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The ‘lazy way’ to make a million dollar fortune

While there will always be the lucky investor who strikes it rich on a speculative mining stock, as a strategy, trying to get rich quickly is bound to lead to disappointment.

Rather, investing is best viewed as a tried and tested way to ‘get seriously rich slowly’.

Consider this!

Let’s assume you can save an initial $10,000.

Next, let’s assume through a diligent savings regime you are able to save $500 every month – this equates to $6,000 per year of additional funds for investment into shares.

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 (pa). That may sound like a lot, and it is compared with the interest you’d receive from your bank, however, as we’ll see in a moment it’s definitely not impossible.

Finally, we’ll need to utilise the “magic” of compound interest. This “magic” has the greatest effect the longer we allow the compounding to continue. In this instance we’ll need 30 years.

The strategy, as outlined above, means in total we save $190,000 to invest into a share portfolio.

The beauty of compounding, achieved via reinvested dividends and capital gains expands our wealth by an extra $971,458!

So, after just 30 years, your share portfolio could ultimately be worth $1,161,458!

Of course, picking stocks that will give you long-term double digit returns is no cinch, but then again it’s certainly not impossible.

Consider the 10-year total shareholder returns (TSR) achieved by the following three stocks for instance.

  • Cochlear Limited (ASX: COH) has produced a TSR of 12.2% pa.
  • SEEK Limited (ASX: SEK) has achieved an impressive TSR of 15.3% pa.
  • Navitas Limited (ASX: NVT) has provided shareholders with a TSR of 16.4% pa.

Which shares might be your best bet for the next 10 years?

How 1 Man Turned $10K Into Over $8 MillionDiscover how one man turned a modest $10,600 investment into an $8,016,867 fortune. Learn more about this man and how you can start down the path toward financial independence. Simply click here to learn more.

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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