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Dave McGinn resolves to turn his $9,000 into $750,000, a figure the retirement calculators tell him should translate into an annual income of around $40,000. The challenge? He wants to do it in fewer than 10 years, before his daughter even starts Grade 5. (Ryan Hughes)
Dave McGinn resolves to turn his $9,000 into $750,000, a figure the retirement calculators tell him should translate into an annual income of around $40,000. The challenge? He wants to do it in fewer than 10 years, before his daughter even starts Grade 5. (Ryan Hughes)

How to retire early with no money Add to ...

I have a recurring dream. It comes to me when I am slumped at my desk, giving the clock my best Svengali stare, willing the hour hand to move faster. In this dream, I kiss my wife goodbye as she leaves for work and I, pyjama-clad, return to a large plate of waffles that awaits me in the kitchen. My schedule is free and clear, showing only a date with the newspaper and maybe a tee time on the horizon. Perhaps I will learn to play bocce.

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Normally, I snap out of it. I'm 32 years old. I have a home to pay off, a car to fix, and a year-old daughter who one day will want to wear shoes. Retirement, I tell myself, is reserved for those who have worked long and hard. But not today. This is the day I resolve to realize my dreams. I have just over $9,000 in RSP savings. It's not a lot, but I can't help thinking that, with a bit of financial wizardry, I could cultivate a small fortune. It's time to make my money work for me.

I'm actually in a better position for retirement than many of my peers. At least I've started saving. A poll conducted for the Royal Bank of Canada in late October of last year found that 32% of Canadians have yet to even begin tucking away funds for retirement (compared with 24% the year before). The same survey found that a mere 35% of Canadians had contributed, or planned to contribute, to an RSP for the 2009 tax year, the lowest percentage of contributors in more than a decade. "As a whole, Canadians have undersaved for their retirement," Tina Di Vito, the director of retirement strategies at BMO Financial, tells me. The word "understatement" comes to mind.

Even more depressing is the fact that a large number of those ill-prepared Canadians are running out of time. Among the respondents 55 and older, almost half admitted they had yet to start planning for retirement. Even supposing they managed to tuck away $50,000, that will only grow to about $105,000 by the time they hit 65, assuming an 8% rate of return. If these folks have any hope of hanging up their hats any time soon, they have little choice but to take whatever they've got now and swing for the fences.

To which I say, why wait until I'm 55 to make my big move? I could make my Hail Mary pass today and, if I'm successful, I could be signing up for aquafit classes tomorrow. I hereby resolve to turn my $9,000 into $750,000, a figure the retirement calculators tell me should translate into an annual income of around $40,000. The challenge? I want to do it in fewer than 10 years, before my daughter even starts Grade 5.



Like many Canadians, I turn to my local bank branch for answers to my most pressing financial questions: Can I start a Registered Education Savings Plan for my daughter? Can I please get a credit card with a lower interest rate? Are those calendars free? I make an appointment to see the manager, a very professional woman who welcomes me into her spare office with a warm smile. It's a tiny space with a potted fern and one of those posters of an eagle with a quote about inspiration or courage. I can't remember which.

"What can I help you with?" she asks.

Here goes. I explain my plan and ask her what I should do with my nine grand in retirement savings so that in 10 years it will have grown to $750,000?

Did I just make the funniest joke in the world, or was it merely the best zinger ever heard in this branch of one of Canada's big banks? Either way, the manager laughs so heartily, she has to put one hand over her stomach to contain herself. I remain stone-faced.

. Weigh in on whether you would stash some extra money into an RRSP, RESP or a TFSA.

Turning to her computer, she crunches some numbers. If I want to retire in 10 years with an annual income of $40,000, I need to put $4,900 into an RSP each month, she says, assuming an annual rate of return of 8%. Finally, I realize what I should have been doing with that extra five grand I had lying around each month. Good to know.

What if I had access to $50,000? I ask. (I don't want to reveal what scenarios would allow me to come up with such a princely sum on short notice.) Could I turn that into $750,000 in 10 years?

If that's what I want to do, I'm in the wrong place, she says. I need to find a money manager.





