If you’re lucky enough to have $50,000 in a savings account and no immediate use for it, then I think you should consider investing it into the share market with a long term view.
This is because you could turn these funds into a life-changing sum thanks to a combination of time and compound interest.
How is this possible?
As of the end of 2019, the Australian share market had provided investors with an average annual return of 9.5% over the last 30 years.
While we may not have started 2020 in a positive fashion, I remain confident that the local share market will deliver a similar level of return over the next three decades.
If this proves to the case, then a $50,000 investment could grow materially over the period.
For example, if you were to invest the $50,000 into the share market and earn the same return, you would have ~$125,000 in 10 years, ~$310,000 in 20 years, and then ~$760,000 in 30 years. That’s all from just a single investment.
If you’re happy with this potential return, then you could simply look to invest in an exchange traded fund (ETF) that tracks the S&P/ASX 200 Index (ASX: XJO). The BetaShares Australia 200 ETF (ASX: A200) allows investors to do this.
Another option is the Vanguard Australian Shares Index ETF (ASX: VAS), which gives investors exposure to the 300 shares listed on the S&P/ASX 300 index.
What if you beat the market?
Now, imagine if you could outperform the share market by a small margin each year.
Instead of an average annual return of 9.5%, what would happen if you achieved a return of 11.5% per annum?
With this level of return, your $50,000 investment in 2020 would be worth ~$150,000 in 10 years, ~$440,000 in 20 years, and a massive ~$1.3 million in 30 years.
While beating the market is hard, it is possible. Shares like REA Group Limited (ASX: REA) and ResMed Inc. (ASX: RMD) have consistently beaten the market over the last 15 years and appear well-positioned to continue this trend over the next decade.
The key is identifying companies with strong business models, positive long term outlooks, and competitive advantages.
I believe the shares recommended below tick a lot of boxes and could put you on a path to becoming a millionaire…
NEW! 5 Cheap Stocks With Massive Upside Potential
Our experts at The Motley Fool have just released a FREE report detailing 5 shares you can buy now to take advantage of the much cheaper share prices on offer.
One is a diversified conglomerate trading over 30% off it’s all-time high, all while offering a fully franked dividend yield of over 3%…
Another is a former stock market darling that is one of Australia’s most popular and iconic businesses. Trading at a significant discount to its 52-week high, not only does this stock offer massive upside potential, but it also trades on an attractive fully franked dividend yield of almost 4%.
Plus, this free report highlights 3 more cheap bets that could position you to profit in 2020 and beyond.
Simply click here to scoop up your FREE copy and discover the names of all 5 cheap shares.
But you will have to hurry because the cheap share prices on offer today might not last for long.
As of 2/6/2020
More reading
- 3 high quality ASX blue chip shares to buy in June
- 3 founder-led ASX shares to buy for strong long-term returns
- 3 investing secrets for success with ASX shares
- ASX 200 investor in your 40s? 3 shares to buy now
- I don’t normally buy ETFs, but I would buy these 2
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited and ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post How to become a millionaire by investing in ASX shares appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/3cuqhQ8
Leave a Reply