000 as the baseline standard for being “rich”. Since there are so few millionaires — 1% of Canadians — when one of these rarities shows up, we question the existence (and it’s creation). And when it’s about money, it becomes a pure numbers game, thus the calculators. The questioning nature here is actually quite logical.

    People visit this site to glean info on how and where to put their hard-earned money, so when a completely anonymous poster (perhaps known only to FrugalTrader, yet another completely anonymous figure) espews his path to riches with over-used generalities sprinkled with exceptionally few specifics…eyebrows raise. “This guy’s story” is an empty set of empirical data thus application of scientific method is left filling gaps.

    Perhaps the true sad thing is that the world of money has become so rife with corruption and distortion (perhaps always has been?) that speculators are left holding big bags of mistrust and disquiet instead true knowledge (and big bags of cash!).

    The most sad thing is people soaking up whatever they read on the internet hook, line, and sinker. :)

  • SST October 19, 2013, 3:02 pm

    @Stats: “And – the numbers do add up.”

    No, they don’t.

    Applying maximized/omitted assumption still leaves a $200-$300,000 short-fall in this version on the story.

  • RG October 20, 2013, 3:04 pm

    A house at $350k? Sure I would’ve paid mine off 7 years ago but obviously the author isn’t living in Vancouver or Toronto and I’m in a field of work whereby living in some small hamlet is out of the question. Having said that, our initial $50k down payment on a condo 16 years ago in a depressed Vancouver market has mushroomed into $850k of equity in a detached house in a maturing, desirable neighborhood with awesome views. Still, paying that biweekly mortgage negates alot of luxuries but life is comfortable yet and, oh, my car is 16 years old and still drives like new because I do all the maintenance on it and the lack of salt on the roads preserves cars in the lower mainland. After all of that, its the damn taxes at all levels of government eating us alive, slowly.

  • Cold Truth October 23, 2013, 11:57 am

    I am not surprised by the emotionally negative comments. Anybody not living at the poverty line has the ability to save *something*. How much you could *possibly* save depends on your income. How much you actually save depends on your lifestyle.

    If you lived in low cost housing, took public transit or drove old inexpensive vehicles, purchased only lowest-cost nutrional from scratch food ingredients, and limited children to one or none…

    ..you *could* save a significant amount on 50K/yr household income. But that’s not a very enjoyable life!

    So you upgrade your standard of living. But, you can’t own a family sized home, have 2-3 kids, own two vehicles < 8 years old, buy high priced food, spent money on stuff and activities for you and your kids, AND maintain that lifestyle in retirement with 50K/yr.

    Your expectations are unreasonable. I bet your grand parents were closer to the poverty line than you, and had some savings because they lived to lower expectations.

  • D2cold October 23, 2013, 9:02 pm

    I would like to say to him congrats on his savings and that i think it is possible!

    My own networth would have been vastly different had i made a few different decisions in 2007 and 2008.


    I have a similar income to his (and have for 10 years). Been married for 8+, 3 kids, bought 3 brand new cars in 10 years and don’t save much more than my 18% (rrsp contributions of which 7% is company infused). Wife spends lots and has been on mat leave 3 times. If we had one kid and wife was similar to my spending, and had not bought new cars we could easily be 1 million plus.

    My only question is his comment on taxes in #4 on dividends. If you quit working and your stocks were non registered Canadian companies your tax would be near zilch! Key is to have no T-4 income and find a good mix 10-20 companies with 3-4% dividend. Food for thought as your networth grows and you move closer to “early retirement”

  • Dwilly October 24, 2013, 10:01 am

    69. Cold Truth – Agree totally. I think this is just a thinly-veiled version of the same argument. Although I think the problem here is that we all need to challenge the belief that “life wouldn’t be very enjoyable” if we spent less. It’s tantamount to rolling over, and accepting that you need to have everything TV tells you that you need. For all those who whine about how “hard it is now” and how much “better it was for your grandparents”, I’ll tell you about a couple things about how your grandparents lived.

    For one, they didn’t all have an iPhone. Or 300 cable channels. They had a Chevy, not a BMW. They lived in an older house, with older stuff. They cooked their own meals. And for fun, they went outside. To parks. Or any of the innumerable FREE places that still exist today, that people have seemingly forgotten about. And neither did they feel they had a “bad” or “boring” life, nor did they believe they were entitled to have any more.

    This generation (and before you accuse me of being a rambling old guy, I am 30) needs to man up, and stop feeling sorry for ourselves and entitled to more than we are.

  • SST October 24, 2013, 10:46 am

    This has taken a weird turn towards the emotional.

    I would argue lifestyle is the basis of savings, but not the basis for wealth.

    If Philip and his spouse were making $200,000 right out of the gate (@23) and saving 20% in cash, they would have accumulated ~$450,000 (this being a maxed out amount).

    Thus, lifestyle paints only half, or in this case, less than half of the picture.

    Having intelligent and lucky investment choices seems to be the the real driver of wealth.

  • Dwilly October 24, 2013, 2:14 pm

    @SST, I think it again depends on how one defines “wealth”. If you define wealth as 99.5th-percentile, mid-seven figures, living on a yacht sort of wealth, then yes, I would tend to agree with you that few people that get there get there on savings alone. They are more likely risk-takers, entrepeneurs, or otherwise “lucky” investors.

    But if you define “wealth” in more modest terms, maybe mid- to high-six figures, such as “a pool of money sufficient to allow, when coupled with social programs, a middle-income earner in Canada to retire comfortably – if not excessively”…. then I think the story changes. I think you do not need risky or “lucky” investment choices, and systematic saving coupled with moderately intelligent investing can accomplish that.

