Is It Actually Simple to Build Wealth in Canada?

Disclaimer: I am not a financial advisor. You are trading and investing at your own risk and should consult a financial advisor for any investment decisions. Do your own due diligence when considering investing, and information about how to build wealth in Canada. This article serves as educational and entertaining content, not investing advice.

You know it’s pretty interesting. Whenever I do a Google search to discover some books on how one can build wealth, it seems the options are endless.

Some of the books that were brought up include Dave Ramsey’s Total Money Makeover, Robert Kiyosaki’s Rich Dad Poor Dad, and Secrets of the Millionaire Mind by T. Harv Eker.

But all provide some different answers, I know because I’ve read a few of these books that were included in the Google search results. This makes me question whether there is one proper way we need to build wealth.

That yellow brick road to just follow down on and enjoy the view.

So, stay with me here as we go through various questions and, with some research, try to tackle how we all could build wealth, among other things.

What exactly is wealth?

Let’s first start by looking at the definition of wealth and how it’s measured because I’m really interested to know exactly how we can define it.

According to Investopedia, wealth measures the value of the assets owned by a person, community, company, or country. How it’s determined is by taking the total market value of both physical and intangible assets owned, minus debts.

We often consider someone wealthy if they have a high net worth, which is the same as subtracting their liabilities from their assets or assets minus liabilities if you prefer to see it in order.

Even in my searches to better understand what wealth is, many sites state that it’s very subjective, and it’s up to the person to determine what wealth is to them.

Is it having x amount of dollars? Is it have a loving and caring family? Does it have a billion-dollar business? Well, there seems to be no wrong answer technically, which I kind of enjoy.

Instead of focusing on a typical standard of wealth, you can focus on your own bar and figure out how to obtain your own version of wealth.

Yet for this article, we’ll focus on wealth in financial terms.

How can I determine my net worth?

There is a simple calculation you can perform. Just total up all of the market value of your assets and subtract it from your liabilities.

To briefly explain more, we can count a financial asset as something that puts money in our pocket, and a liability is something that takes that money out of your pocket.

What might be an asset, you say? Well, here are some things that would fall under that category:

  • Stocks
  • Businesses
  • Cash itself
  • Podcast
  • Social media channels (providing you’re earning money through advertisements)

Liabilities may range from debts or loans you owe to institutions or creditors.

Therefore, you can add your totals for both categories and subtract one from the other on a piece of paper.

Or, if you’d rather, you can use a calculator like this one here.

Well, isn’t being rich and wealthy the same?

Photo by Viktor Theo on Unsplash

According to the Merriam-Webster dictionary, the definition of being rich is “having abundant possessions and especially material wealth.”

So there is a case where you can defend that being rich and wealthy are, in fact, the very same thing. I won’t argue with you much because I don’t want to.

Yet, these are my thoughts when it comes to being rich. I envision someone being rich with an abundant amount of cash. Sure, maybe they have all the nice cars, houses, clothing, etc. Yes, you can also be wealthy and have all of those luxuries amongst piles of cash.

However, for someone with wealth, I think of someone with a lot of assets or maybe just an asset with a significant amount of value rather than a large amount of income. Again, I can think of Bezos here.

Therefore, to my own opinions on the two, being wealthy has high valued assets, and being rich is having a lot of money.

People will argue that someone can be rich and have a lot of debt, which is fine. Yet to myself, being rich is having a lot of cash regardless of the debt. There are no doubt high-income individuals who have lots of debt to purchase unnecessary things priced at a pretty penny.

And for those people, I wouldn’t consider them rich. Instead, I would consider them not smart with their money.

How has wealth been generated from those already wealthy?

With how much public exposure some of the wealthiest have generated for themselves over the past, there’s no surprise on how they could build the wealth they have.

There’s no actual get rich quick scheme, and most people who claim to have a strategy are just attempting to sell you a dream. So, while I will discuss ways others have generated wealth, I will admit that there likely are no secrets to building a certain amount of wealth. Anyone who has read this far trying to find one has to either research more or come to the subtle realization that there never will be a quick method.

Here’s a breakdown of the top 10 wealthiest people in the world as of today’s date.

  • Elon Musk

Many people are familiar with Elon has he is a very public figure online, both on his Twitter and in the general media. This genius and entrepreneur have made his wealth through various companies, including Tesla and SpaceX.

