The Motley Fool

How to be an ASX 200 share millionaire in 15 years

The S&P/ASX 200 Index (ASX: XJO) has been on a rollercoaster in 2020 but it could be the perfect time to be an ASX 200 share millionaire.

A number of blue-chip shares have been smashed lower but I think there are good buying opportunities. Here’s how to make your millions from buying and holding high-quality shares for decades.

How to be an ASX 200 share millionaire in 15 years

Dividend yields can be a little bit misleading in times like these. However, I think any dividend cuts will be temporary while valuations have slumped lower.

If we look at a traditional valuation method of discounted cash flows, one year of lost earnings should only lower ASX 200 prices by 10% or so.

However, there are some absolute bargain shares trading much lower than that right now. 

Some of the Aussie real estate investment trusts (REITs) could be the key to becoming a millionaire in 15 years. REITs like Scentre Group (ASX: SCG) are down almost 42% in 2020 and are yielding 9.50% at the time of writing.

National Australia Bank Ltd (ASX: NAB) shares have slumped 27.91% this year amid the coronavirus pandemic triggering a bear market.

NAB shares are yielding 6.01% and just posted a $1.4 billion half-year profit. I think the ASX company can continue to churn out strong dividends. That income could quickly compound if reinvested and make you a millionaire within 15 years.

For some retail exposure, Harvey Norman Holdings Limited (ASX: HVN) shares are down 22% in 2020. The Aussie retailer’s shares are yielding 9.70% today and could build your share portfolio quickly.

Let’s say we start with a $75,000 share portfolio in 2020. If our ASX dividend shares can yield 7% per year and still get an average of 5% capital appreciation per year, we could be netting a 12% per year total return.

If we stash away $20,000 per year and reinvest our returns for 15 years, becoming an ASX 200 millionaire could happen sooner than expected.

That $75,000 portfolio could grow to $1,014,385 within 15 years and set the investor up for retirement. 

Foolish takeaway

Clearly, this is a simplified example and there are many variables to take into account when investing in real life.

However, a combination of luck and disciplined savings can go a long way in building your wealth. If you want to be an ASX 200 share millionaire, the best way to start is by building a diversified portfolio for the decades ahead.

5 stocks under $5

We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.

And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

*Extreme Opportunities returns as of June 5th 2020

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Scentre Group. 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.

Related Articles...

Latest posts by Ken Hall (see all)