How to become a millionaire in just 31 years

Credit: Angie Nan

While people will give a wide variety of reasons for deciding to invest in shares, at the end of the day their motivation is likely to boil down to a desire to earn a decent return on their savings.

These savings will in turn be utilised for a range of purposes such as ensuring a comfortable retirement or providing a head start in life for their children.

While the motivation for investing in shares might be humble for most, it’s amazing to realise that starting from scratch and putting aside a little each week could actually mean that you’re a millionaire within just 31 years!

Consider this

You’ve mastered the concept of ‘living within your means’. This frugality allows you to save $100 per week, every week, – adding up to $5,200 per year.

You invest this into the stock market and earn 10% per annum (pa) – we’ll get to how in a moment.

Then every year for the next 30 years you add another $5,200 to your share portfolio. All told you will have invested $166,400 (that’s 31 x $5,200) and the beauty of compounding your savings at a rate of 10% pa will do the rest. Under this scenario by providing investment gains of $879,516.

Summed together and your total wealth will have ballooned to $1,045,916!

Of course, achieving a 10% compound return over a 31-year period is not easy, but it’s not impossible either.

How do you earn 10% per annum?

If you’re not an experienced investor, then it could be best to seek guidance from someone who is.

A long-term, top ranking fund manager can be a good place to start. For example, Platinum Asset Management Limited (ASX: PTM) – which manages the Platinum International Fund – has achieved a return of 12.6% per annum since the fund’s inception in April 1995.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Bruce Jackson.

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