The S&P/ASX 200 Index (ASX: XJO) has been on a rollercoaster in 2020 but it could be the perfect time to be an ASX 200 share millionaire.
A number of blue-chip shares have been smashed lower but I think there are good buying opportunities. Here’s how to make your millions from buying and holding high-quality shares for decades.
How to be an ASX 200 share millionaire in 15 years
Dividend yields can be a little bit misleading in times like these. However, I think any dividend cuts will be temporary while valuations have slumped lower.
If we look at a traditional valuation method of discounted cash flows, one year of lost earnings should only lower ASX 200 prices by 10% or so.
However, there are some absolute bargain shares trading much lower than that right now.
Some of the Aussie real estate investment trusts (REITs) could be the key to becoming a millionaire in 15 years. REITs like Scentre Group (ASX: SCG) are down almost 42% in 2020 and are yielding 9.50% at the time of writing.
National Australia Bank Ltd (ASX: NAB) shares have slumped 27.91% this year amid the coronavirus pandemic triggering a bear market.
NAB shares are yielding 6.01% and just posted a $1.4 billion half-year profit. I think the ASX company can continue to churn out strong dividends. That income could quickly compound if reinvested and make you a millionaire within 15 years.
For some retail exposure, Harvey Norman Holdings Limited (ASX: HVN) shares are down 22% in 2020. The Aussie retailer’s shares are yielding 9.70% today and could build your share portfolio quickly.
Let’s say we start with a $75,000 share portfolio in 2020. If our ASX dividend shares can yield 7% per year and still get an average of 5% capital appreciation per year, we could be netting a 12% per year total return.
If we stash away $20,000 per year and reinvest our returns for 15 years, becoming an ASX 200 millionaire could happen sooner than expected.
That $75,000 portfolio could grow to $1,014,385 within 15 years and set the investor up for retirement.
Foolish takeaway
Clearly, this is a simplified example and there are many variables to take into account when investing in real life.
However, a combination of luck and disciplined savings can go a long way in building your wealth. If you want to be an ASX 200 share millionaire, the best way to start is by building a diversified portfolio for the decades ahead.
To help you get started in 2020, here are a few top shares to buy for a good price!
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More reading
- 2 ASX shares to buy for strong retirement income
- Where to invest $20,000 in ASX 200 shares today
- How you can get very rich with ASX 200 shares
- Can gold really protect your ASX share portfolio?
- How I would build a $100,000 ASX portfolio with ETFs
Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post How to be an ASX 200 share millionaire in 15 years appeared first on Motley Fool Australia.
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