I reckon many Australians would love to have a $1 million ASX share portfolio. That represents significant wealth; it’d unlock bountiful passive income and provide financial security.

It can be a fairly simple journey to reach $1 million, but it’s certainly not easy, particularly with a higher cost of living these days. It may not be possible for every Australian, but it’s not impossible.

For starters, full-time working Australians regularly receive superannuation contributions thanks to the mandatory superannuation guarantee (SG). That alone can help plenty of Australians build a nest egg worth hundreds of thousands of dollars (if not millions) over the decades.

But this article isn’t specifically about investing in ASX shares in superannuation. The plan focuses on building wealth outside super, which could be particularly useful for people who want to create financial independence and potentially retire earlier than their mid-60s.

Having a $1 million portfolio could unlock significant cash flow for an investor. For example, with a 4% dividend yield, $1 million could create $40,000 of dividend income. A 5% dividend yield could create $50,000 of annual passive income.

In finance spaces, people talk about a 4% safe withdrawal rate (including probably increasing the withdrawal dollar amount for inflation each year) as being a way to live off the money without it running out during retirement. I like that type of plan, particularly when you consider how the ASX share market has returned more than 4% per year over the long term, so the portfolio balance could continue increasing over the years.

Let’s look at the three steps I’ suggest, and what I’m using, to build towards a $1 million ASX share portfolio.

Get personal finances in order: earn and save

Personal finances are the foundation of a good investment footing.

Earning and saving is what creates the money to invest and the financial stability to stay invested during all economic conditions.

Boosting earnings is one of the best things we can do for our finances.

Of course, growing our income is easier said than done. It could involve taking on some more hours of work, learning a new skill or tool, getting a qualification or creating a second source of work income (either as an employee or as a business).

We don’t need to bring in more income of course, but this is about creating flexibility in the household finances to be able to start building wealth with investments, or else the net worth won’t change.

It could involve a lot of hustling to bring in that second income. As an example, when I first started writing part-time at Motley Fool a decade ago, I was still working full-time in my other job. The extra income helped my household have the cash for investments. Again, it’s a choice of how (or if) we grow our income.

The other side of the coin is the spending. Spending less than we earn is a key factor in reaching a $1 million ASX share portfolio (particularly outside of superannuation).

Someone earning $50,000 and saving $10,000 each year could build their non-superannuation wealth faster than someone earning $150,000 but they only save $5,000 per year.

Motley Fool isn’t a frugal tips website and every household has a different financial picture, so for people who want to reduce spending, you’ll need to figure out what makes sense. But, things like giving Aldi a go for food shopping, making bulk meals, avoiding consumer-related debt, buying second-hand items where it makes sense (such as cars) and so on could make a big difference.

I also think it’s a good idea to have an emergency fund. Start with $1,000 in a savings account and build toward three to six months of living expenses, which is particularly important when a household relies on a main breadwinner. You don’t want to have to sell shares during weak economic times because you need the cash.

Consistently invest in (ASX) shares

Once we have regular monthly savings and an emergency fund, we can start investing in the ASX share market.

Consistently putting money into the stock market is a good routine and helps you buy (more) when the market is weak. I love it when the stock market falls because it means better prices. As Warren Buffett, one of the world’s greatest investors, once said:

To refer to a personal taste of mine, I’m going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the ‘Hallelujah Chorus’ in the Buffett household. When hamburgers go up in price, we weep. For most people, it’s the same with everything in life they will be buying — except stocks. When stocks go down and you can get more for your money, people don’t like them anymore.

Whether it’s investing $500 a month, $1,000 a month, $2,500 a month or even more, I think it’s great to regularly put money into the market. Dollar-cost averaging (DCA) is a great tactic.

What should investors buy? Well, that’s what Motley Fool is all about – helping Australians find the right investments for their portfolio.

I certainly think that exchange-traded funds (ETFs) can form the core part of the portfolio, with additional investments (such as ASX growth shares) being used for potentially stronger returns or extra diversification.

Some ASX ETFs I really like as a ‘core’ investment include Vanguard MSCI Index International Shares ETF (ASX: VGS) or VanEck MSCI International Quality ETF (ASX: QUAL) for global diversification. Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is my preferred pick for Australian investment exposure.

One thing I want to mention is that I avoid margin lending, CFDs and other financial instruments that significantly increase the risk of investing and could lead to a permanent loss of that capital if the bet goes wrong.

Watch compounding work its magic

Investing is great for building wealth because it can grow itself. If something returns an average of 10% per year, it can double in value after approximately eight years. It could then double again in another eight years. And so on.

Compounding is a very powerful force that helps our financial numbers get progressively bigger. The share market has proven it’s an incredible tool for wealth building, even if there’s some volatility along the way.

As Albert Einstein once supposedly said:

Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.

Life doesn’t necessarily work out exactly like a spreadsheet, but I want to show how regularly investing certain dollar amounts could deliver a $1 million ASX share portfolio. Sometimes we may be able to invest more per month and sometimes it could be a bit less.

If someone invested $500 per month and it returned 10% per year, it would turn into $1 million in around 30 years.

Investing $1,000 per month at a 10% annual return would reach $1 million within 24 years.

Investing $2,500 per month with a 10% average return per year turns into a $1 million ASX share portfolio within 16 years.

Finally, investing an impressive $5,000 per month at an average return of 10% per year would become in less than 11 years.

So, what are you waiting for? Get saving and investing!

