Here's how you can retire by 50, RICH!

All it really requires is a little dedication, patience, self-control and a small but regular sacrifice.

a woman

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The biggest gains made from the share market are those that are realised over the ultra-long term. That's what investing is all about – and that's how the real money is made. By buying stocks at reasonable prices and then letting compound interest work its magic over the years – even decades.

We here at The Motley Fool certainly believe in that notion, and we're proud to have investing great Warren Buffett arguing the same point right by our side.

To quote the man: "We believe that according the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a 'romantic.'"

While our strategy might not necessarily be the 'sexiest' or most exciting form of investing, it is one that history has proven to work. And despite what so many headlines suggest, the 'buy and hold' method will continue to work for as long as humans are investing.

And all it really requires is a little dedication, patience, self-control and a small but regular sacrifice. It really is the greatest way to turn something small into something enormous, as you will see below.

Here's a little method that you could consider employing today to kickstart your investing journey.

And it doesn't even require a huge outlay of cash! In fact, what would be a small investment today could truly change the rest of your life as you know it…

Consider this: You invest $10,000 today – completely ignoring the fact that the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) is sitting near a six-year high – and continue to regularly add cash to your portfolio over the coming years. Let's say $1,000 a month.

Based on the market's average return of 12% per annum, your portfolio could be worth $241,643 in just 10 years' time. If you were to continue making the same contribution monthly over another 10 years, that figure would blow out to $961,092! In 30 years, your portfolio could be worth $3,195,591!

You can see my point – compound interest can truly be a life changer… and the earlier you start investing, the better.

For instance, if you invested that $10,000 as a 20 year old, you could be considering retirement by the time you're 50 (let's face it, most of us would love to spend the last few decades of our life relaxing on a yacht or on a beach in the Bahamas).

And the good news is, it's never too late to start investing! As the old Chinese proverb goes: The best time to plant an oak tree was 20 years ago, the second best time is today.

As I said before however, this method does require patience and self-control. Market fluctuations are normal and they are all part-in-parcel with investing. As it is, there is no such thing as a risk-free stock.

While the market will gyrate (and believe me, it can get scary at times), the market will rise over time – that much is almost guaranteed.

Remember, even through the dot.com bust and then the global financial crisis between 2007-09, the market has returned an average of 12%. Those investors who remain patient and composed will succeed in the long run – regardless of any short-term knocks.

Now, consider the possibility of beating the market's average return. While it's not easy to achieve, it's certainly possible when you invest in quality stocks at reasonable prices.

Say you were to invest $10,000 today (and made the same monthly deposits) and actually managed to achieve an annual return of 15%…

You could have $3,327,112 after 26 years! I know that's a long time to wait still, but compared to the length of the average working life, it's quite an appealing prospect.

And to really highlight how that money is being made, that would mean an initial deposit of $10,000. Total regular deposits of $312,000. And then the total returns made would equate to a massive $3,005,112.

As I mentioned before, now is still the time to be investing in the share market. However, it is highly unlikely that big gains will be coming from Australia's most popular stocks, like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) or even Woolworths Limited (ASX: WOW). None of these are looking particularly appealing at today's prices.

To realise the market's true potential, you need to dig a little deeper, and may want to consider the ideas shared by some of the great stock advisors before throwing your money at potentially worthless investments.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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