How to become a millionaire with $10,000 on the ASX

Credit: Pictures of Money

Turning $10,000 into $1 million dollars may seem like an unthinkable task. But given time, the right investments, and a bit of luck, it can certainly be achieved.

Time is definitely a big factor here. The longer you’ve got, the easier it becomes. Starting out with $10,000, I believe you would need an investment time horizon of at least 20 years.

With a 20-year investment time horizon, you would need to average a return of 26% per year over this period of time:

$10,000 x (1 + 26%) ^ 20 = $1,017,210.

Achieving an average return of 26% over such a long period of time is almost impossible. But there are many shares on the Australian Stock Exchange which have provided this level of return for shareholders in the last 10 years.

For example, shares that we know and love like Domino’s Pizza Enterprises Ltd. (ASX: DMP), TPG Telecom Ltd (ASX: TPM), and REA Group Limited (ASX: REA), have all provided shareholders with returns in excess of 26% per year for the last 10 years.

But that was then, what about now?

The great news is that there are a number of shares on the ASX which I believe could be capable of providing this level of return for at least the next decade. After which there will no doubt be a huge collection of new shares on the ASX to choose from for the second part of the journey.

I expect an investment in one of these three shares will provide strong returns for investors in the next 10 years. Although, whether any produce truly spectacular returns is impossible to know.

Catapult Group International Ltd (ASX: CAT)

Sports analytics company Catapult is a real favourite of mine. I have been very impressed with its great products, growing client list, and extremely low churn rate. Management has estimated that the addressable market it operates in will be worth $4.7 billion in a few years. With Catapult being one of the market leaders, I believe this gives the company plenty of room for growth.

iCar Asia Ltd (ASX: ICQ)

Online automotive classifieds business iCar Asia is the Carsales.Com Ltd (ASX: CAR) of Malaysia, Thailand, and Indonesia. With a combined population of around 350 million, I expect this to be a very lucrative market in the future as internet penetration rates gradually rise in line with Australia’s 85% of population. iCar is the leading player in these markets by some distance, which I believe will help it make a real success of the monetisation of its services.

Money3 Corporation Limited (ASX: MNY)

Money3 is currently an Australian credit provider for personal and car loans. In its half-year report it reaffirmed its full year guidance of net profit after tax of $19 million, up 36.3% year-on-year. The added bonus with Money3 is that it is expected to pay an estimated fully franked 6.2% dividend in FY 2016.

There is a fourth share which I believe could help you become a millionaire. I feel this exciting tech share has what it takes to provide investors with huge returns in the future.

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Motley Fool contributor James Mickleboro 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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