Building Wealth is a Long Game

If there’s anything about money that I’ve learned over the years it’s that Building Wealth is a long game; one measured in decades, not months or years. That may come as a surprise to some people. But for the vast majority of us it’s true.

Building wealth is a long term game that requires healthy financial habits. The most important habit that we can develop is the habit of regularly saving and investing our money. It doesn’t matter how much or how little you save, just developing this one habit is enough to set you apart from the millions of people who live paycheck to paycheck.

Every single financial institution offer some form of an automatic savings/investing plan where you can have a set amount of money withdrawn from your checking account each month and deposited into a savings account or an investment account. I use Questrade because of their free ETF purchases and low-cost stock trading commissions.

When I got my first real job I immediately set up an automatic investing plan where each pay $25 would come out of my bank account to buy low-cost index funds. At the time, I was in my mid-twenties which is an excellent time to start saving even a small amount of money because of the power of compound interest. As I progressed in my job, I increased the amount that I was saving little by little. Before long I was saving hundreds of dollars each month.

My point here is that anyone can do this. That is to set up an automatic wealth-building system that let’s them grow rich over time. So many people struggle with their finances and stress out about money when they can easily take control of their financial future by making one small change. Sure in the beginning the savings won’t seem like much. But after a few years you’ll have a decent chunk of change sitting in that account.

If that money is invested it will grow on its own and earn interest or dividends. After 10 or 15 years, thanks to compounding, this money will earn more than what you’re putting into it. That’s what happened in my experience. I went back and looked at my passive income reports from 2014 and compared them to some recent ones and was astonished at how little passive income I actually earned. At that point I had been investing for about 5 years and was so happy that I might make $2,500 in passive income that year! This year I’m on track to earn $17,000!

The past 5 years has been super busy for my family. We bought our final family home and took on a huge mortgage…nearly $500k! We bought another vehicle, had another kid, had expensive daycare bills and costly home renovations. Throughout it all, I maintained my savings rate but didn’t really add much to it. My investments kept growing and my passive income soared.

Personal finance isn’t about our past, it’s about our future and where we’re going. So what do I see 5 years from now? Well, if I maintain my current savings rate and keep reinvesting my dividends, my passive income will likely double to about $34,000. That’s not bad for doing absolutely nothing…just staying the course. That’s why taking the time to set up an automatic investing plan is so important. Just set it up, forget it, and be amazed 5 years down the road. My experience is by no means extraordinary, anyone can do this and see these same results.