Becoming a millionaire is a dream that many Australians have.
Being the next winner of one of the lotteries run by Tabcorp Holdings Limited (ASX: TAH) is one way to achieve this, another is through investing in the share market.
Get lucky with a small cap.
One way of becoming rich quickly through the share market is getting lucky by investing in a small cap share that goes onto very big things.
For example, if you'd invested $25,000 into the shares of Nearmap Ltd (ASX: NEA) 10 years ago, that investment would now be worth a staggering ~$1.2 million.
But success stories like these are few and far between and can't be relied on.
In light of this, I feel the best way to become a millionaire is to invest consistently, patiently, and smartly in the share market over a long period.
Long term investing.
As of the end of 2018, 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 provide the same return over the next 30 years, a single $10,000 investment each year earning the market return would grow to be worth over $1 million in 26 years.
Four years later that investment would be worth over $1.5 million and another five years later the magic of compound interest would take the value of your investment to almost $2.5 million if the returns stayed the same.
All in all, I feel this demonstrates how starting early and investing consistently in the market can generate significant wealth.
Where should you invest?
To get returns like that you could simply invest in an index tracking ETF, or you could look to speed things up by generating even better returns through individual shares.
Companies such as Appen Ltd (ASX: APX) and Cochlear Limited (ASX: COH) could be great long-term investments.
Appen is a leading provider of high-quality training data for the rapidly growing machine learning and artificial intelligences markets and Cochlear is a leading hearings solutions company which I believe is well-placed for long-term growth thanks to the quality of its products and ageing populations around the world.
