Millionaire Interview 6. I have started a series called Millionaire Interviews. There is no better way to learn how to build wealth than from those who have already done so. Along those lines, I ask millionaire bloggers or even millionaires who are not bloggers a series of 11 questions that they answer. The questions are highlighted in bold and the answers are below each question. Hopefully, the answers are enlightening and will help you on your journey to build wealth and attain the $1,000,000 mark and beyond.
The millionaires in the Millionaire Interview series became millionaires at a younger age than the Secret Dividend Millionaires. This comes down to mostly having higher incomes. Second, they are not very frugal to the point of austerity as some of the Secret Dividend Millionaires but certainly save more than they earn and save more than the average person. Lastly, most have multiple sources of income.
Before we start with Millionaire Interview 6, if you are a millionaire blogger or even a millionaire who doesn’t blog and want to be a part of this series, just send me an e-mail or message me on Twitter.
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Millionaire Interview 6 – Financial Freedom Is A Journey
Millionaire interview 6 is with Charles Fournier, a blogger and retiree from Canada who blogs on Financial Freedom Is A Journey. His blog, Financial Freedom Is A Journey, focuses on building wealth and achieving financial independence through better investing. He and his wife reached the $1 million mark somewhere in his mid-40’s after working in the banking industry since the age of 20. They achieved this by having income exceed their expenses and making their money work for them mostly in common stocks of high quality companies. They have also owned real estate rental properties. He describes his current net worth as more than $8 million CAD but less than $12 million CAD excluding their principal residence. Now let’s take a look at Millionaire Interview 6.
- Tell us a little bit about yourself.
I am 61. My wife and I have been married ~32 years and we have 1 young adult.
I was born in the province of Quebec but attended university in Ontario. After graduating in 1980 I accepted a position in Alberta with one of Canada’s major 5 banks. Four years later I returned to university in Ontario to attend business school. After I graduated I returned to the banking world.
I have worked for 3 of Canada’s major 5 banks over the course of my career until I retired at 55.
- What is your net worth? At what age did you become a millionaire? How many years did it take to become a millionaire? Do you have any debt?
I don’t like to disclose too much and on my Financial Freedom is a Journey blog I only disclose a portion of our holdings. As a result, my response to these questions might seem vague.
I have tracked our Net Worth on a semi-annual basis since 2006 – the year in which our Net Worth reached $1 million. At the time I would have been in my mid 40s.
I never really set out to be a millionaire. I set out to be financially free. You can be a millionaire where the cost of living is extremely high and struggle to have a reasonable quality of life. Someone living in a less expensive part of the world, however, can have far less than a million dollars yet they have financial freedom.
I also wanted to be happy. What is the point of having all the money in the world if you’re personal life is messed up and people only spend time with you because you have money?
I started my journey to become financially free the very day (not joking) I started my career in 1980 at the age of 20. I can remember like it was yesterday. After my first day at work I thought ‘I am supposed to do this until when!? Well, this blows.’ I knew I only had one life to live and I envisioned work getting in the way of life.
Total net worth is within CAD $8 – $12 million. A principal residence should be excluded in the net worth calculation unless it is used to generate income. This is because the principal residence is a cash drain (ie. property taxes, utilities, maintenance, mortgage payments, etc.).
Having said this, our principal residence is only ~11% of our total assets. The remaining 89% is in high-quality equities held in multiple investment accounts.
We do not have any debt. Debt is a double edged sword. It works really well when it works and terribly when it doesn’t work.
Debt should only be used to invest in assets that have a strong probability to generate investment returns that exceed the cost of capital. A good margin of safety should be built into your plan so as not to rely solely on the investment returns to service the ongoing debt obligations. In essence, approach your finances like a well run company approaches its finances.
- How did you become a millionaire?
You generate wealth when your income exceeds your expenses. This is not rocket science but so many people just don’t get it. I call this the ‘Can’t Fix Stupid’ syndrome.
If you intend to create wealth just by saving money you will struggle to make progress. Your money must work for you.
We choose to invest in common stocks of high quality companies and do not invest in bonds, preferred shares, crypto currencies, SPACs, MLPs, penny stocks, or anything speculative.
Chasing dividend yield is for fools.
If a company can increase investor returns faster by reinvesting in the business as opposed to distributing dividends then that works for me. Do NOT focus solely on Dividend Kings, Dividend Champions, Dividend Aristocrats or you will miss out on very attractive companies such as Visa (V), Mastercard (MA), Berkshire Hathaway (BRK.B), and Brookfield Asset Management (BAM).
A word of caution – be very, very, very careful if you decide to put all your eggs in the same basket (could be real estate) and that basket is in your line of work.
