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Young, Rich, and Retired: An Interview with QCash



I’d like to introduce a fellow Canadian who has accumulated over $1.5 million dollars in net worth at the young age of 36 and has recently retired. Did he inherit his money? Did he obtain a windfall of some sort? How did he do it?

I had the opportunity to interview the young millionaire about these questions and his secrets of success. Without further adieu, I’m proud to present… QCash!

What province do you live in?

Ontario

How old are you?

I turn 37 at the end of this year (xmas eve)

What is your current net worth?

As of yesterday, $1,735,000

Can you break down your net worth by portfolio and real estate?

Real estate:

Principal Residence $254,000 (purchase price in 2000)
Residential Investment $92,000 (purchase price in 1990 $184,000 but I
bought it with a friend, my first investment)
Residential Investment $181,000 (purchase price in 2002)

Portfolio: $1,200,000

When did you start saving and investing?

My first job was at McDonalds. I was 14 and started saving 10% of everything I earned.

When I was in my mid-20′s, I owned three houses (2 and 1/2) and had mortgages on all of them. I had just got a good job in Toronto and was living the high life. I started using credit cards more extensively and was living beyond my means. I hit a point where I honestly didn’t have enough money/credit for the next mortgage payment and it scared me straight. I got my spending back under control and realized I never wanted to get to that point again. I still had a large positive net worth, but my liquidity was zero.

What is your savings philosophy?

I try to allocate a certain percentage of income to savings. Usually I first try to max out my RRSP and then my non-registered savings.

When my wife and I decided we would start a family, we tried to live on just my salary. We did this for almost 15 months (didn’t hit the nail on the head the first time out :-) and my wife was earning a decent living. We saved all her salary, and then banked all her maternity leave.

During your working years, how much did you save / year on average as a percentage of your income?

It would have been about 15-20% on average. Maxed out the RRSP and then used the extra for savings and investing.

Once I started saving, I found it addictive. I resented using any of the funds to pay for anything. I was actually getting quite miserly, but I then started allocating a certain percentage to “mad money” account and then used that to have fun, but didn’t feel I was going to break the bank.

How does your spouse feel about your financial fanatics?

I married someone who shares the same philosophy and approach to saving and spending. She is much more conservative than I and I run all our investment plans through her for her opinion/veto. Having a spouse who is interested in your financial future makes life a lot easier.

What influence did your parents have on your financial knowledge?

My parents split up when I was 7. My dad was always refinancing our home to pay for things. If the house went up in value, he refinanced and spent the money. When my parents split up, my mom, my sister and I moved out.

My mother is not an investment savvy person. She is easily influenced and bails out as soon as a loss is posted. However, it was evident that if I wanted to go to university, buy a bike, car, etc, I had to save my own money to do it. There would be no handouts. (This sounds harsh, my parents were generous, but not with money.)

These circumstances caused me to not ever, ever want to live like that. I decided at a young age that I wanted to be rich.

What was your first investment?

At 16, I bough 100 shares of Laidlaw Class B for $14/share, sold them at $18/share and thought I was the cat’s pajamas of investing. The next time I bought the same shares at $14 only to sell them at $12.00 when I needed money for university.

At 18, my friend and I bought a house together. We had been roommates in University and his sister was a real estate agent. His sister found us a great place that we could rent to 5 other guys and live rent free for the rest of university. His mother co-signed the loan. We still have that house to this day, paid in full.

What was your investment strategy to get you to where you are today?

Most of my investments early on were in RRSP mutual funds (most still are today). I maxed out my RRSP contributions every year and then put the rebate back towards my realestate mortgage.

After university, I bought my own place, and another, only to sell them both when we got married. Those two sales netted me about $90,000 over 10 years.

What are your favorite mutual funds today?

Mavrix Dividend and Income Fund
BMO Dividend Fund
BMO Monthly Income Fund

How do you pick them?

I was looking for guaranteed rates of return. Both the Mavrix and BMO Monthly Income fund have a Return of Capital portion which makes the cash flow much better from a tax point of view. Yes, it means my cost base is adjusted each year I hold them and I will get hit with the capital gain when I sell, but my intention is not to sell them for a long time to come.