  • Jeff Bezos

Another famous entrepreneur is Jeff Bezos, who is the owner of Amazon, arguably the most popular retailer globally. He has other ventures within Blue Origin and The Washington Post, which help boost his wealth.

  • Bernard Arnault

Bernard is the CEO of LVMH, the world’s largest luxury goods company. Not necessarily as well as known of a name as the first two in the list, Bernard has made a large fortune from his equity stake in Christian Dior SE.

  • Bill Gates

Bill Gates was a co-founder of Microsoft, which we all know of today. He also has stakes in Cascade Investment LLC, among other companies that generate much of his wealth.

  • Larry Page

Larry was a co-founder of Alphabet, the parent company of Google, which we all likely use in a day. His 6% stake in the company is worth over $107 billion =.

  • Mark Zuckerberg

The co-founder of Meta (which we mostly know as Facebook), Mark has created one of the largest social media platforms across the world, all doing it while attending Harvard University as a student.

  • Sergey Brin

Another co-founder of Alphabet, Sergey’s wealth from their ownership stake, is similar to Larry’s, just being slightly less at $102 billion.

  • Warren Buffett

Arguably the greatest investor of all time, Warren Buffett’s wealth has mainly been generated through his investments over the years. Many have studied his methods to replicate the success for themselves. However, none have surmounted the amount of wealth he has today.

  • Steve Ballmer

Currently, Steve is the owner of the Los Angeles Clippers in the NBA but was once CEO of Microsoft and still owns an ownership stake within the company.

  • Larry Ellison

As the co-founder of Oracle, Larry has made his fortunes through its successes.

There’s a common theme amongst these 10 individuals here. Most were entrepreneurs, and one was an investor. Meaning that there was no simple way to get rich or wealthy. Instead, it took years and a future vision to achieve such levels.

While most wealth amongst these individuals has been through building tech companies, it’s not to state that there is not a way to build such wealth through other types of companies. However, wealth is not achieved within a moment necessarily; instead, it’s built over a lifetime.

Just look at the ages for some individuals, some are reaching their 50’s, and others are nearing 80 and, in Warren’s case, is over 90 years old.

To see any replication of success within one’s lifetime, understand that building wealth will require consistency and time.

What are some options to build wealth?

A couple of years ago, a piece done by Thomas C. Corley from Business Insider talked about the 4 general ways to generate wealth.

I wanted to include each of the paths here because they are the most realistic ways that wealth can be generated for anyone.

1. Investing

The idea behind this path is that you spend a certain percentage of your weekly income on a particular asset. Now, these assets could be buying ETFs from the stock market, real estate, or anything that will appreciate in value over time.

As for the percentage you need to invest, that amount is entirely up to you, the individual trying to build wealth. It’s obvious to state that the higher the rate, the more wealth you could generate (and I state could, because there is risk involved).

According to Thomas’s study, it took around 32 years for those who saved 20% of their income and invested it to reach an average amount of $3.3 million.

Yet like they stated, it takes plenty of time to see the results and requires discipline and consistency to work in our favour.

2. Have a very high paying job

Now, some careers will pay a significant amount of income every year. Here’s a list of some of those jobs:

  1. Nurse practitioner – $104,000 per year
  2. Dentist – $93,600 per year
  3. Utilities Manager – $114,000 per year
  4. Power Systems Electricition – $86,000 per year
  5. Mining and Quarrying Supervisor – $83,200 per year

A really high-paying job is to become an executive of a large-sized company. However, this may be a challenging career to pursue given the amount of education and experience required to hold that type of position, not to mention the significant commitment it will entail if you are fortunate to have the position.

In 2018, CNBC reported that some CEOs of large companies could earn up to $17.2 million (in USD). Now we are talking about a lot of moolah there, but that can lead to a significant amount of wealth to generate for the individual.

3. Being highly skilled in a particular area or topic

There is likely a need for every skill out there, so don’t feel left out if you think you possess none.

According to the author of the piece, it can require an enormous investment in time and money.

Think of a professor that teaches a class in biology. It’s more than likely that they needed to have a high degree from a university, practice in their field, a sound understanding of topics they are teaching, among other things.

However, this all may sound like a delight to someone passionate about something.

But the path isn’t for everyone clearly.

4. Dreamer or Entrepreneur

As we have seen in some of the wealthiest individuals listed above, most were entrepreneurs and, dare I say, dreamers.

