Becoming a millionaire is an aspiration that many Australians have.
Whilst the quickest way to achieving millionaire status would be by winning one of the lotteries run by Tabcorp Holdings Limited (ASX: TAH), the odds are certainly not in your favour.
Another way to become a millionaire is to invest patiently and smartly in the share market.
As I have revealed previously, investments of just $20,000 in the shares of fund manager Magellan Financial Group Ltd (ASX: MFG), design software company Altium Limited (ASX: ALU), and voice over IP provider MNF Group Ltd (ASX: MNF) 10 years ago would have all grown to be worth over a million dollars today.
As of the last week, the Magellan investment would have grown to be worth over $2.3 million, the Altium investment would be worth $2.2 million, and the value of the MNF Group investment would have grown to $1.4 million.
Unfortunately, shares that generate this level of return are rare, so don't start planning those dream purchases just yet.
Long term investing.
Instead of counting on finding the next Magellan or Altium, I would suggest investors focus on growing their wealth over the long term.
For example, over the last 30 years the Australian share market has provided an average return of 9.1% per annum.
If it were to do the same in the future, a $10,000 investment in the share market each year would grow to be worth over $1 million in 26 years.
And by year 30 your investment would have grown to be worth over $1.5 million. Keep going another five years and compound interest will work its magic and take the value of your investment to almost $2.5 million.
Overall, I believe this demonstrates how starting early and investing consistently in the market can generate significant wealth further down the line.
And who knows, maybe one of your investments will be the next Altium or Magellan and you'll do even better than the market average.
