Could investing $10,000 in ASX shares make you a millionaire?

Many readers are likely to aspire to being a millionaire one day.

While there are many ways to achieving this goal, one method that has created countless millionaires is investing in ASX shares.

But could you really get there by investing $10,000? Well, the answer is yet, depending on your investment time horizon.

Turning $10,000 into $1 million with ASX shares

The power of compounding and time are your two best friends when it comes to investing. When these two combine, good things happen.

Historically, the share market has generated an average annual return of 10% including dividends.

Were it to do the same again in the future, a single investment in $10,000 could grow into something significant in time if you’re patient enough.

For example, thanks to time and compounding, $10,000 would turn into over $40,000 in 15 years if you averaged a return of 10% per annum and reinvested your dividends.

But clearly, $40,000 is still a long way from that millionaire status we are aspiring to.

Well, unfortunately, without making any further contributions, you would have to sit very patiently to reach this level.

In fact, it would take just over 48 years in total to grow $10,000 into $1 million with ASX shares and a 10% per annum return.

If you’re 21, then this means that you could have a million-dollar portfolio around the time you reach retirement age. That certainly would be a nice nest egg to combine with your superannuation.

But what if you wanted to get there sooner? Let’s look at making extra contributions.

Making a million quicker

Getting to $1 million quicker will depend upon your available income.

If you are able to start with a $10,000 investment and then make $500 contributions each month, it would take approximately 28 years to get there.

Think you could manage $1,000 investments each month? Great, because that would knock off about six years and take just over 22 years to get to $1 million.

Finally, if you’re lucky enough to have $2,000 available to invest monthly, then you need a touch of 16 years to grow your portfolio to millionaire status.

Which ASX shares should you buy?

History has shown that a focus on high-quality companies with strong business models has delivered great results.

Companies like CSL Ltd (ASX: CSL), Goodman Group (ASX: GMG), and Xero Limited (ASX: XRO) could tick these boxes and may be worth further investigation.

But the main key to success is to find the plan that suits you (and your budget) and stick with it through the long term. You will no doubt be thanking yourself for doing so in the future as your wealth builds.

The post Could investing $10,000 in ASX shares make you a millionaire? appeared first on The Motley Fool Australia.

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• ASX 200 re-writes history. Which companies are leading the charge?
• How a $10,000 investment in this ASX 200 stock ballooned to $17,460 in FY24!
• CBA and 7 other ASX 200 shares smashing new highs on Thursday

Motley Fool contributor James Mickleboro has positions in CSL and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Goodman Group, and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended CSL and Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.