8 Is Great: How an 8% Return Can Fast-Track You to a Million-Dollar Retirement
Forget 4%. Why aiming for 8% is the ultimate wealth-building hack Canadians need to hit $1M faster.
Why 8 Is Your Magic Number
If I told you there’s a simple formula that could turn your nest egg into $1,000,000 faster than you ever thought possible, would you believe me? It’s not a get-rich-quick scheme, it’s not crypto hype, and it’s not about timing the market. The secret is three characters long: 8%.
That’s right—8 is great when it comes to building wealth for retirement. While most Canadians are told to expect 4–6% annual returns on their investments, bumping that number just a bit higher—to 8%—can completely transform your financial trajectory. And the best part? It’s achievable with the right mix of strategy, discipline, and tax efficiency.
Today, I’m going to show you why 8% is the sweet spot, how it gets you to $1M faster, and the practical steps every Canadian can take to aim for it—without swinging for the fences or taking reckless risks.
Why 8% Is the Game-Changer
Here’s a truth that isn’t talked about enough: the difference between a 5% return and an 8% return is not just a few percentage points—it’s the difference between retiring comfortably in your 60s and wondering if you’ll outlive your savings.
Let’s run the math:
If you invest $500/month for 35 years at 5%, you’ll have about $570,000.
Do the exact same thing at 8%? You’ll end up with $1.1 million.
That’s double the wealth, simply because your money compounded faster. No doubling your savings rate. No side hustle grind. Just aiming for a smarter return.
This is the power of compounding: when you hit 8%, your money snowballs at an exponential pace. That’s why 8 isn’t just a number—it’s a milestone.
Why “Safe” Returns Might Not Be Safe at All
Conservative advice often tells Canadians to stick to “safe” returns—think GICs or bonds at 4–5%. While these options might feel comfortable, the truth is that low returns carry their own risks:
Inflation Risk: At 3% inflation, your 5% GIC barely grows your wealth in real terms. At 8%, you’re building real purchasing power.
Longevity Risk: Canadians are living longer—retirement could last 30 years or more. A 5% return may not sustain that.
Lifestyle Risk: A too-cautious portfolio means less money for travel, family support, or even healthcare later on.
Ironically, being “too safe” could be the riskiest move of all.
How Canadians Can Aim for 8%
So how do you realistically achieve 8%? It’s not about speculation—it’s about using the full Canadian playbook.
1. Maximize Your TFSA (Tax-Free Savings Account)
The TFSA is Canada’s ultimate wealth hack. Gains compound tax-free, withdrawals are tax-free, and contribution room keeps growing every year.
Invest it in growth assets like broad-market ETFs (e.g., VEQT or XEQT) that historically deliver 7–10% annually over long horizons.
Don’t waste TFSA space on cash or GICs. Think of it as your 8% engine.
2. Use RRSPs to Supercharge Compounding
Contributions reduce your taxable income today (hello, refund), and investments grow tax-deferred until you withdraw.
Inside your RRSP, stick to diversified equity ETFs or dividend-growth stocks.
If your employer matches contributions, treat it as free money—a guaranteed boost to your return.
3. Diversify Beyond Canada
The TSX is heavy on banks and energy. To aim for 8%, Canadians must go global.
U.S. tech and healthcare stocks, plus international exposure, offer growth engines that Canada alone can’t match.
Use all-in-one ETFs like XAW for global coverage.
4. Add a Dividend Growth Strategy
Canadian dividend stocks (think the Big 5 banks, telecoms, utilities) regularly pay 3–5% dividends and grow payouts over time.
Combine this with capital appreciation, and suddenly that 8% return isn’t so far-fetched.
Even better: dividends in a non-registered account qualify for the Dividend Tax Credit, boosting after-tax returns.
5. Leverage Dollar-Cost Averaging
Don’t stress about timing the market. Consistently investing monthly—rain or shine—smooths out volatility and captures long-term growth.
Over decades, this discipline turns market dips into buying opportunities.
Real-World Example: The $1M Blueprint
Let’s make this real.
Case Study: Sarah, 35, Toronto
Current savings: $20,000 in a TFSA
Monthly contributions: $750
Investment strategy: 80% equity ETFs, 20% dividend stocks
Target return: 8% annually
By age 65, Sarah’s portfolio could hit $1.05M.
Now, imagine Sarah had settled for 5%. She’d end up with $665,000—a huge difference.
That’s what aiming for 8% does: it doesn’t require you to work harder or save drastically more. It simply requires smarter, more tax-efficient investing.
The Emotional Side of 8%
Money is math—but it’s also emotion. For many Canadians, the difference between 5% and 8% isn’t just numbers—it’s confidence, freedom, and peace of mind.
At 5%, you’re always calculating, worrying about whether your savings will last.
At 8%, you feel in control, knowing your money is working as hard as you are.
This confidence matters. It allows you to plan family trips, support your kids, or consider early retirement without second-guessing every dollar.
But Isn’t 8% Risky?
This is where mindset matters. 8% isn’t reckless—it’s realistic.
The S&P 500 has averaged 10% annual returns for nearly a century. Global equities have done similarly. The Canadian Couch Potato model (balanced ETF portfolios) often returns 6–9% depending on risk tolerance.
The key isn’t chasing hot stocks—it’s staying invested, diversified, and disciplined. In fact, the riskiest move might be aiming too low.
Key Takeaways: Your 8% Action Plan
“8 is great”—the difference between 5% and 8% is the difference between $600K and $1M.
Use TFSAs and RRSPs to shield growth from taxes.
Invest in growth assets like global ETFs and dividend-growth stocks.
Stay consistent with dollar-cost averaging.
Don’t fear volatility—over decades, the market rewards patience.
The Million-Dollar Question: Where Do You Start?
The truth is, aiming for 8% doesn’t require you to be a market genius. But it does require a plan tailored to your life. Everyone’s situation is different—your income, family obligations, debt load, and risk tolerance all matter.
That’s why working with a financial advisor can be the game-changer. They’ll help you:
Structure your TFSA, RRSP, and taxable accounts for maximum efficiency.
Build a portfolio designed to realistically aim for 8%.
Keep you disciplined when markets test your resolve.
If your goal is a million-dollar retirement, don’t leave it to chance. Partner with a financial advisor who can turn “8 is great” from a slogan into your reality.
Final Thought
Here’s the bottom line: retirement isn’t about luck—it’s about math and discipline. And in that math, 8 is the magic number.
By aiming for 8% returns through smart, tax-efficient investing, you can shave years off your journey to financial freedom. You’ll build not just wealth, but peace of mind.
Because at the end of the day, you don’t just want to retire—you want to retire well. And with 8 on your side, you’ll have the confidence to do exactly that.
Disclaimer: This analysis is for informational purposes only and does not constitute financial advice. Investors should conduct their own due diligence and consult with a financial advisor before making investment decisions.