Wolfgang Klein, a senior investment adviser at Canaccord Wealth Management, is willing to help me out. Sitting in his office overlooking downtown Toronto, Klein turns to one of the three monitors on his desk, each displaying enough information to make my head explode, and explains that in order to turn $50,000 into $750,000 in a decade I need to achieve an annual rate of return of just over 31%. Not even Warren Buffett gets returns like that, he adds, helpfully. It can be done, he says, but at a level of risk that would make most investors queasy.

"You need to be able to put it all on red," he says. Blue-chip stocks are out, as are bonds and mutual funds, since none of them will come anywhere close to generating an annual compounded return large enough to reach my goal.

Klein suggests investing in one or two junior mining stocks. Several such stocks have been known to go from pennies a share to 10 times that amount in the course of a year. "The problem is, it fails more often than it happens," he says. "You have to have luck and do your homework and know the company inside and out."

Had I come to see him last year, Klein would have suggested I look to commodities. For instance, had I known Ventana Gold Corp. even existed, I could have invested at 14 cents a share in November, 2008, and watched it climb to $9 by early December, 2009. These days, however, the gold market is overheated. As is the market for lithium, which apparently everyone in the world but me knew was the hot commodity of 2009. "You've got to buy it when it's quiet, and sell when it's a riot," Klein says. His knack for turning investing maxims into nursery rhymes is appreciated.

Sensing my desperation, or perhaps my cowardice, he tells me to invest in myself. "If a person wants to make a lot of money quickly, the smartest way to do it is to start up their own company and hope they're successful," he says.

Unfortunately, I lack an idea for said successful company. I scratch my head for a few days, coming up with nothing. Then it hits me: Instead of starting my own company, maybe I can find a guy who already has one-preferably the guy developing the next Rubik's Cube-and who just happens to be looking for $50,000 of seed money. How do I find that guy?



The key is to pick companies that have management you are confident in, and then be patient. Brett Wilson


If anybody has a line on the next million-dollar idea, it's Brett Wilson. As anyone who's ever seen an episode of CBC's Dragon's Den knows, this is what he does for a living. And Wilson is stinking rich. In 1991, he co-founded a successful Calgary-based investment banking advisory firm. Then, two years later, he added some more dough to his pile when he co-founded FirstEnergy Capital Corp., a firm that provides financial advice to Canada's energy sector. Now,

he's the chairman of a private merchant bank, and uses his keen ability to sniff out the next big thing to make some change on the side. Over the phone, I beg him to tell me his secret of success.

"The reality is, you can't pick the winners," he tells me. "All you can do is pick a portfolio, and embedded in that will be a winner or two." But Brett, you pick winners all the time on TV. Pick me a winner.

"I've got lots of things in my portfolio that, over a 10-year cycle, would be worth five or 10 times what I paid for them," he patiently explains, but adds that he's got a lot of duds as well. The key is to pick companies that have management you are confident in, and then be patient. "In most cases I'm looking for a double or a triple over a three- to five-year period," he says.

Wilson suggests I bank my money in a start-up natural gas company. "My gut feel right now is that natural gas is one of the most oversold markets in North America-and one of the least understood," he says. It's "ripe for a cyclical run."

Finding the right early-stage gas company is going to require research, which sounds suspiciously like work. Even thinking about it makes me want to take a nap. In an ideal world, I wouldn't have to rack my brain trying to pick just one natural gas company; there would be some kind of investment product that would allow me to tuck my nest egg into a whole bunch of said companies at once-all the while earning outrageous returns.



"If an index has a great year and goes up 35%, a regular ETF that just tracked an index on a one-time basis should be up pretty close to that." Howard Atkinson, president of Horizons Exchange Traded Funds


As it happens, there is such a product. Exchange-traded funds (ETFs) follow an index of companies but trade like stocks on a major exchange. There are ETFs that track everything from gold to real estate to airlines and, yes, natural gas. Rather than having to pick one company, I figure that the right leveraged ETF should allow me to ride a few natural gas companies all the way to my time-share in Del Boca Vista-in theory at least.

I call up Howard Atkinson, president of Horizons Exchange Traded Funds, a Toronto-based firm and the sole Canadian provider of leveraged and inverse leveraged ETFs. I ask him how I can get in on what appears to be the best game in town.

