How to turn $250 a month into a $500,000 ASX share portfolio

Whenever I think about long-term investing, I always come back to Warren Buffett. Not because I’m trying to copy his stock picks, but because his story shows what really matters.

Buffett didn’t get rich quickly. In fact, most of his wealth was built later in life. The secret wasn’t some hidden formula. It was owning good businesses, reinvesting returns, and giving compounding decades to do its thing.

That same approach can work for everyday investors, even if you’re starting with something as modest as $250 a month.

Why I think consistency wins

I don’t believe you need to be a genius to build wealth in ASX shares. What matters far more is showing up consistently.

Putting $250 a month into ASX shares won’t feel exciting in the early years. I know that because I’ve watched how slowly portfolios grow at the start. Most of the progress comes from your own contributions, not market returns.

But that’s fine. The real goal early on isn’t performance. It’s building the habit.

Regular investing also takes a lot of stress out of the process. You’re not trying to time the market. You’re not guessing when to buy. You just keep investing through the ups and downs, which quietly works in your favour over time.

How I think about compounding

Compounding is one of those concepts that sounds technical but is actually very simple.

Early on, you are doing all the work. Your monthly investments matter far more than what the market does.

Later on, something shifts. Your portfolio gets big enough that your returns add more value than your annual contributions and growth starts to feel faster, even though you’re doing the same thing as before.

This is exactly what happened with Buffett’s long-term holdings like Coca-Cola and American Express. The real wealth wasn’t created in the first decade. It came much later, after years of steady compounding.

How I’d apply this to ASX investing

If I were starting from scratch today, I wouldn’t overcomplicate it. I’d focus on building a diversified ASX portfolio, reinvesting, and sticking with the plan.

I would buy quality ASX shares like CSL Ltd (ASX: CSL), Hub24 Ltd (ASX: HUB), and Wesfarmers Ltd (ASX: WES), and hold them for the long-term.

Long-term results tend to come from a few simple behaviours: investing every month no matter what markets are doing, staying invested during downturns, reinvesting income, and not constantly changing strategy. Trying to be too clever usually just gets in the way.

What could $250 a month turn into?

If someone invested $250 a month and achieved an average return of 9% per year, over roughly 32 years they would contribute about $96,000 in total.

Thanks to compounding, that ASX share portfolio could grow to $500,000.

What stands out to me is that the majority of that final balance doesn’t come from the money invested. It comes from time. Time in the market really does the heavy lifting.

Foolish takeaway

Turning $250 a month into a $500,000 ASX share portfolio isn’t about chasing the next big winner. It’s about adopting the same mindset that’s worked for investors like Warren Buffett for decades.

Start early enough. Be consistent. Focus on quality. Let time do the rest.

The post How to turn $250 a month into a $500,000 ASX share portfolio appeared first on The Motley Fool Australia.

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• I’d buy 328 shares of this ASX 200 stock to aim for $1,000 a year

American Express is an advertising partner of Motley Fool Money. Motley Fool contributor Grace Alvino has positions in CSL, Hub24, and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Hub24, and Wesfarmers. The Motley Fool Australia has recommended CSL, Hub24, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.