Becoming a millionaire is a dream 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) or striking it very lucky at Crown Resorts Ltd (ASX: CWN), the odds are certainly not in your favour.
Another way to become a millionaire is to invest patiently and smartly in the share market.
Long term investing.
I would suggest investors focus on growing their wealth steadily over the long term.
For example, as of the end of December, the Australian share market had provided an average return of 9.1% per annum over the last 30 years according to research by Fidelity.
If it were to do the same in the future, a single $10,000 investment each year earning the market return would grow to be worth over $1 million in 26 years.
And if you keep going, four years later that investment would have grown to be worth over $1.5 million. Not done there? Keep going another five years and the magic of compound interest will take the value of your investment to almost $2.5 million.
I believe this shows how starting early and investing consistently in the market can generate significant wealth in the future.
Where should you invest?
But where could you get returns like that? You could simply invest in an index tracking ETF, or you could look to expedite your millionaire status by generating even better returns through individual shares.
Whilst it is impossible to know what things will be like in 30 years, I believe the next decade is more predictable.
I believe companies such as printed circuit board design software provider Altium Limited (ASX: ALU), biotech giant CSL Limited (ASX: CSL), sleep treatment specialist ResMed Inc (ASX: RMD), and business and accounting software provider Xero Limited (ASX: XRO) are all well-positioned to deliver strong long-term earnings growth over the next decade that could generate outsized returns for shareholders.
