Building up $100,000 in an ASX share portfolio is a goal shared by many investors. After all, with that sort of money stored away, there are a lot of options financially.
The good news for readers is that with a long-term perspective, a regular savings plan, and a well-thought-out investment strategy, it certainly is achievable.
But how might an investor starting from scratch build a six-figure ASX share portfolio?
Building a $100,000 ASX share portfolio
The first step is getting the ball rolling and there's no time like the present.
After all, the longer spent in the share market, the longer investors can benefit from compounding. This is what happens when earning interest on top of interest or returns on top of returns in the case of the ASX shares.
It is mathematical sorcery and the key to supercharging a portfolio's returns over the long term.
Investors might want to consider saving $1,000 from their paycheck each month and putting it into their ASX share portfolio if they can. But $500 each month would also be worth doing if that's more suitable for their budget.
If we are to assume a 9.6% per annum average return, which is in line with the 30-year average, an investor would reach the $100,000 goal in the following timeframes:
- $500 a month – 10 years
- $1,000 a month – 6.2 years
Stock picking
When it comes to picking ASX shares for a portfolio, history shows that investors are better off focusing on quality rather than speculative options.
Sure, investors do occasionally strike it lucky with penny stocks, but there are countless more investors that get sucked in and lose their entire investments.
Buying fairly priced, high-quality companies that have durable moats (competitive advantages) has worked wonders for Warren Buffett throughout his career. There's every chance that this focus will also deliver the goods for investors in the future.
Rather helpfully, the Vaneck Morningstar Wide Moat ETF (ASX: MOAT) is an easy way to invest in companies with moats. Alternatively, it can be a good fund for investors to study to get an idea of which companies have the qualities we are seeking.
All in all, while growing an ASX share portfolio to $100,000 from scratch may seem like an impossible task, it really isn't. And by following the steps above, later this decade readers could achieve this goal.
