The ASX share market can be the ticket to becoming a millionaire in two decades — or even quicker if things go well.

Now, I’m not about to say that investors should jump in and buy the next hottest thing to get rich. That has the potential to turn out badly.

However, investors may be wondering about the best way to become wealthy. Personally, I prefer investing in ASX shares because of how little groundwork is required, and unlike property investment, you don’t have to take on piles of debt to participate.

These days, people can get a decent return from savings accounts. But I don’t think they’re the best choice for growing wealth. Saving is good, but it could take a lot of money to become a millionaire through a savings account.

Let’s say we use a savings account with an interest rate of 3.5%. Someone would need to save around $3,000 per month to get to approximately $1 million after 20 years.

How ASX shares can accelerate wealth

Here’s an example of how ASX shares can produce good returns for investors.

At 31 December 2022, Vanguard Australian Shares Index ETF (ASX: VAS) had returned an average of 8.5% per annum over the prior 10 years. The average has now increased given the exchange-traded fund’s (ETF) recent performance, up around 9% since the start of 2023.

If someone put $2,900 per month into the ASX share market and that investment returned an average of 9% per annum over the next 20 years, this would become $1.78 million.

But, we’re not aiming for $1.78 million.

To get to $1 million, we’d only need to invest $1,650 per month if our investments returned 9% per annum.

What to look out for

The ASX share market is a good place to invest. However, it’s dominated by large bank and mining shares such as Commonwealth Bank of Australia (ASX: CBA), ANZ Group Holdings Ltd (ASX: ANZ), BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO).

These giants are very good at what they do, but they’re already huge, so I’m not sure how much more some of these names can grow.

Smaller companies or those targeting the global economy could have better growth potential over the long term. They have a longer growth runway and more room to re-invest.

I think we can see this with the returns generated by Vanguard MSCI Index International Shares ETF (ASX: VGS), which has returned an average of 10.6% since its inception in November 2014. If this ETF were to achieve the same returns over the next two decades, with its portfolio of global shares, investors would only need to invest $1,370 per month.

Which investment options could outperform?

I believe that there are some ASX growth share investments that can achieve stronger returns than 10%.

Smaller businesses could deliver a lot of growth. I think names like Airtasker Ltd (ASX: ART), Temple & Webster Group Ltd (ASX: TPW), Adore Beauty Group Ltd (ASX: ABY), Lovisa Holdings Ltd (ASX: LOV) and Healthia Ltd (ASX: HLA) could grow a lot over the next decade.

But, there are also some other options that could deliver outperformance. ETFs such as VanEck Morningstar Wide Moat ETF (ASX: MOAT), VanEck MSCI International Quality ETF (ASX: QUAL) and Betashares Nasdaq 100 ETF (ASX: NDQ) could deliver good growth from the current valuations.

The post How to create a million-dollar ASX share portfolio in two decades appeared first on The Motley Fool Australia.

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More reading

• Buying ASX shares as a beginner? Here are 3 things I wish I’d known
• A new bull market is coming: 3 ASX shares I’d load up on before it gets here
• Why did the Vanguard Australian Shares Index ETF lag the ASX 200 in January?
• Need passive income? Turn $5,000 into $800 every month
• Goldman reveals the ASX shares that could surprise to the upside (and downside) this reporting season

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Nasdaq 100 ETF, Healthia, Lovisa, Temple & Webster Group, and Vanguard Msci Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group and Airtasker. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Adore Beauty Group, Healthia, Lovisa, Temple & Webster Group, VanEck Morningstar Wide Moat ETF, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Core Lithium Ltd (ASX: CXO)

According to a note out of Macquarie, its analysts have retained their outperform rating and $1.30 price target on this lithium developer’s shares. This follows the release of the company’s quarterly update. Macquarie was pleased with what it saw and notes that spodumene production is expected to commence during the second half of FY 2023. It expects this milestone to boost its shares when it happens. The Core Lithium share price ended the week at $1.13.

Megaport Ltd (ASX: MP1)

A note out of Goldman Sachs reveals that its analysts have retained their buy rating on this network as a service provider’s shares with a lowered price target of $8.10. Although Goldman wasn’t impressed with operational trends during the first half, the broker remains positive. This is because of Megaport’s clear product advantage versus peers and its decade-long runway for growth. The Megaport share price was fetching $5.97 at Friday’s close.

Telstra Group Ltd (ASX: TLS)

Another note out of Goldman Sachs reveals that its analysts have upgraded this telco giant’s shares to a buy rating with a $4.60 price target. The broker sees Telstra as an attractive option for investors right now due to the defensive nature of telecoms in an uncertain environment. In addition, Goldman has highlighted Telstra’s low risk earnings (and dividend) growth over the coming years and the favourable outlook for the mobile market. The latter follows price rises from competitors. The Telstra share price ended the week at $4.15 today.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

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More reading

• Here’s how I’d start building a second income this February, for $30 a week
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Core Lithium: An ASX 200 share to buy in February? 
• Brokers name 3 ASX shares to buy now
• Tech boom! Buy these ASX tech shares before it’s too late: broker

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Megaport. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re searching for dividend shares to buy when the market reopens, then it could be worth checking out the two listed below.

Here’s why they have been tipped as buys:

Accent Group Ltd (ASX: AX1)

The first ASX dividend share that has been tipped as a buy is footwear and apparel retailer Accent. It is the owner of a growing portfolio of retail brands such as Hype DC, The Athlete’s Foot, Glue, Platypus, Sneaker Lab, and Stylerunner.