If you were to give some financial tips to someone just starting out,
what would it be?

Don’t get emotional about the markets. Do not put all your eggs in one basket. Real Estate can be a great wealth generator, but make sure you know what you are doing…it has a huge PITA factor.

When did you retire?

I stopped working on December 31st, 2006

Is retirement what you thought it would be?

After only three months, I think I am busier now than I ever was :-) In reality, I am enjoying the time with the kids and my wife. We make two days a week family days and do something together. I still volunteer and belong to several committees in Town.

What is your retirement investment strategy?

I am slowly trying to convert my holdings into dividend paying stocks and income generating funds.

Did you have a financial role model? If so, who?

Not really. I read as much as I can.

What is your favorite financial book of all time?

  • The wealthy barber, David Chilton
  • Stop Working: Here’s How, Derek Foster
  • Smart Women Finish Rich, David Bach (this last was for my wife,but I liked it)

Which financial web sites do you read often?

  • Yahoo Finance
  • Canadian Business Website
  • Million Dollar Journey (awww..)

Hope you guys enjoyed the interview as much as I did! Lessons learned? Live below your means and invest your money.

If you guys didn’t notice, QCash’s ACTUAL net worth is WELL beyond the $1.7 million that he tells about because he uses the original purchase price of his real estate assets instead of today’s market value.

Thank you QCash for taking the time to be interviewed. Your story is truly inspirational.

Do you have questions for QCash?  Feel free to ask them in the comments.

If you have a financial success story to share, please contact me by clicking this link.





43 Comments, Comment or Ping

  1. Boy…that takes a lot of self discipline!

    Although I wasn’t in a position to retire until age 55, I also found that having a wife with the same attitude about money made our early retirement plan go smoothly.

  2. 2. Mike

    Qcash is only 36? wow…

  3. Great questions Frugal and wide variety, very cool. Hats off to him for his efforts, they have obviously paid off big time :p

  4. 4. cihanlee

    Great story, such inspiration. Just one question for Qcash though, what was his savings earning 10-12%. Although, Qcash is such an inspiration, to be honest it isn’t quite hard to be a millionaire before the age of 40. It just takes time, good investment strategies,and most of all money management. As he said, living below your means, even for only 3 yrs, you be surprised how much wealth you can generate doing this.

  5. 5. Q Cash

    FT

    Thanks for the interview. I enjoy your website and all the articles you post. I still learn something new every day.

    Can Money – having a wife who sees things the same way as I do has been key. In fact, she is the conservative one and the frugal one (although she still enjoys the occasional shopping spree at winners :-)

    Cihanlee – I was on a pretty good track with my returns, but I can’t say exactly where they were without pulling out all my old records. One day I might do that, but it is down on my honeydo list ;-) I can say two things: one, I had pulled a lot of my investments out of the market in 2000 to buy our house. This meant that I was not heavily exposed to the meltdown of 2001-2002 (my RRSPs took a hit, but I didn’t panic because I knew that I would not be using them for some time). Also, my wife came to the table with a networth of almost $250,000. So between the two of us, we were well on our way.

    We wanted to be mortgage free as soon as possible and we made it a priority. Also, as soon as we were ready to start investing again, I picked up a really neat little investment property and worked hard to pay that off as soon as I could.

    I also used some third party second mortgages in my B2B SD RRSP which pay at between 10-12%.

    Q

  6. 6. Jon Lee

    How much money would you suggest I have before I start investing in stocks/mutual funds?

  7. Hey Jon, you can invest in the market with as little as a few hundred dollars, but typically a decent start point is with a few $k, especially if you are going to be trading stocks online. The biggest cost will be your commissions, and they add it REAL quick!

  8. 8. Warren

    QCash, I’ll mark you down on my idols list, right there with Derek Foster. :)

    Jon/Blain, commissions can be a killer for the small investor. Go with a discount brokerage and try to buy stocks you’ll want to hold on to for many years. Derek Foster’s book follows this plan and its a great read.

  9. 9. Junior

    What can I do right now?
    I work part time make close to 600 a month or more during holidays, I save 80% to 75%

    Currently I have just invested in stocks, and mutual funds

    Any tips for me
    I want to buy house rent out just like you and your friend did, but the fear is what if the tenant leaves.

