Turning a small investment in ASX shares into a $500k portfolio

You don't have to start investing with a big lump sum to grow your wealth.

A smiling woman with a handful of $100 notes, indicating strong dividend payments

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Turning a small investment into a substantial portfolio might sound like a financial fairy tale, but in the world of ASX shares, this dream can become a reality.

The magic ingredients? Consistency, patience, a buy and hold attitude, and compounding.

Investing $500 a month

Although a $500 investment might seem insignificant, it's the consistent application of this amount that works wonders over time. Regular monthly investments into ASX shares allow you to capitalise on the power of compounding and dollar-cost averaging. The latter is a strategy where you invest a fixed amount at regular intervals, regardless of market fluctuations. This approach not only reduces the impact of market volatility but also encourages a disciplined investment habit.


Diversification is the backbone of a strong investment portfolio. Allocating your $500 monthly investment across a diversified group of quality ASX shares helps mitigate risks and capture opportunities across various sectors. Thankfully, the Australian share market offers exposure to a range of sectors including finance, technology, retail, healthcare, and resources. They can all play a role in your diversified portfolio, allowing you to tap into the broader growth potential of the Australian economy. Investors could also leverage exchange-traded funds (ETFs) to gain access to other markets.

The buy and hold mindset

One of the most critical components of turning a small investment in ASX shares into a substantial portfolio is embracing the buy and hold approach. Warren Buffett famously said, "The stock market is a device for transferring money from the impatient to the patient." By resisting the urge to frequently trade based on short-term market fluctuations, you give your investments the time they need to weather market cycles and realise their full potential. In addition, the longer you invest, the more you can benefit from the power of compounding.

Reaching your $500k goal

With an average total return of 9.6% per annum since 1993, history shows that investing $500 into ASX shares each month could have turned into $500,000 in a little over 23 years. That means a 30-year-old could have built up a sizeable nest egg not long after turning 50 if they had followed this strategy. And while it is impossible to say what the market will do over the next 30 years, these returns are in line with the historical average. I feel this makes it a realistic goal for investors to target in the future.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on How to invest

A businessman in a suit adds a coin to a pink piggy bank sitting on his desk next to a pile of coins and a clock, indicating the power of compound interest over time.
How to invest

$1,000,000 portfolio: One way to achieve 7-figure wealth

One simple investing trick can help almost anyone build wealth on an exponential scale.

Read more »

A head shot of legendary investor Warren Buffett speaking into a microphone at an event.
How to invest

How you could retire rich by investing like Warren Buffett with ASX shares

The secret to retiring rich isn't so secret.

Read more »

a man with a wide, eager smile on his face holds up three fingers.
How to invest

3 easy ways to boost the returns of your ASX shares

The simplest things can sometimes save you the most money...

Read more »

A smiling woman puts fuel into her car at a petrol pump.
Dividend Investing

Want $150 in monthly passive income? Buy 656 shares of this ASX 200 stock

Just 656 shares in this ASX 200 dividend jewel can deliver a $150 monthly passive income.

Read more »

A woman in a hammock on her laptop and drinking a smoothie
Dividend Investing

$8,000 in savings? Here's how I'd aim to turn that into $1,151 in monthly passive income

Here’s how I’d go about investing in ASX dividend shares.

Read more »

Man holding Australian dollar notes, symbolising dividends.
Dividend Investing

Here are 2 top ASX 200 shares I'd buy now for passive income

These ASX 200 stocks sit at the top of my passive income play list.

Read more »

Woman and man calculating a dividend yield.
How to invest

Is right now a good time to buy ASX shares or should I wait?

With the All Ords up 12% in six months, should I buy ASX shares right now?

Read more »

Invest written on a notepad with Australian dollar notes and piggybank.
How to invest

Buying ASX shares? Experts reveal what they wish they knew before investing

Learn how to avoid costly mistakes by listening to your investment elders (who have already made them).

Read more »