All investors? dream of becoming rich on the stock market, and yet very few people ever manage to achieve it.
Many even disregard it as an impossible task ? one that only the ?professionals? with millions or even billions of dollars of capital at their disposal can achieve.
That?s usually because other things in life tend to get in the way.
I bet that sounds familiar?
For instance, the overdue bills, the children?s education and various other financial hurdles.
So when I tell you that you could quite easily make a million dollars by investing in the stock market, you?ll probably just laugh. Heck,…
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All investors’ dream of becoming rich on the stock market, and yet very few people ever manage to achieve it.
Many even disregard it as an impossible task – one that only the “professionals” with millions or even billions of dollars of capital at their disposal can achieve.
That’s usually because other things in life tend to get in the way.
I bet that sounds familiar…
For instance, the overdue bills, the children’s education and various other financial hurdles.
So when I tell you that you could quite easily make a million dollars by investing in the stock market, you’ll probably just laugh. Heck, you might even question my sanity!
But the fact is, anybody can achieve it. You don’t even necessarily need luck to be on your side, provided that you can remain patient, composed and maintain an element of self-control.
The rest is quite simple. And it doesn’t even require a huge deposit to achieve! In fact, what would be considered a small investment today could see you become a millionaire in just 19 years!
Below, I’ll show you exactly how you can make that work for you…
But first, you should know that this is an extremely easy – some might even call it lazy – way to getting rich. More often than not, all you’ll need to do is twiddle your thumbs and resist the temptation to act.
That’s why a high level of patience and self-control are both needed…
Because the stock market can be one hell of a volatile place, and those investors who are going to crack under pressure when the going gets tough are going to struggle to realise their true potential.
To make this work, you need to be committed to the long term. That is, you need to ignore the market’s sometimes-violent mood swings and stick to your guns on your stable of high quality investments.
What you need to remember is that despite these fluctuations, the Australian stock market has still managed to rise an average 12% per annum since 1900. And yes, that’s even including the Great Depression, the Dotcom bust and the more recent Global Financial Crisis.
Even with the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) now trading at a multi-year high, now is still the time to be investing in high quality stocks for the long term.
Now that I’ve reiterated just how vital patience and self-control are to making this work, I’ll show you exactly how this can be achieved…
Making your $1 million
To begin with, you’ll need to set aside $10,000 and commit to an additional $250 on a weekly basis. I know right now that might seem like an impossible amount, but keep on reading and you’ll see how small it actually is in the scheme of things.
Remember how I said the market had achieved an average return of 12% per annum over the last century?
Imagine if you were to employ this method for even just one year. Your portfolio would be worth $25,008 after just 12 months.
Extend that over five years, and you’d have more than $100,000! O r$106,642, to be exact…
Already you can see that the gains are starting to pick up the pace…
But check this out. If you were to follow this method over just 19 years – averaging the market’s returns and depositing just $250 weekly – your portfolio would be worth a massive $1,035,546. That’s right, you would have become a millionaire in just 19 short years.
And that’s if you were keeping level with the market. Market-beating returns are by no means out of your reach!
I’ll show you a little more on how you can do that shortly…
But first, let’s take a look at another quick example. Imagine if you were to follow the exact same process as before. That is, initially depositing $10,000 and making a $250 deposit on a weekly basis.
This time however, imagine achieving an average annual return of 14%. While you could actually have your first million after just 17 years, your portfolio could instead be worth an incredible $1,355,151 after 19 years. Keep that up for 30 years even, and you’d have more than $6,600,000.
The possibilities truly are endless…
‘How is this even possible?’ I hear you asking…
This method has been recognised and employed by some of the greatest minds in the history of humanity.
Albert Einstein, for instance, once described it as ‘the eighth wonder of the world’.
It is also one of the key factors behind the success of investing greats like Warren Buffett and Peter Lynch.
The method that I am speaking of is a phenomenon known as compounded returns. In other words, you can make your money work for you – and earn interest on any interest earned along the way.
Now all you need to do is pick the right stocks!
At their current valuations, I somehow doubt it’ll be the usual stock picks that get those sort of results. I’m talking about blue chips like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) or Woolworths Limited (ASX: WOW).
Instead, I think the real money will be made from some of the nation’s smaller growth stocks.
For a few ideas of which stocks could deliver market-smashing returns in the long-run, I urge you to take a look at these two articles.
Alternatively, The Motley Fool’s top advisors have also uncovered another small-cap stock with fantastic growth potential which is well worth checking out.
In addition to fantastic growth potential, it offers a 7% grossed-up dividend yield! Our top analyst recently dubbed it, "The Motley Fool's Top Dividend Stock For 2014 - 2015". Best of all: You can get the name and code of this ultra-promising stock for FREE! Just click here to download your free copy of "The Motley Fool's Top Dividend Stock for 2014-2015" today.
Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.