The post 3 steps to build a $1 million ASX share portfolio appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in VanEck Msci International Quality ETF and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

BHP Group Ltd (ASX: BHP) shares have come under pressure on Tuesday following the release of the mining giant’s latest quarterly update.

The shares are down around 2% to $59.19 as investors digest the company’s operational performance and outlook.

There were some mixed results, but I think the announcement provides several reasons to remain positive about BHP’s future.

Here’s what stood out to me.

A strong performance from iron ore

One thing I liked about the update was the performance of BHP’s Western Australian iron ore operations. Production increased 4% compared with the same quarter last year, despite considerable planned maintenance.

The company also achieved first-quarter production records at both its mines and ports, demonstrating the strength of its integrated operations.

I think that is encouraging because iron ore remains an important source of cash flow for BHP. Keeping these operations running efficiently helps provide the financial resources needed to invest in other parts of the business.

Management also maintained its production guidance for FY27, giving me confidence that operations are progressing broadly as expected.

Copper remains the big opportunity

The copper result was less impressive, with production falling 19% during the quarter. Lower ore grades, scheduled maintenance, severe weather, and operational disruptions all contributed to the decline.

Nevertheless, BHP maintained its full-year copper production guidance. And there was some encouraging news on pricing, with average realised copper prices increasing 53% compared with the same period last year. That could provide a meaningful earnings benefit if prices remain elevated.

Looking further ahead, I continue to believe copper will become an increasingly important part of BHP’s investment case.

Demand from electricity networks, renewable energy, and AI infrastructure should create opportunities for producers capable of supplying large quantities of the metal.

BHP is preparing for that demand. The company announced further progress on its copper expansion plans, including additional funding for the proposed new concentrator at Escondida in Chile.

It also reported an increase in the mineral resource base at Olympic Dam, supporting its longer-term ambitions in South Australia.

I think these developments could help BHP become a substantially larger copper producer over the coming decade.

Another growth opportunity approaching

I was also pleased to see continued progress at BHP’s Jansen potash project in Canada.

Stage 1 is now 87% complete, with first production still expected in mid-2027. I think this could become an important addition to BHP’s portfolio.

Potash provides exposure to agriculture and global food production, giving the company another source of demand beyond its established metals businesses.

There is still considerable investment required, but Jansen is getting closer to becoming an operating business.

Foolish takeaway

I would be happy buying BHP shares following today’s update.

The weaker copper production deserves attention, but I like that management has maintained guidance while continuing to advance its major growth projects.

For me, the combination of strong iron ore operations, growing copper ambitions, and the approaching start of potash production makes BHP a mining share worth owning for the long term.

The post Should I buy BHP shares after its update? appeared first on The Motley Fool Australia.

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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 no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Investing $10,000 in an exchange-traded fund (ETF) could be a great way to build wealth over the long term.

And one of the most popular options on the ASX is the Vanguard Australian Shares Index ETF (ASX: VAS).

But is this an ETF I would choose for a $10,000 investment today? Here’s what I think.

A simple way to own Australian shares

One of the things I like about the VAS ETF is how much exposure it provides through a single investment.

The fund tracks the S&P/ASX 300 Index (ASX: XKO), giving investors access to approximately 300 companies listed on the Australian share market.

That includes some of the country’s most established businesses, such as Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP).

I think there is a lot to like about owning companies like these over the long term.

CBA has a powerful position in Australian banking, while BHP provides exposure to commodities that could benefit from global economic development.

And with hundreds of other businesses included, investors can participate in the broader performance of the Australian share market.

For someone who doesn’t want to spend time researching individual companies, I think that simplicity is a major advantage.

Income and long-term growth

Another reason I like the VAS ETF is the combination of income and capital growth it can offer.

Many established Australian shares pay regular dividends, and the fund passes on income from its underlying investments through quarterly distributions.

These can also include franking credits, which may be valuable depending on an investor’s tax circumstances.

I think that gives the VAS ETF an interesting balance. Investors can receive income along the way while potentially benefiting as the underlying businesses grow their profits and become more valuable.

There is also the benefit of low costs. Vanguard charges an annual management fee of just 0.07%, equivalent to around $7 a year for every $10,000 invested.

Over a long investment horizon, I think that is another reason the ETF makes sense.

Would I invest the full $10,000?

This is where I would consider what else I already own.

Although the VAS ETF holds approximately 300 companies, the Australian share market is heavily concentrated in banking and resources.

That means the fund’s performance can be influenced considerably by the fortunes of those industries. It also provides limited exposure to technology businesses and other industries that are more prominent overseas.

For that reason, I would be more comfortable owning the VAS ETF alongside international investments. I think that would give me a better balance across countries and industries.

Foolish takeaway

I think investing $10,000 in the VAS ETF could be a smart long-term decision.

The fund offers exposure to hundreds of Australian businesses, regular income potential, and very low fees.

I would be happy buying it today, but as part of a broader portfolio that also includes international shares.

The post Is it a smart idea to invest $10,000 into the VAS ETF? appeared first on The Motley Fool Australia.

More reading

• Could $750,000 in ASX ETFs fund a comfortable retirement?
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• Own Betashares ASX ETFs? Here’s your next dividend
• 3 reasons why the Vanguard Australian Shares Index ETF (VAS) is a solid buy

Motley Fool contributor Grace Alvino has positions in Commonwealth Bank Of Australia and Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.