Now dreamers would be anyone who has a particular dream or even passion and want to pursue it. They could classify as an entrepreneur. Maybe instead, it’s a musician or an actor.

Yet, we certainly know that dreamers can achieve a significant amount of wealth.

So, if you’re this far and are starting to be turned off by these different ways to build wealth, then maybe it isn’t for you. It’s okay if you don’t want to build wealth and would rather just have enough for retirement and be financially free; to each their own.

There isn’t any easy way to generate a lot of wealth. Instead, it takes time, patience, and commitment.

So, do we need a lot of money to generate wealth?

I suppose it all depends on your goals. If you’re trying to generate $10 million in wealth during your lifetime and want to be an investor, then, of course, you’ll need a large amount of money to invest regularly.

Yet, you don’t always need a large amount of money to generate wealth. Of course, you could be an executive that pays top-notch. But all of that depends on your goals for wealth and how you plan to obtain it.

Even if you can invest $675 a month for 40 years, and the investment can achieve a return rate of 5% annually, then in 40 years, it’ll be worth over $1 million.

Now, there are specific frameworks you can follow; some may state it’s best to invest 20, 30, 40, maybe even 50% of your income.

So, while I can not tell you the amount you should be investing, any amount that can go towards being invested into assets is excellent in itself.

Just evaluate what you want and decide your own framework. Or, you know, talk to a financial advisor.

The importance of having a plan to build wealth

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Building wealth is similar to marketing. There needs to be a solid plan to achieve success.

So, with wealth, especially if one wants to build wealth for investing, there is a significant need to have a plan to acquire such wealth.

Just take the example I provided above.

Investing $675 a month for 40 years, and the investment can achieve a return rate of 5% annually, then in 40 years, it’ll be worth over $1 million.

Miss a month, then the amount will be affected.

But building wealth is all a commitment, even if you aim to do so by having an outstanding skill or building a business.

I know it’ll turn some people away, which I understand. Not everyone wants to be fully committed to building wealth, which is fine.

Yet, there are reasons as to why it works. I have to admit, when writing this section, I thought of Dave Ramsey’s Total Money Makeover, a book that I’m currently reading.

Apparently, Ramsey has helped thousands, maybe millions of people and families get out of debt and build wealth. Meaning that you can copy someone else’s plan if you rather not develop a plan.

I want to cover Dave Ramsey’s book in future articles, especially once I’ve finished the book.

But whether you build your own plan or use someone else’s, only understand that it will be achieved through just that, a plan.

Ideas for building wealth

So what are some additional bits or tips that I have learned? Well, I don’t know if I could call them tips, because you know, not a financial advisor or anything. But I will share a few things that I’ve learned and were not discussed already.

  • Have multiple income streams
    • Multiple income streams mean more money that can be invested into assets. Now, as for ways to get additional money, you can look into writing, freelancing, or picking up a second job. Either way, if you’re struggling to save on expenses for investing, one can look to more income.
  • Save money when you can
    • I always think of Robert Kiyosaki saying, “it’s not what you make, but what you keep.” Well, I may have paraphrased there, but your income doesn’t matter as much as the amount you can keep, meaning the amount you save off of it. Considering your spending habits could provide to be useful.
  • Learn more about personal finance
    • This may be pretty obvious, but learning more about money will only help build more wealth. After all, if you are trying to build wealth, why would you attempt to make decisions with little financial literacy or intelligence? I’m not trying to insult you, by the way. I’m merely trying to state that if you want to become better at something, you often try to learn how to do so.

Concluding Remarks:

So how does one build wealth? If we look at how wealth was created by those successful, one can invest in revolutionary businesses or in appreciating assets. Maybe one will follow a passion or focus on a skill that will generate plenty of value in dollars or crypto.

Everyone who wants to build wealth will need money, particularly if they plan to invest their way to fortune.

Whatever way you plan to build your wealth, you’ll need to figure out and plan how exactly you will accomplish it.

You can just keep it very simplistic. There truly is no need to make things vastly complicated. Why go through that trouble?

The path to wealth isn’t simple but can be rewarding through time, commitment, and consistency.

Thanks for reading this article. Are you interested in me explaining the path to wealth that I have learned so far? Just let me know via social media or by email.

As always, if you want input as to what I should write, message me on social media.