In early 2007 we were on vacation in Florida. Our daughter was playing with another girl her age in the pool and I got to talking with her father. He had purchased his parent’s real estate appraisal business and business was booming. While in Florida he and his wife decided to purchase a couple of residential condos. So… income from real estate, their largest asset is their principal residence, and their investments are in real estate. In 2007! I never kept in touch with that person but I suspect things did not work out too well.
We have owned some rental real estate but we would have been far better off investing in high-quality companies. We have sold our rental properties within the last 2 years as part of our strategy to simplify our lives.
As noted earlier, my journey to millionaire status began when I started my first full-time job in 1980. My annual starting salary was $14,000. To put this in perspective….my weekly grocery bill was under $40.
Four years later when I left the workforce to return to university my income had increased to ~$25,000.
During these 4 years my expenses were always less than my income. My expenses in year 4 were actually lower than in year 1 because I was sharing accommodation versus renting by myself in year 1.
The money I had saved was sufficient to cover my university costs and I still had money left over to take a 2.5 month ski trip in Europe and to also have ~$10,000 to my name.
- What is your investing philosophy, and do you use a particular strategy?
My investment strategy is KISS (Keep It Simple Stupid). Do the homework upfront and then leave the investment alone.
I was never a very active trader but I did occasionally liquidate a position after it had run up so as to reinvest funds in other companies. I do not do that anymore. I get out of the way.
If the stock price of one of my holdings tanks and my underlying thesis for investing in the company has not changed then I am really not worried. Quite the opposite! I look at the drop in the share price as a potential buying opportunity.I would not change my strategy if I had to start over again.
- What was your best investment? What was your worst investment?
I invested in Visa within a month after its mid-March 2008 IPO, have automatically reinvested the quarterly dividends, and have also periodically added to my position. It is my largest holding and my average cost is sub $17.
I initiated a position roughly 15 years ago in Church & Dwight (CHD), have automatically reinvested the quarterly dividends and have periodically added to my position. It is now my 2nd largest holding. My average cost is sub $16.
You can look at the stock charts for these companies to see how they have performed.
The last time I did a FFJ Portfolio holdings review was in August 2020. In that post I listed my top 30 holdings. I have not disclosed specific percentages because I have several accounts for which I do not disclose details.
My worst investments were nominal in value. Before I knew what I was doing I acquired shares in such ‘dogs’ as Cameco (CCJ), Lorus Therapeutics, and SNC Lavalin. These investments were made such a long time ago but the lessons have stuck with me. I lost a bit of money on the first two and broke even on SNC.
I even invested in Nortel but this is because I acquired a few hundred shares when it was spun off from BCE (BCE). I was lucky to make money with this investment. After I sold my shares at ~$115 the stock price went in a freefall to $0.
Another cautionary tale…a former university classmate of mine was employed by Nortel. At the height of the dot.com bubble he told me he had moved all his investments into high-tech companies. He’s employed in the high-tech industry and his investments are all high-tech companies! Things did not work out well.
In addition to acts of commission I have suffered from acts of omission. Those are far too many to mention. Some of these companies were companies with whom I had dealings over the course of my career. Had I invested in them and never sold the shares I suspect the value of our portfolio might be a bit higher than the current value.
- How much time per day or week do you spend reading financial news and going over your investments?
I spend very, very little time reading financial news. That stuff is entertainment for active traders.
I also spend little time going over my investments. What is there to go over?
I allocate time to looking at company financial statements and earnings presentations for existing holdings and companies in which I may wish to invest. On a couple of occasions we have had a financial advisor review our overall game plan (e.g., risk mitigation insurance such as life, critical illness) but I have always handled our investments.
- What habits helped you become a millionaire?
When we were starting our careers we tracked our daily cashflow to ensure we knew where our money was going. Eventually it became routine and we no longer maintained a spreadsheet. Our spending habits were ingrained in us.
Everyone has a different opinion as to what is frugal. If frugal is not spending money we have not earned, to buy things we don’t want, to impress people we don’t like, then we are frugal.
Buying ‘stuff’ is not what brings us enjoyment. We prefer to spend our money on life experiences.
We don’t have a budget per se. We’re just not people who spend a ton of money. Our expenses are really not that complicated so it is pretty easy to plan. We know our cash inflow and we make it a point to spend less than our income.
I am eligible to collect a government pension and my wife will be eligible to start collecting in a couple of years. We will, however, wait another decade before we start collecting as we don’t need that income now.
We are at a point where we will need to start ‘melting down’ our retirement accounts otherwise we will face significant annual personal tax liabilities if we delay our withdrawals another decade. As we ‘melt down’ our retirement accounts over the next decade, our annual expenses should be less than what we withdraw from our retirement accounts. We will add surplus cashflow to our taxable accounts to invest in high quality companies so as to generate additional income and capital gains.
