Investing in the stockmarket is not a short-term pursuit.
You only have to look at the richest people on earth and realise their wealth wasn't created overnight. Sure, some have come up with brilliant ideas, such as Facebook and Google, which we all now use on a day-to-day basis.
However, I believe these people are the exception to the rule and many of the richest people we know or meet would have grown their wealth exponentially over time. According to Forbes rich list, only three of the forty richest people on earth are below fifty years of age.
Having money to begin with does help, but even if you (like me) weren't fortunate enough to be born into money, there's one simple way you can greatly increase your chance of retiring wealthy.
For example, let's say you decide today that you want to invest for your future. You have $0 to begin with, but decide $1,000 per month is a manageable amount of money to invest into your stock account.
Assuming you can achieve the Australian stock market's historical yearly average return, which according to AMP Capital's Dr Shane Oliver is 12%pa, then after 50 years your money will be worth over $28.8 million. And that's just the market's average return!
Unfortunately no one knows exactly what the world will look like in 50 years, nor what businesses will still be around from today.
However, three companies which I believe will still be in existence many years from now are BHP Billiton Limited (ASX: BHP) – whose history dates back as much as 150 years, Coca-Cola Amatil Ltd (ASX: CCA) – whose brands are also over 100 years old, and Washington H Soul Pattinson & Co. (ASX: SOL) – a diversified holding company, which first listed shares in Australia in December 1902.
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At best, we can use historical performance to make educated guesses over the likelihood of future outperformance. However, as I'm sure every billionaire on Forbes rich list knows, we don't drive our investment vehicle looking in the rear-view mirror!
