How to become a millionaire with ASX shares starting with $0

Starting with $0 does not mean the end goal has to stay small.

In fact, I think one of the most encouraging things about investing is that the starting balance is only one part of the story. The bigger drivers are the amount added over time, the return earned, and how long the money is left to compound.

That is where ASX shares can be powerful.

Start with the first $100

If I were starting from scratch, I would not focus too much on the $1 million target at first.

I would focus on the first $100 invested.

Then the first $1,000.

Then the first $10,000.

That might sound too simple, but I think this is how most real wealth is built. Not through one dramatic decision, but through repeated small ones.

The first stage is about getting money into the market and building the habit. A diversified ASX exchange-traded fund (ETF) like the iShares S&P 500 AUD ETF (ASX: IVV), a broad global ETF like the Betashares Global Quality Leaders ETF (ASX: QLTY), or a handful of quality ASX shares could all play a role.

The key is to avoid waiting for the perfect moment.

Let the portfolio do more of the work

The early years can feel slow because most of the progress comes from contributions.

But over time, the balance starts doing more of the heavy lifting.

For example, an investor putting in $1,000 a month would contribute $12,000 in the first year. At that stage, the investment returns may not look life-changing.

But once the portfolio reaches $200,000, a 9% return would represent $18,000 in a year. At $500,000, the same return would represent $45,000.

That is when compounding starts to feel very different.

Of course, a 9% annual return is not guaranteed. Some years will be negative, and some will be much stronger. But as a long-term assumption, I think it shows why time in the market matters so much.

The millionaire maths

Here is what the path could look like from a $0 starting point, assuming a 9% average annual return.

Investing $500 a month could reach $1 million in about 32 years.

Investing $750 a month could reach $1 million in about 27 and a half years.

Investing $1,000 a month could reach $1 million in about 24 and a half years.

Investing $1,500 a month could reach $1 million in about 20 and a half years.

The lesson I take from this is not that everyone needs to invest a huge amount from day one.

It is that every increase in the monthly investment can bring the target closer. Even small raises, bonuses, or reduced expenses can help if they are redirected into the portfolio.

Foolish takeaway

Starting with $0 can feel like a disadvantage, but it also gives investors the chance to build good habits from the beginning.

The aim is not to become a millionaire overnight. It is to create a system that keeps buying productive assets month after month.

If the portfolio earns an average return of 9% per annum over the long run, regular investing could do much of the hard work.

That is why I think the most important step is simply getting started, then giving compounding enough time to surprise you.

The post How to become a millionaire with ASX shares starting with $0 appeared first on The Motley Fool Australia.

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• Want to fast-track retirement? These ASX ETFs could get you there
• All-weather ASX ETFs to buy if the market crashes 20%

Motley Fool contributor Grace Alvino 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.