I got a later start on my Million Dollar Journey (MDJ) mainly because it took me until age 30 to figure out what I wanted to be when I grew up. The year I started making my first real income, I also got married. In retrospect, getting married factored majorly in to our financial success. Two travelers on the MDJ with similar goals and money views can journey faster, further, and happier. Divorce on the other hand, is one of the 5 biggest wealth-killers around.

Avoiding other big 4 wealth-killers such as annual tropical vacations, anything brand new with wheels, debt for depreciating assets, and expensive show homes and second homes, was also critical in our successful journey. You are now likely thinking “what a boring dude.” It’s not true but I’m happy it appears that way because living modestly is a key ingredient for a successful MDJ!

We reached the $1M net worth destination by age 40 and $5M by age 50. After working (we’re educators) and investing for about 20 years, working, which I still do, is now an option. Over the years, I’ve set many net worth (NW) goals and achieved them. The most recent milestone happened in 2013 – our NW increased by $1M; well $949,722 to be exact. That breaks out as 50K savings, about $170K in dividend income, and the balance in unrealized capital gains. 2014 is starting out on a strong footing with our NW increasing by ($254K) by March 21.

Here are the factors that led to our success

First, I took complete control. I realized early on that the only one that truly has my financial interests at heart is me! I rarely used brokers and advisors so I didn’t have to fire too many of them. Next, I consolidated all cash and investments in the fewest full investment trading accounts possible with one financial institution (FI) – my bank. Same with my credit card and line of credit (backed by house) used only for investing – I consolidated them to one FI. Tip: don’t de-register any investments in this consolidation process.

Managing a portfolio is complicated enough, so we didn’t want to make it harder by juggling multiple institutions. As a bonus, consolidation lowered my fees overall and let me manage the portfolio more effectively from one place. “Selling my soul” to one bank had other benefits too. All of a sudden I had better bargaining power and better service. It seemed like my business mattered more to my bank.

Then, I got financially literate. I don’t subscribe to any financial-related publications and services except two: the Canadian Money Saver (www.canadianmoneysaver.ca) and the Canadian ShareOwners Association (www.shareowner.com). Both of these offer independent advice and educational-based content. The CSA, in particular, has a stock study guide package, including video lessons that are fantastic. In addition to learning the “nuts and bolts” at the CSA, I also took the Canadian Securities Course. With a relatively small investment in time, I am now the most educated (but un-licensed) financial advisor that I know.

I don’t buy and read the seemingly endless barrage of financial self-help books. 20 years ago, I read Gordon Pape’s Building Wealth in the 90s and a seminal book called The Richest Man in Babylon. I read the original Wealthy Barber a few weeks ago and although now dated, it is excellent. But really folks, nearly all the current stuff is just a re-packaging of good old ideas. You’ve no doubt heard about the “pay yourself first 10%” wisdom? I read that in the Richest Man which was published in 1926. To be fair, there are some current tax and investment topics you should keep informed on but you can easily (and for free) do that online and in the Money Saver publication I mention above.

Next, I began to challenge accepted financial wisdom. For example, I’m wary of over-diversification. Stock diversification does not remove market risk and above a certain number of holdings, company-specific risk reduction is minimal to non-existent. Excessive diversification does serve the financial industry however by creating demand for their endless variety of managed fund products. It also creates portfolios with an excessive number of holdings which in turn is fertile ground for churn and hence frequent fees.

A friend of mine has a multi-million dollar portfolio with 150+ North American stocks managed by a broker. That size of “garden” needs a lot of pruning and weeding and is therefore very profitable for the broker. I have 49 stocks in a $5M portfolio – 75% Canadian and 25% US. My total commissions for 2013 for tending that garden – $150. That’s a tiny Management Expense Ratio (MER).

I also ignore often-cited rules-of-thumb for asset allocation. Other than my house, I have two asset classes: stocks and cash. The types of stocks I own has gradually shifted over the years from growth to blue chip dividend payers, but even in my retirement, I don’t see a reason to not hold all stock. A solid dividend paying utility or Canadian bank beats a deposit based investment any day in any market. Radical? I’ve “managed” a 2-stock (TD and PKI) RRSP/ RRIF portfolio for an older friend for about 15 years. He is now well into his 80s and the required withdrawals have just recently exceeded the dividend income but the growth component has maintained the account value at about $40k. I took over this when he was frustrated that his then $14K deposit-style RRSP wasn’t performing.

My kids’ RESP is another good example of effective asset allocation. Started in 1998, with deposits and CESGs of $108k over the years, it is now worth $250k and has never held more than 13 Canadian stocks and nothing else. I don’t see any reason to change that formula, even after they start attending post-secondary. Actually, with some luck, I might be able to eventually withdraw my contributions and have their education paid from just the income and CESGs. That’s a grand slam home-run in my opinion.

Along the way I became patient. I don’t have a magic touch when it comes to stock-picking. I do study the companies to determine if their stocks are “on sale” and if they aren’t – I wait. As per CSA wisdom, I also build positions over several quarters or even years rather than buying my desired holding in one shot. However, if bargains suddenly appear I am ready to act. While the media was in doom and despair mode in the 2008-10 period, I added tons to my holdings, even using large amounts of (additional) margin to do so. Best example of this was adding 1,000 SBUX at $9.53 in 2009 (price is $76 at the time of writing).

I’m also not afraid to hold a lot of one company if it has a long and stable track record of increasing earnings and dividends. Holding nearly 12,000 shares of TD doesn’t bother me. TD was the first stock I ever bought in 1997 – 100 shares for $12.50 per. You have to start somewhere and a Canadian bank stock is arguably the best place. Canadian banks survived the biggest “global economic crisis” since the Great Depression. Need more evidence?