  10. Junior: Being a landlord is a JOB. Make sure that you are ready when things do go wrong. You should have vacancy as part of your evaluation before you purchase a property.

  11. 11. Kevin

    Hi,

    Thanks for the article. I worry a little that $1.75 Million isn’t enough to retire on at the age of 36. It would seem to be only about $60,000 to $70,000 per year if you did not want to draw down your principle. What about college for the children? A US Ivy League school could cost $150,000/year for a 2007 newborn.

    The individual mentioned seems to already be used to frugal living, and if he and his family can maintain that (maybe live on $30,000 – $40,000/year) there may be enough to last them and pay for college.

    However, at this point retirement might be a bit premature. My family is in the same range as this individual (I’m 34), but I don’t plan on retiring soon. Maybe I’m just a bit too conservative with my retirement calculations.

  12. Kevin: QCash has already started a RESP for his young child which hopefully should be more than enough to cover University in Canada. But yes, if the child decides to go to University in the states, things could get pinched.

  13. 13. Kevin

    Was this savings not part of the $1.75 Million?

  14. 14. Jon Lee

    Do I need a discount brokerage to invest in mutual funds? Or is it just for stocks?

  15. interesting read.. but one thing what I want to know is .. how did you accumulate that money?.. what kind of work did you do and why retire on 1.7 million?

  16. 16. Cannon_fodder

    I may have misinterpreted the asset statements that QCash made because no one else brought it up. You gave residential/investment property values but not at current prices. You also didn’t state whether they were mortgage free or not.

    So, are your properties in fact worth much more than 2000, 2002, 1990 prices? Do you have liabilities in the form of mortgages?

    Regardless, what you have achieved makes me wonder why I haven’t done better? It would be interesting to see an annual snapshot of how your net worth changed because it might demonstrate dramatically the difference in starting sooner rather than later.

    I’d be quite happy to retire at 55 but now I wonder – what is taking me so long?!

  17. Cannon: Yes, QCash’s net worth is well beyond the 1.7 million that he has quoted because he is listing original purchase prices and not today’s values. He also does not have any mortgages remaining. I would say that Q’s net worth is closer to 2 million.

  18. 18. Q Cash

    Kevin:

    I have included the RRSP (joint for the two kids) at its current value of approx $45K in the net worth statement.

    My wife and I feel that we are going to give our kids a leg up on college but we are not responsible for the whole amount.

    Both my wife and I paid for a portion of our university. My parents paid my first year or residence and that was it, I earned/borrowed the rest. My wife’s parents paid for her first year tuition and that was it. She paid for her residence and everything thereafter.

    So if my children decide to go to an ivy league school, it better be on some sort of scholarship :-)

    Also, my kids are 4 and 2, so I have a few years of contributions/compounding to deal with here.

    Q

  19. 19. Q Cash

    Everyday Weekender:

    My money was mostly accumlated between savings/investments growth (max RRSPs). I also owned two other properties in my lifetime which allowed me to generate a few tax free capital gains.

    My wife came to the table with $100-$150K in assets (depending on who you ask :-).

    I will also say that unlike Derek Foster, I did have a couple of years where I earned a six figure salary. Very trying and tiring years, but I did try to save as much as possible, I didn’t go out and spend big.

    Finally, I point to the fact that my wife earned high 5 figures and the year and half between deciding to start a family and actually having number one arrive, we were living on just my salary and managed to save all hers (less one vacation). When she recieved maternity benefits, the total amount went to savings as we were used to surviving on my salary.

    A significant increase in my net worth was because I cashed out some investments to pay for our house prior to the 2000 crash and Sept 11, and reinvested a large portion once my salary started to increase (we used the HBP from my wife’s RRSP and so we were replacing that as soon as we could shortly after the 2000 meltdown, so much of my networth is unrealized capital gains in my various investments).

    Q

  20. 20. Q Cash

    Cannon Fodder

    I am going to pull all my old statements and try to give a year over year of my NW totals. I have (somewhere) my 1999 (the year before I married) up to 2006. With FTs permission, I will get them posted.