Atkinson agrees that in rare cases, an ETF could hold the potential of a massive payout. "If an index has a great year and goes up 35%, a regular ETF that just tracked an index on a one-time basis should be up pretty close to that," he says. With leveraged and inverse leveraged ETFs-known in the industry parlance as bull and bear ETFs-the potential earnings would actually be much, much higher. He translates: A bull ETF aims to double, and in some cases triple, the daily gains of the underlying index. (In other words, index goes up 35%, I earn 70%.) An inverse leveraged ETF, on the other hand, does the opposite: It gains in value as the index drops, through a combination of short selling and trading in derivatives such as futures contracts. The only problem? When the index does go in the wrong direction, well, the losses are equally dramatic.

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Still, if I were to purchase a leveraged ETF and ride a strong index trend, it's possible, admits Atkinson, that I could see returns of 600% in a year, with compounding. This is exactly what happened when oil ran up to $147 a barrel in 2008, and also when natural gas cratered from $15 down to $3 in 2009. The question is, would I have the nerve to ride such a wave?

"Very few investors would hold through that entire period," Atkinson says. Leveraged and inverse leveraged ETFs are "not necessarily something that you are going to buy, stuff into your portfolio and ignore for long periods of time."

While I like the idea of anything that comes with a 600% upshot-however rare-the thought of losing anything at all is a real downer. What I need is something tangible, an investment simple enough that a mouth-breather such as myself can understand it. What I need is real estate! Maybe I can become the next Donald, get myself a comb-over and a catchphrase, and a gold-plated hotel with my name on it. If I want all this in 10 years' time, I had better get started now.

For guidance, I turn to Brad Lamb, a man often described as Toronto's condo king. Over the phone, he assures me that real estate is probably the most viable way for me to achieve my goals.

He lays it out: With a pair of $25,000 down payments, I could likely purchase two 400-square-foot apartments in downtown Toronto. In four years, there's a decent chance I could list each of those units for $250,000, assuming the housing market continues to run strong. Using my profits from the sales, I might buy four more such apartments (at a discount from the builder, if I'm smart) and flip those in another four to five years, by which time I should be able to realize another $50,000 per apartment.

"If there's no setbacks, you could get up to maybe $500,000, after tax, in 10 years," Lamb calculates. But while such a strategy appears "foolproof" in a hot market, he cautions that there's a strong chance that house prices will cool off at some point over the next decade. Considering the risk involved, he throws out an alternative.

"You should go to Vegas," he says.



On a cold Monday night in December, I point my Oldsmobile Alero toward Casino Niagara. As I rattle down the QEW, the words of Wolfgang Klein echo in my head: "You've got to put it all on red."

Once inside, having wiped my feet on the plush gaudy carpet, I make a beeline for the first roulette wheel I see, and settle in beside five guys in sports jerseys. I slide $100 in cash-the maximum bet-toward the dealer.

Do I want $5 or $10 chips, she asks?

"Doesn't matter," I say. "It's all going on red." The guys at the table turn and look at me as the dealer passes me a single, black chip. They think I'm either a god or a moron. I promptly slide the chip onto the red section of the mat.

As the ball rattles round the wheel, images of retired life serenade my cortex. Lazy mornings. Crosswords. Tuesday morning tee-offs. Waffles. The ball bounces erratically as the wheel slows, finally settling on...19 red!

I just doubled my investment.

However, if I'm going to retire rich, I need to keep this roll going. I put my black chip back on red, but spread my winnings four ways-the roulette version of an ETF-over the numbers 26, 27, 29 and 30. If the ball lands on any of them, the payout is 8 to 1. The dealer gives me a look not unlike the one my banker gave me, and spins the wheel again.

I'll give you the Coles Notes summary: The ball landed on 33 black and, just like that, my chips were gone. I only lost $100 but I learned a pair of very valuable lessons. One is that my investment adviser was only half-right: You do need to put it all on red. You also need to be prepared to put it on red again and again, except for the times you need to put it on black.

The second thing I've learned is that there are a lot of senior citizens at Casino Niagara on a Monday night. Each is seated at a slot machine, and each has that same checked-out look upon their face. Some of the seniors don't even appear to be playing, just sitting on their stools staring at the machines. If this is what retirement looks like, I think I'd rather be at work.

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