I’ve become philosophical. The most important thing I learned on the MDJ is that you have to give up some “good” things to get some “great” things. If you want to succeed on your own MDJ you need to ask yourself: “what am I prepared to give up?” A bit of time away from the TV to learn about investing? Driving new cars? The latest show home? Annual tropical vacations? I happily gave up a lot of that stuff and more and somehow I survived.

A recent article by a financial writer ominously proclaimed “the correction is coming.” He then went on to tell us very eloquently how to defend our portfolio from it. A little re-allocation, a fancy mutual fund or ETF, a little global diversification perhaps…The only thing I agree with is that a correction is coming since given enough time any fool making this prediction will be right eventually. However, this time try preparing for it another way. Get ready to look for bargains and to start your MDJ! Or, add to your portfolios with good quality, dividend paying stocks that you have identified! Bon voyage!

About the Author: Pete and his wife are educators in Western Canada, and are regular followers of MillionDollarJourney.com

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First off, congrats on your personal success! Second, thanks for sharing. It takes your personal time to share, and certainly nobody makes you, so we appreciate it. Third, I agree wholeheartedly with most of your recommendations, particularly around modest living, taking control, becoming financially literate, and patient. These are the REAL keys to success, and the most wonderful thing about them is they are free and available to everyone, all you need is the will and some commitment of time.

On your specific investing advice, I admit to having some concerns with your suggestions. First, on asset allocation, I would argue that this is the bedrock of smart investing, and you haven’t truly “ignored” that as you’ve said. If you hold some stocks and some cash, then you have split your investments between “growth stuff” and “safe stuff” – it’s just that you’ve decided to keep your “safe stuff” in cash rather than bonds. You may also have decided on a more aggressive allocation (ie more stocks than cash) than “conventional wisdom” but this is a personal decision revolving around your time horizon and level of risk comfort – a subject on which I suspect you are likely quite self-aware. I am not sure it’s wise/prudent to suggest that you have (or that others should) “ignore asset allocation”.

Second, on diversification, I would again question your suggestion that you don’t need or haven’t done this. I share your general dislike of many financial products out there, however there are SOME good options. You can buy hugely diverse ETFs with MERs of 0.2% or less (iShares just lowered their fee on XIC to 0.05%!!). That means for an investor with $500,000, owning iShares XIC would cost just $250/yr, very modest by any standard, and then you own 250 companies. You could not assemble that portfolio, or even your own portfolio, for materially less. Now, I fully agree that when you get to a $5M portfolio, your options/costs get a bit different – but assuming most people reading this have somewhat less than 7 figures to invest, the case for low-MER ETFs is much more compelling. (and there is nothing stopping your from changing the process as you evolve from $10k to $100k to $1M)

You might say that you have done alright without diversification, by investing in good companies. To that I would reply by asking: What has been your annual rate of return over the past 10-20 years? You have either achieved returns less than the market (in which case while you might be happy with your circumstance, it should be noted that your NW today might have been 6 or 7M had you done differently), or you have outperformed the market (in which case you are a very rare occurrence, and either very skilled or very lucky).

The point is, for most smaller scale retail investors, I am not sure that your advice to ignore asset allocation and pay less attention to diversification is prudent.

Good post. Well written.

You didn’t mention incomes, only “educators.” There are many kind of educators. University profs earn low six figures plus a pension while elementary teachers earn mid-five, with proportionally lower pension amounts from that.

As an accountant, I know income and savings rate matter much more than anything you mention on investment and asset allocations. Therefore your first two paragraphs (along with income figures that you omitted) are likely easily 80% of your success to one million.

Your other 13 paragraphs are likely the remaining 20% or less of your success on your million dollar journey. But nonetheless, a great article on the less important things.

Pete, prepare for the slings and arrows!
(j/k…but you know it’s coming…)

Thanks to Goldberg for the mention of income.
I know people on both sides of the border (CAN/US), and there is a marked difference in that Canadians do NOT talk about their income, whereas Americans will do so freely. Cultural weirdness.

I’d like to address this line:
“…even using large amounts of (additional) margin…”

“Additional” margin? Could you please detail exactly how much margin was used during the entire process?

Utilizing “large amounts of margin” also runs contrary to your MDJ mantra of “living modestly”.

What people THINK they do and what people ACTUALLY do can be completely different.

I’ll leave it at that for now.

Congratulations on joining a VERY exclusive club (stock market millionaire).

@Goldberg, SST: Agree totally, the missing bit of information here is income, savings rate, or in other words, Rate of Return that I asked for.

Most retail investors have no idea what their own personal rate of return has been. Amassing $5M is wonderful, and I think most would be very happy to have that sum in the bank. But whether your story/methods should be espoused depends entirely on what your net contributions (savings) were. If I started with (saved/contributed over time) $100K and turned it into $5M, that’s one thing. If I started with (saved/contributed over time) $4M and now have $5M, that’s decidedly less impressive in terms of the successfullness/value of your methods/investing choices. A statement of IRR over time (and relative to the broad mkt) really ought to be obligatory before espousing any particular strategy.

Congratulations Peter on your discipline an and great results.
This post is very interesting and parallels my MDJ in many ways as I’m close to 50, finished being a full time student for good at about 30, and managed a net worth above 1M by 40. I totally agree with frugal living and saving, I’ve saved at least $50,000 per year for the last decade.

But I’m always skeptical of apparent market beaters and wonder if luck or something else is involved.

I think something special must have happened between 40 and 50 for Peter. The increase in net worth for 2013 sound impressive, but it looks like the capital gains are 18% in a year when the S&P 500 was up more than 25%, didn’t beat the indexes there.