    Q

  21. 21. Kevin

    Hi Q Cash,

    Thanks for the updates. I think you give everyone here something to aim for.

    Thanks again!
    Kevin

  22. 22. Ed Rempel

    Hi Q,

    Very inspiring! It’s great to see someone making smart decisions with their money.

    I have 2 questions. Did you use leverage to get there?

    And how frugal are you and your wife? Do you actually live very inexpensive lives?

    Ed

  23. 23. chrisw

    Kudos to you Qcash! Congratulations on your success to date.

    I’m 37, married with two kids (5 and 3) and we’re a single income family living in Calgary. We have a similar net worth (~1.8M) to you and your wife and started building our net worth about 10 years ago (~$50K when we started). Reasonable incomes for several years, diligent saving and investment strategies, a positive attitude and a little luck have helped us build what we have.

    Retirement continues to be a long way off for me, but I do have a 3 year target to increase our cashflow and allow me to exit my 9-5 job. More time for family is the primary goal for exiting the 9-5 workday. After that, building a business, as well as continuing with real estate and stock investments will be the focus.

    Cheers!

    Chris

  24. 25. nobleea

    FT;

    QCash mentioned that he would post his NW totals for the past 7 years if he could dig them up. Was that ever posted? It would certainly be neat to see.

  25. 28. JD

    Count me in amongst the people who can’t understand how anyone can retire with only $1.5MM at the age of 36. I have more than that and I’m much younger and can’t imagine retiring right now unless I wanted to live like a pauper. Since you’re still young why not build it up to $5MM or $10MM so you can retire comfortably and not have to live on what amounts to a working-class income?

  26. 30. newbie

    I’m very grateful to have a chance to learn from QCash and everyone else… If only I had been so motivated or aware at 14. I only have one thing to add to the conversation: From what I’ve read, and correct me if i’m wrong maximizing RESPs for 18 years will only cover half the projected cost of tuition in Canada… if someone is smart enough to attend an ivy league school lets hope they get scholarships, and if they start their financial education early hopefully they will be well on their way. I don’t want my little ones to start their adult lives in debt the way my husband did (maybe I would have found a way to buy that investment property instead), but I can’t but think about all the kids I knew in university. The ones that had everything paid for were often the ones who took the most for granted and wasted the opportunity.

  27. 31. Cannon_fodder

    Newbie,

    I’d say that unless you are going to include Masters and PhD pursuits or are going to an expensive school in the US, maximizing RESPs (right now $50k but certain to go up every several years because of the rising cost of tuition, books, lodging, etc.) that this will more than cover tuition, books and even provide some assistance if the child has to pay for lodging.

    AFAIK, there is nothing preventing someone from putting the full $50,000 in the RESP as soon as the child has a SIN. This would allow for 18 years of growth – at 8% CAGR it would quadruple.

  28. 33. Kaitlin

    @newbie: I think it depends on the kids, too. I’ve been lucky enough to have everything paid for –as did both of my brothers–because education was a priority for my family. My grandmother always regretted that she didn’t pursue university and always talked about the importance of education. My mom paid for everything herself (my grandmother was a single parent on a very tight income in the 1950s and on) when she was in university, but wanted my brothers and I to have every opportunity to pursue higher education without graduating under insurmountable debt. The result, at least for my family, is that all 3 of us worked very hard, got good grades and scholarships. I have a scholarship that pays for half of my tuition every year.

    My point: I think if you teach your kids the value of a dollar (as most readers of this site would, I imagine), they’ll appreciate the gift of a free education and won’t fritter it away.

  29. 39. Kasm

    With the downturn in the economy and the market down of 30-50%, I’d be interested in an update from Qcash – How have you investments held up? Were you were successful in converting all to dividend yielding recession resistant stocks and just living off the dividend? Has the market forced you to find alternate income sources? Just curious. Thanks

  30. It is really important for a wife has same attitude towards money.

  31. 42. Emily

    QCash, how about an update. I believe the last was was 07/08? I find both your story and FTs amazing and very inspirational!

  32. 43. Chris

    Why do you own mutual funds rather than ETFs? You seem to have enough to even bypass ETFs and buy the stocks directly, especially if you’re holding them for many years.

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