How to aim for a $1 million ASX share portfolio with just $270 a month

ASX shares can unlock excellent wealth.

Young boy looks shocked as he lifts glasses above his eyes in front of a stock market graph. representing three ASX 300 shares hitting 52-week lows today

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

ASX shares can be the key for Aussies to unlock pleasing wealth, and we don't need to invest a lot to (possibly) build a portfolio worth hundreds of thousands of dollars, or even $1 million.

Property has done well over the last decade, but it can be tough to start in real estate because of how large the deposit needs to be, as well as the expensive transaction costs.

With ASX shares, we can decide to invest a small amount (perhaps less than $1,000) for a very small amount of brokerage.

The first part of investing is having the cash to put towards businesses. That means spending less than we earn, one way or another.

Start investing in ASX shares

Aussies need to decide which online broker they want to go with. Ideally, it's with a broker that we can trust and one that has low brokerage fees.

Most brokers have a minimum investment of $500, so if we save $270 per month, I'd suggest that investors should think about investing, at most, once every two months. With interest rates now much higher these days, we can earn a decent return on cash sitting in a savings account, so it's okay to wait a month or two to invest.

Where I'd choose to invest

If I were looking to reach $1 million sooner rather than later, I would want to choose investments that I think can deliver good compounding returns over time.

Investing doesn't need to be complicated, we can choose exchange-traded funds (ETFs) that do the investing for us and that can enable our portfolio to deliver good results.

I'd back ASX-ETFs that are focused on quality businesses that have a track record of delivering good returns, though nothing is certain.

For me, there are a few ETF investments that I'd want in my portfolio, including Vaneck Morningstar Wide Moat ETF (ASX: MOAT) and VanEck MSCI International Quality ETF (ASX: QUAL).

The MOAT ETF is about investing in businesses that have competitive advantages that are more likely than not going to endure at least 10 years if not 20 years. It only invests in those high-quality businesses when they're at what's deemed to be a good price. Over the past five years, the MOAT ETF has delivered an average return per annum of 15.6%, though the past is not a reliable indicator of future returns.

I'd also consider ASX growth shares that may be able to deliver significant growth in their operations over the next 10 or 15 years. At the moment, I'd name ASX shares like Lovisa Holdings Ltd (ASX: LOV), Johns Lyng Group Ltd (ASX: JLG) and Temple & Webster Group Ltd (ASX: TPW) as ideas, but there are plenty of other possibilities which I'll regularly write about.

However, I wouldn't choose the highest-risk, small businesses – we don't need to go for highly speculative investments to do well.

Compounding returns

By looking at investments that may be able to deliver good capital growth, the long-term could help deliver pleasing numbers. I wouldn't expect to be able to deliver average returns of 15% per annum for the next decade (or three), but perhaps an average of 11% per annum may be possible.

If we invested $270 per month and the portfolio makes returns of 11% per annum, it would take around 34 years to reach a $1 million portfolio. To put that in perspective, that would come from $110,160 of our own cash put in and the rest would (theoretically) come from investment returns. You can play around with this compound interest calculator from Moneysmart.

My calculation assumes investing $270 per month over the whole time period, but if after five or ten years we could start investing $500 per month or $750 per month then $1 million would come much quicker. Finding strong ASX share investments can also help build a portfolio more quickly.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group, Lovisa, and Temple & Webster Group. The Motley Fool Australia has recommended Johns Lyng Group, Lovisa, Temple & Webster Group, and VanEck Morningstar Wide Moat ETF. 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

Person holding Australian dollar notes, symbolising dividends.
How to invest

How to become a multi-millionaire with ASX shares

Here's how anyone could potentially build a very large investment portfolio.

Read more »

Smiling woman upside down on a swing with yellow glasses, symbolising passive income.
Dividend Investing

$20,000 in savings? Here's how I'd aim for $20,000 in passive income

Here’s how I’d target $20,000 in passive income every year from ASX shares by investing $20,000 today.

Read more »

bull market encapsulated by bull running up a rising stock market price
How to invest

A bull market could be coming in 2024. Here's Warren Buffett's investing advice to help you cash in on it

Warren Buffett officially became a billionaire at age 56; today he’s worth some US$137 billion!

Read more »

a smiling picture of legendary US investment guru Warren Buffett.
How to invest

Here are Warren Buffett's tips to becoming rich with ASX shares

The Oracle of Omaha's latest letter to shareholders was filled with great advice.

Read more »

Happy couple at Bank ATM machine.
How to invest

How to generate $50,000 of passive income from ASX shares each year

Here's how to make the share market your own personal ATM.

Read more »

A woman in hammock with headphones on enjoying life which symbolises passive income.
How to invest

3 ASX 100 and ASX 200 shares I'd buy now for a $1,820 passive income in 2024!

These three ASX dividend shares offer investors market beating passive income.

Read more »

Legendary share market investing expert and owner of Berkshire Hathaway Warren Buffett
How to invest

No savings in 2024? I'd follow Warren Buffett and start building wealth

Don't let having no savings hold you back from becoming wealthy.

Read more »

Woman laying with $100 notes around her, symbolising dividends.
How to invest

How long would it take to turn $20,000 into $100,000 with ASX dividend stocks

It may not take as long as you would expect.

Read more »