The total annualized return for the Canada and US markets for the last 10 years is between 7 and 8%, turning $1M into $5M with $50k per year of savings in 10 years requires a 15% return. Not many investors have the skill to consistently beat the market by that margin, many more are lucky enough to do it on occasion.

It would be interesting to see the 10 year internal rate of return for Peters investments and the yearly net worths for the last 10 years. It would also be interesting to see what kind of volatility you had to stomach.

In my case I saw my net worth cut in half by the financial crisis at a time when my job was insecure. As usual, sticking with equities paid off as they have more than recovered, but not without some stress and excitement along the way.

I’ve never been able to consistently beat the markets so these days I stick primarily to an indexing approach.

Congratulations Pete!

It would appear our investing philosophy is similar. In my view diversification is overrated including having a fixed income component. My stock portfolio is roughly 55% Canadian, 40% U.S. & 5 % Int’l. My holdings are predominantly low beta, blue chip dividend growth stocks that raise their dividends at a greater rate than inflation. When it comes time to tap into the income I’ll be able to live off the dividends without needing to sell anything. I may not have any fixed income in my account but I calculate my company pension & CPP will make up approx. 40% of my income stream in retirement when all is said & done. I call that my bond-like component. I consider total performance returns secondary to increasing income. That said, my total return was over 24% in 2013 & is close to 15% annually back to when I went DIY in 2008 during the depths of the recession. Prior to 2008 I went through many years of underperformance with a financial advisor.

I got off track to tell my story. I mainly wanted to say we have similar views on investing that have been successful for us. Our way isn’t for everyone. It’s best to become knowledgeable with several different investing styles and then go with one that you’re most comfortable with!

All the best!


Question: When you say that you had a $1M networth at 40, is that $1M for you and your wife combined, or $1M for your wife and $1M for you?

Dwilly, you are right, I haven’t ignored asset allocation but as I said I have ignored the often-cited rules of thumb for same. For example, I have totally ignored “% allocated to stocks should be 100 minus your age.” Re investment rate of return, good question and not easy to calculate. To simplify it, I treated my return calculation kind of like a mutual fund – that is, I set a unit value of $10 in 1992 and then have adjusted my “number of units” as I have added money over the years at the current unit value. My 2013 unit value is 51.63. Over these years the market has had higher returns in 10 of them. Generally speaking, I don’t think I’ve beat the market overall. Don’t confuse my “growth in net worth” with investment returns since I’ve had my personal residence working toward my net worth as well.

Goldberg, I can’t say enough good about having a CA on my team. We differ remarkably on investing style/ wisdom but he has been invaluable from a tax perspective. Yes, what we have earned and managed to save and grow has been of prime importance in reaching $1M. At this stage we are making much more (including cap gains) from investments. Our income has grown from the mid 5 figures to low 6 figures and with a frugal lifestyle we have always managed to save nearly all of one of the incomes.

SST, Over the years, I have always had between $50-200K in borrowed (line of credit) for investing. In addition, I have typically used varying amounts of margin in my trading accounts which are currently at about $350K. Other than a student loan and small mortgage which I quickly paid off, I have never had personal debt.

Greg, yes something special did happen in the last 10 years. It was the 2008 melt down which I took complete advantage of. I laid down big bucks on good companies that were oversold. I had more than just a few sleepless nights but made it through the storm and the recovery has accelerated my situation. Also, we’ve saved more than $50k per year in the last 10 years because all of the investment income (at least $75k/ yr) was reinvested. This acceleration and compounding has been one of the most interesting and gratifying things to see.

Please don’t misconstrue telling my story as advice. Like Bernie said, this approach isn’t for everyone. Like most of the stories and articles that I’ve read, I sometimes take away a nugget or two but I am always skeptical. One of the nuggets I read long ago was that in our lifetime of investing we’ll have a small number of really really good buying opportunities. For me 2008 was one of them.

Geoff, $1M total for both of us.

Thanks for answering, Pete.

@Pete: Cheers and thanks for the reply. As you’ve said and other posters have recognized, the real issue here is a high ratio of savings-to-income, combined with effective investing and time. Interesting to note your point on marriage as well – I am in the same boat. (A successful) marriage (with a spouse with decent earning power) has actually been a financial boon for us, allowing lowered/more efficient expenses and higher savings. I completely agree/recognize how financially ruinous divorce could be.

While I agree that divorce is a great way to kill wealth, I don’t think the other 4 you’ve mentioned will have a significant dent in wealth for people who have high income to being with (which is clearly the case for you).
I would say the true wealth destroyers are divorce, illness, disabilty and children. Many would nix children from that list as they provide other types of wealth.
Certainly buying a new car every year or two isn’t the best way to spend money, but that’s not going to prevent you from being wealthy. Just might take an extra year. Travel is even further away from being a wealth destroyer. Especially when kids are young.

Either way, congrats on your accomplishments. They say the first million is the hardest, but it looks like your next 4 million was far more impressive.

Congrats Pete!

Great post and very inspiring.

I totally agree with your comment about giving something up, or a few things up to reach financial independence earlier than most. The reality is, life is about choices, some good financial choices, others not so much. People need to choose wisely based on their income and debt load.

We’re trying to save upwards of $20k per year outside our pension plans. We hope to financially free at 55 and work if and when we choose, another 15 years from now.

We have about 40 stocks, 30 CDN and 10 US, and I intend to buy another 10 or so to round out the portfolio. We don’t have a $5M portfolio but maybe decades from now we will :)

Thanks for sharing your story!

