The Motley Fool

Do you know how much money you’re missing out on?

Money is a very important topic to understand for your life. Money is integral to our society, we need money to pay for everything we use.

Most people have a decent understanding of how much money they’re earning. For employees it’s super simple as it says on the payslip and on the annual PAYG summary how much the income is.

Less people have an understanding of their spending. Budgets or retrospective spending analysis might seem boring or limiting to some.

But the most important aspect of money could be understanding the investment side of things. Getting your investing right could be the difference between becoming a millionaire and comfortably retire or not.

Imagine an 18 year old who has the ability to invest in something like iShares S&P 500 ETF (ASX: IVV) and hold it for 50 years to retirement age. If that teenager invested just $1,000, invested nothing else and it compounded at the historical average of 10% a year it would become $117,400 after five decades.

There’s no guarantee that the market will return an average of 10% per year from here, it will likely be less (or perhaps more), but the idea is clear. If you invest in shares for the ultra-long-term you are probably going to compound yourself to excellent wealth. The problem is that many people don’t know how much their potential future wealth is reduced by not investing.

By all means, the basic necessities need to be covered. But it’s also extremely important that regular people invest for their future. Invest the time (and money) in becoming the best earner you can be (ie education), but also invest in shares for future wealth.

Foolish takeaway

I’m not suggesting that you save every last cent – it’s important to live life today as well as for tomorrow. But ‘future you’ will be very glad that you invested.

These top ASX shares could great alternatives to grow your wealth for the long-term.

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Motley Fool contributor Tristan Harrison has no position in any of the 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 Scott Phillips.

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