- What are your three favorite books related to investing, personal finance, retirement, and financial freedom?
Here are 4 I enjoyed reading.
The Millionaire Next Door: The Surprising Secrets of America’s Wealthy
Daring to Succeed – How Alain Bouchard Built the Couche-Tard and Circle K Convenience Store Empire
Damn Right! – Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger
The Snowball: Warren Buffett and the Business of Life
- Why do you blog about your investing and journey to millionaire status and financial freedom?
I created Financial Freedom is a Journey to:
- interact with interesting people from various parts of the world;
- act as a sounding board for people desiring to achieve financial freedom;
- occupy myself during retirement;
- teach our daughter.
- Besides investing what else do you like to do?
I enjoy physical activities. Prior to the COVID pandemic I would be at the gym 2 -3 hours/day almost daily. When the gyms closed in March 2020 I took up lengthy bike rides/hikes almost daily.
We enjoy travelling and hope to resume this activity once it is safe to do so.
My wife and I also have (and had) elderly parents who live a few hundred kilometers from us in opposite directions. Being financially free with no set schedule has afforded us the luxury of being able to travel to see them on a moment’s notice.
- Anything else you would like to add?
These are just random thoughts that come to mind.
Don’t believe it when someone says everyone can become a millionaire. If everyone could then everyone would be one. Furthermore, how do you explain how people can inherit sizable sums of money or win lotteries yet within a few years they are broke?
Stating you want to become a millionaire is not a goal. It is wish. Wishes rarely come true.
What do you want from life? You must set goals that are:
Once you have a goal then define your short, medium, and long-term objectives.
If you want to become a millionaire in 20 years from the present day you have to realize that the value of a million dollars is far, far less 20 years in the future. Furthermore, a million dollars has very different significance depending on your lifestyle and where you live.
Strive to have enough money so you can help other people without expecting anything in return.
Most people are like a hamster running on a wheel. The faster we run, the faster the wheel turns. This is not sustainable.
We occasionally hear someone say they ‘love their job’. If this is the case they should tell their employer they are prepared to work for no remuneration.
If the goal is to become financially free then all family members have to be on board.
Regardless of our financial position in life, a Will and a Power of Attorney over health and another over wealth are mandatory.
Do NOT view your principal residence or cottage as an asset as explained earlier.
Assets do not necessarily have to generate income but should, at the very least, not be a drain on your cashflow. Shares in a high-quality non-dividend paying company, such as Berkshire Hathaway, is an asset because it has the potential to provide a positive investment return and does not require a continuous cash outflow.
Investing should only begin after you have no debt other than your mortgage. If, for example, you are paying 21% interest on your credit cards you can generate a far greater return with 100% certainty than you can generate from a legal equity investment.
Leasing a vehicle is a terrible idea. Drive a less expensive vehicle if you can’t pay cash.
Limit your equity investments to high quality companies.
Think like a business owner.
Do not day trade.
Monitoring stock charts throughout the day is not investing.
Imagine that you have a punch card with ~30 punches and every time you invest in a company you use up one punch. You will make wiser investment decisions.
An investment consists of potential returns/potential risks. Know your risk tolerance.
If you manage your family’s financial affairs and could suddenly no longer do so, could someone step in and easily figure out what you have been doing?
Final Thoughts on Millionaire Interview 6
I hope you enjoyed reading about Charles Fournier and Financial Freedom Is A Journey in Millionaire Interview 6. Check out his blog at the links above. There are good articles on individual stocks. His story shows that by knowing and managing your income and cash flow you can save more than you earn and use that money to invest to build wealth. Charles invested in common stocks of high-quality companies and this has turned out well for him and his family over time. He has shown that it is possible to reach $1 million somewhere in your mid-40s. Even if your income level is not high it is possible to attain a lower dollar value as your goal.
In an earlier article I identified the three principles of dividend millionaires: spend less than you earn, invest your savings, and reinvest the dividend. Your odds of becoming a millionaire are about 3.6% in the U.S. Achieving FIRE is a process. But I would argue that through careful planning, high saving rates, and investing you can improve your odds. Charles Fournier in Millionaire Interview 6 has showed us it is possible at a fairly young age of before 50 in Millionaire Interview 6. Recall, in the U.S., the average net worth is about $728k in 2016 dollars for those between 35 and 44 years old. I have written previously on net worth targets by age.
As a final note, I have another series called Secret Dividend Millionaires. This one is about ordinary people who became millionaires by investing in dividend paying stocks for the most part. Most of these people were only discovered after they died and left their money to charities and other non-profit organizations. Often, they became millionaires through very frugal if not austere living, investing their savings in stocks that paid dividends, and reinvesting the dividends.
You can read Millionaire Interview 5 – Banker on FIRE as well.
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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.