Cool post, always nice to hear another perspective from a successful investor. Not everyone will agree on the specifics like asset allocation but all financially successful people (including yourself) seem to agree on one thing: vehicles are a big money pit and should be avoided (if possible)

Great work, and a solid plan. I am a lot more diversified in large part because it’s an effective substitute for research. But you can be diversified with 50 dividend-paying stocks, as long as they aren’t all in Canadian financial companies :)

Even John Bogle has suggested that some investors would be better off building a portfolio like yours and never selling the stocks. Broad market indexes tend to hold stocks for 30 – 50 years on average so if you can beat that you’ll have an advantage. Not surprisingly, few people seek this advantage that could help them beat the index.

When it comes to investments, switching from one strategy to another is an enormous wealth-killer. If you have a plan that’s good enough to last a lifetime that is a major gain.

Congrats. I think the most impressive part of this to me is the ratio of Canadian to US stocks. I have a hard time finding good quality Canadian stocks, not because they don’t exist but more so because there aren’t as many resources out there for finding them. Exceptions for the big financial names, but I don’t want to only invest in one sector either. I’ll add that I also don’t particularly like the mining sector due to the massive momentum swings and difficulty making sense of their finances so that is limiting as well.

Does anyone know some good resources or sites focused on Canadian stocks?



Michael Weber of “Dividend Growth Investing & Retirement” maintains a Canadian Dividend All-Star List of Canadian companies with five or more consecutive years of dividend increases. His list is updated monthly and can be found here:

Thanks for your comments everyone! Drips, my Canadian stock ideas come from the CSA and the Moneysaver (mentioned in my blog) along with reams of thorough research and lists available at my broker’s site (TD WebBroker). I also reviewed the good stock lists at this site (MDJ) and others like it for ideas. Once I have an idea, I use the CSA’s stock study tools to look at the company and their future prospects in more detail. For Canadian stocks, like you, I think of sectors and then look for strong performers. Here are a few non-bank shares that have caught my interest (not recommendations – just ideas!): Insurance (GWO), Retail (MRU, NWC), Utilities (EMA, FTS), Telecom (T, BCE, MBT), Transportation (CNR), Engineering (WSP). I happen to own all of these except for CNR but it is “on my radar.” There are also many interesting ideas in other sectors such as manufacturing and of course pipelines and resources. Good luck.

Great article Pete and you guys have achieved a lot in 20 years. I like the way you used the margin to hunt some value stocks during the financial crisis. Leverage is one of the way to get rich.

We lov you see your networth in 5 year from now.

In this current technologies, beginners do not need to wait and save a lot of money before start investing. They can start as little as $10 per month.

Dear Pete,

Congratulations on your outstanding wealth acquisitions.

Something that struck a nerve was your objection to “annual tropical vacations”.

My wife and are all on the front end but nevertheless well positioned to make millions. With our brutal Canadian winters we realize that taking not one, but three tropical vacations a year is just as important as any MDJ for our family.

All the other wealth-killers would be trivial to us. We have a modest home, modest wheels, no liabilities of any kind.

In the end when we look back, the happiest memories will come from the times we spent together as a family somewhere nice and sunny, not the times spent in front of a computer staring at balance sheets and digital numbers.

It’s important to not lose track of that as you all amass your millions.

You hit the nail on the head – get married to someone with similar financial goals and stay hitched a long time. I commend you on your financial accomplishments. My biggest goal is to achieve financial independence by paying off my mortgage by age 31. Without a mortgage to worry about, I’ll have the freedom to do what I want in life. Kudos to you for taking control of your finances.

Point well made, Emilio.

I always use my personal situation to play Devil’s Advocate.
I get an ~8% raise every year (thanks gov’t!). The frugalist would invest that 8% and continue to live on the old income level, working the same amount of hours (or maybe more). I, on the other hand, reduce my hours worked 8% per year (or as close to it as possible), and continue to live on the same income.

No one ever exclaims on their deathbed how they wished they worked more. It is much more valuable to me to spend time with my family and friends and enjoying all the world has to offer than it is to work. I’m quite confident I’ll be enjoying a middle-of-the-road retirement so I’m not going to wait to go on a cruise when I’m 70 or 80; I’ll surf and ride elephants when I’m 30 or 40!

Yes, more money is always better, but money is infinite (thanks gov’t!) — time is always finite.

When you have $5 million, is a 0.1% decrease in net worth vacation really THAT painful or detrimental?

The saying ‘penny rich, pound poor’ comes to mind (but not 100% applicable).

p.s. — Pete also mentions “debt for depreciating assets” as a wealth killer, but that is EXACTLY what a mortgage is.

Avoiding big mortgages, new/expensive cars, expensive holidays when you are YOUNG is essential. Think 20s and 30s. By the time you are 40s and beyond, if you’ve been a good saver/investor for 20 years already, you’ve got a lot of freedom to enjoy what you want out of life while staying on track for retirement.

As for heavy leveraging during the financial crisis and having sleepless nights, at that point you stopped investing and started gambling.

I’m sorry but as soon as you have significant anxiety over your investments, it’s because you went beyond what you are comfortable loosing, and that is gambling. There was REAL risk of a long term financial depression, you gambled and won. have been miserable for a very long time as you digested your mistakes. I hope that is a lesson you took from the sleepless nights.

As I’ve been reading and enjoying the recent comments, I was thinking about another nugget of wisdom someone once told me. That is, “extraordinary results can only come from extraordinary effort.” For me, extraordinary effort involved some sleepless nights and some sacrifices. But I would be skeptical of any extraordinary success stories that don’t include the sobering reality that it involves sacrifice, hard work and is at times very stressful. However, be careful about assumptions that I haven’t enjoyed every second of the journey and haven’t taken time to smell the roses along the way.

