How to turn $50 a week into a six-figure ASX share portfolio

You might assume that you need a high income to build real wealth with ASX shares.

But the truth is far more encouraging. With patience and the power of compounding, even $50 a week can grow into a six-figure investment portfolio over time.

The best part is that you don’t need to time the market, nor do you need to pick the next big winner.

To achieve this goal, you simply need a long-term mindset and the discipline to stick with the plan.

Here’s how it works.

Starting with $50

Fifty dollars a week may not sound like much. That is just $7.14 a day, which is less than the cost of a matcha in Bondi or some takeaway coffees. But when you invest that amount every week, year after year, it begins to build serious momentum.

Consistency is the key. Whether the market goes up, down, or sideways, you keep investing. This is what spreads your risk over time and helps you benefit from dollar-cost averaging, where you naturally buy more units when prices are lower and fewer when they are higher.

The power of compounding

Now for the powerful part: compounding.

If you were to invest $50 a week, or the equivalent of $220 a month, and earn an average return of 10% per year, which is roughly in line with long-term share market returns, your portfolio could grow far larger than you might expect.

For example, after 10 years your portfolio would be valued at approximately $44,000.

If you keep going for 20 years, then your portfolio would be well and truly into six figures and worth approximately $160,000.

And if you want to keep going from here, a further 5 years, bringing the total investment period to 25 years, would see your portfolio grow to approximately $275,000.

The numbers get bigger the longer you stay invested. That’s the magic of compounding, your returns start earning their own returns, and the snowball grows every year.

Keep it simple

You don’t need to take big risks. For most people, a simple mix of broad-based ASX ETFs can do the job. They offer instant diversification, low fees, and access to global companies in a single trade.

Funds like the iShares S&P 500 ETF (ASX: IVV) and the Vanguard Australian Shares Index ETF (ASX: VAS) could be worth considering.

Even if markets wobble, and they certainly will, your long-term compounding engine keeps working quietly in the background.

Foolish takeaway

Building wealth isn’t about being lucky. It is about being consistent.

If you can commit to investing just $50 a week and stay the course through market ups and downs, you could build a six-figure portfolio without needing a high salary or a huge lump sum.

The post How to turn $50 a week into a six-figure ASX share portfolio appeared first on The Motley Fool Australia.

More reading

• Where to invest $10,000 in ASX ETFs this December
• How much of my portfolio should Vanguard Australian Shares Index ETF (VAS) be?
• The 10-year wealth plan: how to turn small savings into life-changing results
• The Warren Buffett golden rule that investors can’t ignore
• The easy set and forget ASX share portfolio I’d build today

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 iShares S&P 500 ETF. The Motley Fool Australia has recommended iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.