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.