Pardon me while I get a bit more philosophical. When I think of the defining moments in my life, they have always included risk. For example, there was always a sense that things could go very badly (or very well) with a new job, moving away from home, getting married, etc. Along the way there have been some failures. But every one of them was a lesson and I moved forward; rather than retreated. It seemed to me that not accepting, calculating, and taking risks to achieve the great things, would define my life in a way that wasn’t acceptable to me. Magic happens outside of your comfort zone!

The other notion I would like to mention is that as you become more financially successful, you need to think “bigger.” With a $5M stock portfolio, you will see daily fluctuations that exceed what you consider to be a good annual salary. You may get used to the fact that a $500K margin balance (with a $5M portfolio) is acceptable risk if invested in the right companies. When you began your MDJ, perhaps a position of 300 shares in a company was your desired position but there may come a time when 3,000 is your preferred holding. As your portfolio grows, you need to grow too!

I like the reminders from many of you that wealth is a means to an end; not the end itself. After working for just over 20 years, I’m enjoying my goal of having work as “optional” and other pursuits I have time for.

Disclaimer: This post has nothing to do with money.

re: “I was thinking about another nugget of wisdom someone once told me. That is, “extraordinary results can only come from extraordinary effort.” ”

This is a derivative of isshokenmei, a precept of Samurai Bushido meaning “make a desperate effort”; a conduct of life as opposed to acts in singular moments.

However, ‘extraordinary effort’ is often more dangerous. Think of the difference between a businessman making a desperate effort to generate profits in an attempt to stave off bankruptcy; versus a businessman who goes to extraordinary lengths to profit in order to conceal an embezzlement that could land him in prison. Going outside your “comfort zone” isn’t always a good thing.

You need to have a sense of the risk of the extraordinary, but also a sense of the cost of ordinariness; it isn’t always something you can afford to lose.

That being said, the life of the human species depends on whether a few people can do things that are at least a little extraordinary.

Okay, so there is a little bit of money stuff in this post!

Disseminating further…

i) “ignore often-cited rules-of-thumb for asset allocation”
Score another for the concentration side of investing. As mentioned elsewhere recently, diversification is for loss prevention; concentration is for wealth building.

ii) “…challenge accepted financial wisdom”
This requires a simple mind (versus an over-analytical thought process). 99% of investors are not wealthy, ergo, do the opposite and you’ll probably increase your chances of attaining that million.

re: #22 — “There was REAL risk of a long term financial depression, you gambled and won.”

I agree with this sentiment. However, again, the “win” was a mix of simply adhering to broad precedents (Don’t Fight the Fed) and luck — which is nothing more than exposure to opportunities.

A follow up question, and an important one, would be WHEN was leverage utilized?

The millionaire made his first stock purchase in 1997; perhaps he leveraged across the board right out of the gate, providing immediate after-burners to his gains (into a parabolic market none the less!). Perhaps it was applied for only a few highly calculated entries (SBUX).

Using LOC leverage, compared to margin leverage, is much more “safe” as you have to cover interest costs only instead of covering a cash ratio (and with the prime rate trending down since 2000, coupled with rising RE prices, the cost of leverage got that much cheaper).

p.s. — “Canadian banks survived the biggest “global economic crisis” since the Great Depression. Need more evidence?”

Canadian banks were bailed-out just as their American counterparts. Search for that evidence too.

A great post with a ton of wisdom! At the end of the day it is really important to think critically and be willing to learn.

Personally, the only thing I cannot give up is the annual tropical vacation. I believe if you are going to work hard, you have to live a little.

Hi Pete,

Great post with many practical lessons. My situation is a lot like yours, so I can really identify with it.

I think the 3 biggest lessons from your post that most people need to learn are:

1. They way you were frugal and invested a significant portion of your income each year.
2. The confidence, freedom and independence you get once you have built up a solid net worth adds much more to peace of mind than things you give up.
3. Using market crashes as buying opportunities is exactly the right outlook for successful investing.

I also found that ignoring conventional wisdom, such as diversification, is important. I agree with Warren Buffett that diversification is only important if you don’t know what you are doing. I agree with you about ignoring bonds and having a focused portfolio. You may be interested to know that bonds don’t actually reduce the risk for long term investors that stay invested. Bonds reduce risk for short term and mid-term investors, but they are actually riskier than stocks in rolling 20-year periods (and longer).

Most of the top investors hold focused portfolios with a limited number of stocks, most often just 20 or 30. In my case, I don’t hold cash either. I’ve been 100% equities for the long term. I invest very differently from you, but agree with you in these underlying principles.

There were some comments here about your rate of return probably being lower than the index. I’m guessing that keeping up with the index is not your objective. You are more looking for control, something you understand, and a growing portfolio that is more conservative and consistent than the index – is that right?

I say this because I’ve met quite a few investors that invest something like you by choosing stocks for a long term hold using a stock research newsletter as a main source. Where I’ve seen accurate rates of return, they are usually lower than the index, but more conservative portfolios that hold up well in down markets and provide more consistent returns. Also, most investors with large portfolios tend to focus more on downside than keeping up with the index.

My other question for you is how do you handle issues where you would have to pay tax on a large capital gain to have the portfolio that you want? Have you had issues when you decide to sell a stock or find a better company, but there is a large capital gain on the stock you want to sell? How do you handle this?


@Ed Rempel- regarding “I’m guessing that keeping up with the index is not your objective.” I’m not sure how you came to that conclusion. When Peter said his net worth increased by $1M in 2013 and was off to a strong start in 2014, I would take that to mean he believes his investments are doing great, which in my book means outperforming the markets. I found those statements a little misleading as it is likely that he has been lagging the markets recently.

