MENU

The simple way to build a $1.1 million share portfolio

Credit: Angie Nan

If there is one thing that investors shouldn’t expect from the share market it is to get rich quickly. Having this mentality is bound to lead to disappointment.

Rather, investing is the most awesome ‘get seriously rich slowly’ strategy I know.

Wondering where to start?

Here’s a long-term strategy for wealth accumulation which could help you grow seriously rich…

  • Firstly, suppose you can save $10,000 – if you have already – well done, you’re well on your way!
  • Secondly, let’s assume through a diligent savings regime you are able to save $500 every month – this equates to $6,000 per year to add to your share portfolio.
  • Thirdly – and this is where it starts to get a little trickier – imagine you can achieve a return on your investments of 10% per annum. That may sound like a lot, and it is compared with the interest you’d receive on bank deposits, but for many investors it remains a long-term achievable rate of return.
  • Fourthly, we need the “magic” of compound interest to work for our portfolio. This “magic” has the greatest effect the longer we allow the compounding to continue for – so let’s give ourselves 30 years.

This strategy, as outlined above, means in total we save $190,000 to invest into our share portfolio. The beauty of compounding, achieved through a mixture of reinvested dividends and capital gains expands our wealth by an extra $971,458!

Ultimately, after just 30 years, utilising the above strategy you could created a portfolio valued at $1,161,458!

Of course, picking stocks that will give you long-term double digit returns is no easy task but just because it’s hard, doesn’t mean it’s impossible.

Consider the 10-year returns achieved from the following three widely known companies…

Global medical device manufacturer ResMed Inc. (CHESS) (ASX: RMD) has produced a total shareholder return (TSR) of 12.6% per annum (pa).

Global biopharmaceutical developer CSL Limited (ASX:CSL) has achieved a staggering TSR of 23.8% pa.

Global pizza franchise owner Domino’s Pizza Enterprises Ltd. (ASX:DMP) has provided shareholders with a massive TSR of 36.2% pa.

The future still looks bright

While it’s easy to identify top-performing stocks after the fact, it is of course much more difficult to accurately select the future’s top performing stocks.

One of the common themes prevalent across all of the above three companies is that they have global operations which provide a long runway of growth potential. As such, their prospects remain bright.

A Billionaire's Investing Secrets - and 2 New ASX Ideas for You

Whether you're looking to make $1.1 million or setting your goals even higher, Warren Buffett is an investor worth studying...Now you can discover the investing secrets of $60 BILLION man Warren Buffett -- widely recognized as the world's greatest investor. Plus, you'll get two brand new ASX ideas! Your copy of The Motley Fool's brand-new report "The Wisdom of Warren Buffett -- Plus 2 ASX Shares Buffett Could Love" is FREE when you click here.

Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.