Home / How to invest / How I'd aim to turn $10k into $1 million with ASX shares
Want to be a millionaire? Here's one pathway you could take.
- About
- Latest Posts
James Mickleboro has been a Motley Fool contributor since late 2015. After studying economics at university back home in the United Kingdom, James came to live in Australia and managed to land a job at an Australian fund manager. This was the start of a love affair with Australian equities and he hasn't looked back since. James is part of the CFA Institute's Chartered Financial Analyst program and hopes it teaches him how to become an astute investor which allows him to help others with their own investing. Outside of reading and researching he spends many a late night watching the English Premier League and Seinfeld reruns.
Latest posts by James Mickleboro (see all)
- These are the 10 most shorted ASX shares - April 8, 2024
- Buy this high-flying ASX 200 tech stock for a big return - April 8, 2024
- These high-yield ASX dividend stocks can rise 15% to 20% - April 8, 2024
Published
| More on: BRK.B
If you're fortunate enough to be sitting on $10,000 and have no immediate requirements for it, then it could be worth putting it to work for you in the Australian share market.
That's because if you're willing to be patient and take on a bit of risk, this capital could be transformed into a seven-figure ASX share portfolio in the future.
Building wealth with ASX shares
In order to turn $10,000 into $1 million, you would need to generate a 100x return.
That is no easy feat. Sure, you could get lucky and invest in a penny stock that rockets. But for every one of those, there are countless others that will crash and burn and wipe out your capital.
The real way to build wealth with ASX shares is to take a patient, long-term approach.
By focusing on high-quality companies with robust business models and sustainable competitive advantages, investors have generated big returns in the past.
You only need to look at Warren Buffett's record at Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) to see this.
Over five decades, the Oracle of Omaha has grown the company's book value by an average of 19.8% per annum. This is double the market return over the same period.
This level of return would turn a single $10,000 investment in ASX shares into $1 million in a little over 25 years.
Though, it is worth remembering that Buffett's returns are legendary for a reason. Few people can match them.
Leverage compounding
If you were to target a more realistic return of 10% per annum, that $10,000 would become $100,000 after 25 years. It would then take a further 24 years to get to the million-dollar mark.
That might be too long for most people's liking. But don't worry, because if you can spare a little cash each year, you can leverage compounding and potentially get there quicker.
For example, if you were to invest a further $5,000 a year and continued to earn a 9.9% per annum return, it would take you 30 years to become a millionaire.
Alternatively, if you could invest $10,000 each year, your ASX share portfolio would have a market value of $1 million after a touch over 23 years.
All in all, I believe this demonstrates how it is possible to become a millionaire with ASX shares. You just need a plan, patience, and a portfolio filled with high-quality companies.