Leverage and “extraordinary results from extraordinary effort” sound like the opposite of conservative and consistent investing to me. Clearly Peter has done far better than the markets in the last 10 years, probably doubled the market returns, and my hat is off to him for that. But only slight differences in leveraged investment timing in extraordinary times like the crisis of 2008-2009 can easily result in the difference between doubling your money and margin calls, home foreclosures, and bankruptcies.

I might sound envious, but I think luck is a bigger factor than extraordinary effort in Peter’s results. But honestly, I’m happy to take the market returns, which would turn $1M into “only” $3M in the last 10 years with $50k/year savings. A high savings rate and market matching returns are all you really need to speed down the path to financial independence.

Thanks for your comments SST, Al, and Greg. As near as I can figure, I’ve had an annualized investment return (dividend and capital gains) of 7.7% since January of 1992. This is using my “mutual fund math” approach I mentioned in an earlier comment. In 2014, my investments have gained 6% as of March 28. In 2014, my net worth is up by $248k or about 5%.

I’ll leave it to you guys to compare my post 1992 performance to whichever broader index you feel is most appropriate, assuming you’ll accept my less-than-perfect calculation approach. However, for 2014 so far, my return appears a bit better than the TSX and significantly better than American markets, which has been basically flat in 2014.

My best year was 2009 with an investment gain of 41.67%. My worst year was 2002 with a decline of 31.05%. The broader markets also declined in 2002 but I “beat” them handily to the downside. Speaking of periods of significant learning, I’ve made many of the typical mistakes that other investors make – i.e. not realizing a gain when I should have (i.e. NT and BBD) and riding them down.

I’ve also “blind-dated” more stocks than I should have in my early years. Blind-dating is a CSA term for buying a stock without researching it. The other thing I would do differently is managing my entry into the US market. I started building my US portfolio when the US dollar was really expensive. I think you know what has happened since then.

Regarding taxation, I hold the bulk of my non-registered money in a corporation for tax deferral and income type flexibility purposes. For capital gains, I take my lumps just like everyone else. My general thinking is to try to be as tax-efficient as possible but to not to let the taxation tail wag the wealth generation dog.

SST, to answer when margin was used, I have used borrowed money (line of credit and margin) for investing continuously since about 1998 in the amounts described in an earlier post. I’ve even used small amounts of double-margin for short periods of time to take advantage of what I felt were opportunities. I’ve had one margin call in my investment history but no bankruptcies or foreclosures. Right now I’m “light” on my borrowed investment dollars with around $350K.


Is your 7.7% rate an average annual rate or a compounded annual rate (CAGR). One can determine their CAGR here: http://www.investopedia.com/calculator/cagr.aspx

I found it interesting to look at long term CAGRs for Berkshire Hathaway stock, Mawer Balanced Fund – A and the Global Couch Potato portfolio for comparisons.BRK.A = 13.1%
Mawer fund = 8.2%
Global Couch Potato = 7.3%

I wish I had kept all my records prior to mid 1999 so I could track all my performances. As it stands, my 15 year CAGR is 7.4%. Unfortunately, only the past 6 years were DIY.

Good question Bernie. It is the CAGR. Punching my numbers into the investopedia site, I get a 22-year CAGR of 7.75% which is the same as my spreadsheet calculation. The interesting thing about this calculation is that you can make yourself look pretty good depending on the start and end points you choose. For example my 6-year CAGR (2008-2013) is 17.25%. However my 15-year (1999-2013) isn’t that great at 4.85%.

@Pete, thanks for continuing to engage and provide information in your comments, understanding investment returns and where they come from is a topic near and dear to my heart.

I have to say I’m a little baffled about how you got from $1M to $5M in 10 years. Take for example the period from Feb 28 2004 to Feb 28 2014, pretty close to the same period when you went from $1M to $5M right? The total annualized return (capital gains + dividends) of the TSX composite and the S&P 500 indexes were both between 7% and 8% for that period.

Using internal rate of return (IRR) calculations as a reference point, you’d have to save and invest more than $200k in new money per year to achieve the $4M increase in your net work at market returns. On the other hand, if you only added $50k per year to your portfolio, you’d have to double the market return to achieve this result. And you’d have to pay pretty much zero tax on your dividends and capital gains realized.

So it looks to me like you are beating the market overall by a substantial margin in the last 10 years. I can’t see any other way to understand the results.

You’re right there Pete. I get a 5 year CAGR of 22.52% & 6 year CAGR of 12.04%. The 5 year is pretty much the entire bull run while the 6 year factors in the recession.

If I do a 9 year from 1999 to 2008 I get 4.36%, which is the performance during the period I used an advisor before going back to DIY.

OK, I just saw your last post Peter, it looks like the explanation is you have done spectacularly well with your investments in the last 10 years. It more than makes up for an earlier period where your investments may have under performed the market because you have some more more invested in more recent periods.

So now that you have achieved comfortable financial independence, are you going to continue to invest your whole portfolio the way you have in the last 10 years? My opinion is you have taken a lot of risk and are lucky that you didn’t get burned, but maybe I’m just not a good or brave enough investor to pull off what you have.

I like Pete.

Compared to the other millionaires (?) who have told their story on this site, Pete is by far the most transparent and comes armed with level-headed intelligence, education, facts, and figures.

A double-decade 7.75% CAGR isn’t earth shattering (and perhaps should be quite a bit more with margin considerations), but it’s very believable and with a coupling of high income/high savings rate, very doable.