Its shares have been on fire in recent weeks thanks to a particularly positive trading update. Goldman Sachs was impressed, commenting:

AX1 has provided a trading update which was a +12% beat on revenue and +35% beat on EBIT for 1H23 vs. GSe. The revenue beat was consistent across key banners, and commentary on trading through January suggests strong trading is ongoing. January and back to school is a key period for AX1, so this gives us confidence in FY23.

In response to the update, the broker has reiterated its buy rating with an improved price target of $2.75.

As for dividends, the broker is forecasting a fully franked dividend of 12.2 cents per share in FY 2023. Based on the current Accent share price of $2.28, this will mean a yield of 5.4%.

Pilbara Minerals Ltd (ASX: PLS)

Another ASX share to consider is Pilbara Minerals. Although the lithium miner has yet to pay a dividend, one is expected to be declared later this month.

This follows the announcement of the company’s capital management framework late last year. This was put into place in response to the miner generating mountains of cash from its lithium. It commented:

A target dividend payout ratio of 20-30% of free cash flow has been adopted by the Company. This target payout ratio is designed to provide a sustainable dividend return to shareholders, but also reflects the early stages of Pilbara Minerals’ growth cycle, with the remaining cash flow able to be allocated to organic and inorganic growth opportunities.

According to a recent note out of Macquarie, its analysts are expecting the miner to be in a position to reward shareholders with a 30 cents per share dividend in FY 2023. So, with the Pilbara Minerals share price currently fetching $4.89, this equates to a 6.1% dividend yield.

Macquarie also sees plenty of upside for the company’s shares with its outperform rating and $7.50 price target.

The post Buy Pilbara Minerals and this ASX dividend share: experts appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 200 lithium stocks that leapt beyond 20% in January
• Can buying Pilbara Minerals shares today create long-term wealth?
• Dividend forecasts: 3 ASX 200 shares with 6%+ yields
• 3 ASX All Ordinaries stocks hitting new 52-week highs today
• Should I buy ASX 200 lithium shares now or not?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX shares are divided into 11 market sectors which are represented by their own ASX 200 indexes.

If we take a look at the year-to-date performance of these 11 sectors in 2023, there are three categories that stand out for share price growth.

Seems like everyone is buying ASX 200 property shares — otherwise known as real estate investment trusts (REITs). Next on the list are ASX 200 retail shares and ASX 200 technology shares.

To date in 2023, the S&P/ASX 200 A-REIT Index (ASX: XPJ) is up 14%. Coming in close behind is the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) which is up 12.9%.

The next sector in line is the S&P/ASX 200 Information Technology Index (ASX: XIJ) with a 10.9% gain.

Are you detecting a pattern here?

Why are these ASX 200 shares rocketing in 2023?

The answer is pretty simple. These three sectors were pummelled the most during the 2022 sell-off, so they’re having the biggest bounceback today in a newly optimistic market.

These S&P/ASX 200 Index (ASX: XJO) shares suffered the most last year because rising inflation and interest rates are particularly impactful in these sectors.

That turned investors off, which meant buyer demand fell, and some even decided to sell.

The result? A substantial fall in the prices of ASX 200 shares in these three indexes.

The technology index fell 34% over the 12 months of 2022, the A-REIT index fell 24%, and the consumer discretionary index fell 23%.

Here’s why these ASX 200 shares were hit hardest among the 11 market sectors.

Generally speaking, rising inflation is bad news for most companies. It means their input costs increase, and if they can’t raise the prices for their products and services, this usually reduces their margins.

In terms of rising interest rates, they hurt the economy on many fronts. Every company and household with debt faces rising costs, and people cut back spending on discretionary items.

Rising rates are especially bad for Australian tech companies and REITs.

Many listed Australian tech companies fit into the growth shares category. That means they’ve typically got a fair bit of debt and are spending a lot to get established while not necessarily making a profit.

Meanwhile, rising rates also bring property prices down because demand goes out of the market. While REITs managing shops, offices, commercial, and residential property can raise the rent when leases turn over, most leases outside residential are multi-year agreements that can’t be changed in the short term.

The ASX 200 appears to be turning

ASX 200 shares have lifted 8.8% already in January. That’s a clear indication of new confidence.

The Reserve Bank told us this week that inflation has peaked in Australia, and recent US inflation news was positive.

If inflation is coming under control, that means interest rates won’t have too much further to go.

That’s got investors excited enough to get back into the market in 2023 and buy the dip while they can.

Which shares in these sectors should you buy?

A good starting point when researching a market sector is to first look at the top ASX 200 shares by market capitalisation to see how they’re performing.

The biggest ASX property share by market cap is Goodman Group (ASX: GMG). It lost 35% in value in 2022. So far in 2023, Goodman Group shares are up by 21%.

The biggest ASX retail share is Wesfarmers Ltd (ASX: WES). Wesfarmers shares lost 23% in 2022. So far in 2023, the Wesfarmers share price is up by 12%.

The biggest ASX tech share is WiseTech Global Ltd (ASX: WTC). The Wisetech share price fell 13% in 2022. So far in 2023, the shares are up by 26%.

The post Which ASX 200 shares are rebounding fastest in 2023? appeared first on The Motley Fool Australia.

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More reading

• Buying ASX shares as a beginner? Here are 3 things I wish I’d known
• 20+ years of growing dividends. Why I plan to buy more of this ASX 200 stock in 2023
• Here’s how I’d start building a second income this February, for $30 a week
• Here are the 3 most heavily traded ASX 200 shares on Friday
• A rare day in the green: Magellan share price soars 5%

Motley Fool contributor Bronwyn Allen has positions in Goodman Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended WiseTech Global. The Motley Fool Australia has positions in and has recommended Wesfarmers and WiseTech Global. The Motley Fool Australia has recommended Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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