  • Harry October 27, 2013, 12:44 pm

    I don’t see anyone having questioned the obvious flub, “Over the same period, the TSX composite would have returned 10.75% annually, bonds 10.9% and the S&P 500 13.5%.”
    Whether Philip is talking about a 25 year period or since 1926, how do these numbers support the statement that “stocks have outperformed bonds and other investments by a factor of about 30:1″ Is it a typo? 10.9 is higher than 10.75 duh.

  • SST October 27, 2013, 2:39 pm

    @Harry: one comparison is for stocks vs. bonds over 25-year period, the other is ‘since 1926′ (“30:1…”).

    I questioned it in #26.

  • jungle November 18, 2013, 8:09 am

    Wow how did I miss this one? lol

    Cangrats Phillip, you have my support all the way. I too face the pressure of not buying new stuff, having the latest gadgets, etc.

    STATS posted some obvious things above about the market returns above since 2008. Not hard to believe for someone who doubled down when markets were on sale.

  • Skeptical January 2, 2014, 12:44 pm

    Mathematically your story does not make any sense. As others have stated, based on the assumptions your provided relating to income and savings rates, there is no way you would be anywhere close to a net worth in that range. I guess it helped the story?

  • guppsala January 5, 2014, 11:10 pm

    I think it is possible to achieve what Philip did, although it would be interesting indeed to know how of his cash came from savings and how much from returns. Timely and Lucky cash reallocation must be part of the equation, as most of us lost money during the crash, and used the market recovery of 2009-2013 to recoup our losses.

    I am 36 years old and have a net Worth of around 400K. I have a 250K portfolio and the rest is equity in my home (using purchase price not current market price). I started investing in 2007 (bad timing!) and after being in the red for 2-3 years, my average annual return is now 6.15%. I am self employed (incorporated) and my net business income before taxes is around 140k. My wife is also self employed but makes around 35K before taxes. We have one kid (4 years old). My savings used to be around 25k per year but a jump in my income saw my savings grow to 60k per year.

    Since tax is the biggest expense in Canada, I decided that it would be much easier to achieve wealth by being self employed / incorporated. Yes the first years are not easy and demand work, but I love the lifestyle and the tax choices it gives me. Basically, my company pays me a 30K dividend and 30K to my wife, we pay no personal taxes on that (the taxes are paid at company level, 19%). The rest is invested by the company in the stock market and various Financial instruments that are tax efficient. I try to live frugally on the income the company gives us.

    There are many ways to achieve Financial independance! Botttom line is find what makes you happy, and design a Financial plan that allows you to do that as much as possible, as early as possible.

  • Al January 7, 2014, 1:23 am

    There’s nothing wrong with making over 200K a year. I’m not really sure what the author in the post does for a living but rest assured he’s worked for it. Building up that degree of net worth in your young 30s is impressive 200K salary yearly or not – I make more than him and there’s no way I can catch him.

    I finished dental school at 29 with 150K in debt and my girlfriend finished optometry school with 150K in debt at 25 – that was almost 3 years ago now and we’ve just managed to crawl from -300K in net worth to +45K. It’s very hard to do when you start off with such massive debts even when you factor in we made over 325K as a household last year.

  • Debbie February 7, 2014, 12:42 pm

    I’m pretty tired of the haters! What Philip has done however he’s done it is amazing! I have been privy to couples making more than $200,000 a year and being in debt! They have every gadget, every high end thing they can get their hands on and buy and their kids are down right spoiled! They have credit card debt up their ass! People, it is a lifestyle choice!!!

    It doesn’t hurt that Philip and his family have a wonderful income but I’m more than positive if their income was lower they would be saving money anyway!

    14 years ago I went through a bad divorce and my net worth was down to $3,000 dollars, it’s now $300,000 and growing and I live in New York. I read finance blogs like this to get tips and read success stories and give me ideas how to live a better lifestyle, save and invest my money, and learn how to grow my wealth. What I don’t do is feel sorry for myself by putting down successful people and blaming them for my lot in life! Take responsibility for yourselves, your all adults! Philip does not need to justify himself to you!

    Philip — great job! Keep up the great work!

  • SST February 7, 2014, 9:24 pm

    Addressing the “hater” meme, again, pretty sure no one here is against savers, frugalists, the rich, or high-income earners. What people are opposed to is incongruent story lines, insubstantial “facts”, detail skirting, etc. to support the presented claims.

    Perhaps Philip does not need to justify himself to the readers, but it’s a two-way street — the readers need not believe everything put forth on the internet.

    For all we know, FrugalTrader and MillionDollarJourney could be completely make-believe. He is, after all, completely anonymous. Start a blog about money, but not just any money — $1,000,000! Make some stuff up for a couple years, get some press, then let ‘Guest Bloggers’ write the bulk of your blog while you collect the ad revenue.

    Worse (and more corrupt) business plans have transpired in the world of finance for which people have fallen hook, line, and sinker.

    Happy long weekend!

  • Ella September 17, 2014, 3:00 am

    Just read this and just want to say that you are an inspiration. My husband and I are both in our early 30s and have net worth of $650K. Granted, we have only been living together for a year and half months total and just began earning the same level you guys have this past several years. Living together with significant other since you are young definitely saves a lot of $ in the long term (we still rent and don’t do stock etc) and I imagine that had we met and get married earlier, we would have been in the same boat you are since we do save over 50% of our income. Don’t worry about justifying yourselves; in the end, your worth is for yours to keep. Others can question is but as long as you know you have it, you are well on your way, Thanks again for the inspiration =)

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