Of interest is the “luck” Pete had of already having substantial wealth when the 2008 Crisis hit; he was making 17.25% on pre-existing millions. His story may be different if that was his returns during the start of his MDJ.

Hey everyone thanks for our comments. You’ve really made me think! Greg, My plan is to stay with my current approach for the next 10 years. I know my “risk profile” is different than many investors but I don’t perceive this approach as that risky. Back in 2008 I had a sense that things may not go as planned and that caused me to feel some short term stress but even then I was prepared to accept the downside.

Peter, you took risks and chances to turn 1 mil to 5 mil in 10 years. You did it and beat the odds. For every one person that did it (picking the bottom to jump in, margin to leverage, and sleepless nights), there are 20-30 that got burned.

I applaud you for what you accomplished and it is impressive and you deserve a “good job”. But I would not recommend this type of high risk strategy to most people. To move 1 mil to 5 mil in 10 years is not an easy task.

If I gave 1 mil today to 10 investors and asked them to reach 10 mil in 10 years, they would have to take exception risk and achieve over 17% return. This does not include money that they would add from salaries, so they obviously could do it at a lower rate of return. But you would also have to account for tax on dividend and and capital gains realized.

Bottom line is I am jealous, but I dont no think you could repeat this without continued exposure beyond what an average, or even above average invertor could/would tolerate.

BTW did you purchase 12,000 TD shares at around $10 and simply hold on for 10 years?

In my third paragraph it should read 5 mil in 1o years and not 10 mil in 10 years. please correct!!!!

Great post – congrats on the success, you’re strategies and thinking are pretty identical to mine – so it’s great to see others with similar ideas.


P.S. Don’t listen to all these people posting to your article telling you what to do and their criticisms of some of your ideas – just remember – you’re in a spot in your life where you can comfortably choose to work or not and chances are they’re not.

HAP, I’ve build my position in TD gradually over the last 17 years. I only “bought” about 4,000 shares during that period. The rest of my current position was accumulated through DRIPs and 2 stock splits. I most recently added to my TD holdings in late 2013 shortly after the latest split was announced. Speaking of bank stock splits I have been wondering if CM will split at some point soon.

Pete, I had a large position in one stock from a business buyout and this put my portfolio way offside. I kept the large position and the stock did well, so it got even larger. Recently I sold half my position and will trigger a gain. I have invested the funds from the sale into other positions and have better balance. I am now better protected and sleep has improved. Just my 2 cents!

An advantage of buying on valuation is it has nothing to do with market timing. Leveraging aside; purchasing on valuation results in risk decreasing as reward increases. The greater an opportunity for reward = the lower potential risk.

Pete has done a nice job.

Hi Pete,
Congrats on your MDJ. First I would like to mention that I track all purchases, sales and dividends distribution under portfolio on globe investor gold to get accurate rates of return so I can compare them against indexes. My returns are as follows: I earned 17.9% in 2012 (203k)I 30% in 2013 (395k) and up 5.6% this year (90k). I used high leverage starting in 2010 (100k to 300k) but I have terminated my leverage in 2013. Leverage was used to buy beaten up US banks in late 2011. My return on US stocks was 47.9% in 2012 and 44.1% in 2013 plus US Currency gain.

My philosophy defers a little from yours as I do take that annual tropical trip. Last year, I spent 3 weeks and this year 2 weeks vacationing down south That was one of my condition for keeping working. I don’t touch my investment money but I spend some of my money from my business. I also bought myself a new vehicle last year. I have been a pretty frugal person but now I want to enjoy my money from work while my portfolio does it’s magic. At 40, my investments were worth 833k and 1,636k at 42 (almost doubling in 2 years with 215k in savings). I am currently 43 and my investments are now worth over 1.7 million. Add to this my business which is worth about 1 million, I feel I have enough money to retire and my focus has now changed to capital preservation and thus the reason I don’t use leverage anymore. Of course I should be careful when I say capital preservation has I still have 90% of my money invested in stocks, but much better than 130%.

At 5 million, I don’t see the need why you still need to use margin especially after the run up the market has had for the last 5 years. You said you had sleepless night, but shouldn’t you structure your portfolio that that doesn’t happen again. At the end this is only paper money. You have more than enough money to last your lifetime so why not at least spend the money from your paychecks. A 20% correction would be a loss of over 1 million on your portfolio of 5+ million, just like a 10/100 of a one percent loss equals 5k. A 3k vacation or a 30k vehicle hardly registers on the size or your portfolio.

If you don’t beat the indexes, why not invest in low fees etf’s and do away with the stock picking. I was able to beat the market using margin and timely purchases in 2011 but I consider myself lucky more than anything (I made more good purchases than bad purchases). I will be selling some of my stocks to buy etf’s because I know I can’t beat the market over a long period of time and because I am too heavily invested in financials (40%). The more my portfolio grows, the less risk I am willing to take

What is your goal for your portfolio, when will you spend it and how much do you plan to withdraw a year in retirement. What will be the magic moment that tells you I can withdraw 4% yearly (200k) for spending and enjoy new life experiences.

Hey Ron. Nicely done re your MDJ. Your experiences sound similar to mine in terms of seeing an opportunity and acting on it. I was looking at those beat-up US banks really seriously as well. I added some other US stocks at that time like AFL, LLL, SBUX, PFE, VIVO, and LLY.

I continue to use margin mainly for liquidity. If I see an opportunity I need margin to act on it simply because I don’t typically have much idle cash – it’s all invested. Second, margin makes good business sense – borrow money at a lower rate than you can earn with it. The low cost of borrowing in the last 15 years is unprecedented in my lifetime, so I see it as another opportunity ripe for the picking. Last, carrying charges are one the few really good remaining personal tax write-offs. I’m sure you and most of the readers know all that so I apologize for restating the obvious. But you are right, I could get by without it. I sleep very well and margin doesn’t make me nervous anyhow mainly because of what it is invested in.

Some folks appear to make assumptions that I live a spartan life bereft of the pleasures that apparently only money can buy. That really isn’t the case whatsoever. I’ve done a fair amount of travelling (in Canada and the US), spent quality time with my family skiing, hiking, camping and climbing mountains, and many other things. My family had our first beach vacation in 16 years this Feb. and it was very special. My son is going to New York in a few weeks, and we have plans to go to Japan in 2015. When I was in my 20s, I spent a year backpacking and working in the US and Europe so I’ve done my share of travel and have had some interesting experiences.

Regarding retiring from stock-picking, it’s too late for me to stop – it’s in my blood. It’s like a (very enjoyable) second job – I enjoy researching companies, tracking their quarterly earnings, keeping up with their news, and staying in touch with trends that could impact them. I don’t know if I can beat the market over the long haul but I’m going to try. Regarding the magic moment, I have plenty of magic in my life now so I don’t see a big transformation coming. Knowing that I can stop working anytime gives me a great amount of satisfaction. For portfolio goals, I am interested in seeing how long it will take me to get to $10M. My estimate is 4-7 years.

Pete and Ron’s stories really hit a nerve.

I’m highly concentrated in both my primary investment choice (real estate) and and secondary (stocks). Like Pete, I started 20 years ago when I bought my first condo at 24 and through experience (success & failure) I found an investment model that works well for me. I don’t look to diversify my holdings, I simply repeat my success. Same with stocks, I own high yield Canadian blue chips. I am happy with the income stream and continue to build on this.

I get a lump in my throat when I think about 5 mil in the stock market and a 20% drop but I have no problem holding an RE portfolio that size and a 20% drop. I think this is due to my confidence/success level with RE compared to stocks. Though at some point, I have to decide what is the retirement income structure I want: should I eventually consolidate the RE into one small apartment building or a few choice multiplexes or sell off the majority of the assets and transfer to blue chips for tax efficiency. Which brings me back to that lump in my throat…

Every year I take a two week first class, 5 star, trip to Europe which I fondly refer as my mental health-decompression-save my sanity-extravaganza! That’s also one of my conditions to stay working and avoid burnout.

I am a senior manager commercial/ industrial construction (private sector) and earn a healthy low six figure salary with no pension or benefits. Every day feels like a pitched battle. I deal with with way too many alpha males, plus the added pleasure of sub-trade/companies fighting like angry wolf packs over whose to blame for missed project target dates and add-on costs. Oh joy! Why do I stay you may ask, because I’ve worked hard to get here. So I might as well stay for a while. I can walk away anytime should I “start losing it” like some of my colleagues have.

I don’t track gross/networth as much as do net passive income. My goal is to match or better my net working salary. I want to walk away from work versus retire without any negative lifestlye changes and possible being able to do more.

Plus, this is the new challenge that I’ve set for myself . I ‘ve always set targets for myself with focus on the methodology and time frame required to get there. Then, I set another target. And so on. I like to compete with myself (not others) and it keeps me from getting bored.

Can anyone relate to this?

Great story Pete, thank you for sharing!

I love the fact that you have 49 stocks in a $5M portfolio. And the total commissions for 2013 were $150, a tiny MER. You never would have gotten that tiny MER by investing in Index funds or ETFs.

Over diversification is a problem, but most people don’t realize it.


I am happy for your success, but I am also quite leery about free investment advice from self made millionaires without having a complete picture. You mentioned you made your first million from age 30 to 40 as educators and that this was some time ago. This is a short period of time- 10 years- in which you were married, had children, and bought a home (?) I assume. What were your incomes at the time and how much did they appreciate on an annual basis over the 10 year period ?. Thanks for sharing

Hi Pete

Fabulous article. I’m fairly new to the blogging world and have been looking for some reassurance on my investments and philosophy. I follow My Own Advisor (excellent site – great work Mark) and got the link to this from there.

It is really great and really reassuring to hear your investment philosophy. I’m 61 and just retired last June without any company pension plan. My wife was a stay at home Mom so we missed out on the extra salary. Of course, we think it was more than worth it (but that’s just for us). Our kids are both married and have bought houses in Calgary (where we live). We have a couple grandkids with another on the way, so life is very good.

I’m a DIY dividend income investor. We have everything invested in Canada with 25 dividend stocks (6 O&G, 3 pipelines, 5 utilities, 4 infrastructure, 5 REITs, BNS, BCE), 1 ETF, and 3 mutual funds. Our annual dividend income is ~85k so it is way more than enough to live on. Add in the CPP, and we are still accumulating.

The only bonds we have are in the PH&N High Yield Bond Fund (MER= 0.88%).

I came up with the investment plan on my own and was a tad concerned that it was possibly out in left field with so little diversification and so little bond (seems to go contrary to conventional wisdom). It made sense to me in that we don’t need to touch the capital and are more or less immune to stock prices (just as long as the companies continue to pay their dividends). Also, most are dividend growers with 22 of the 28 having a dividend increase in the last year.

Anyway, besides being a really good read, that’s why your article really hit home for us.

Thanks for taking the time to write it up and all the best.

Seems like a fair bit of survivorship bias if you ask me.

@ Don G,

Just curious to know how much you have invested to be earning ~$85K in dividends annually? Thanks.

@ John

Total investments excluding cash are just under $1.7M. My average overall yield is 5.11%