If you're lucky enough to be sitting on $10,000 and don't know where to put it, it could be worth investing it in ASX shares.
That's because historically, the share market has turned amounts like this into something even more significant thanks to compounding.
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$10,000 in ASX shares
According to Fidelity, for the 30 years to December 2022, ASX shares generated an average return of 9.55% per annum.
If the market were to do the same over the next three decades, it would turn your $10,000 investment into approximately $155,000.
And while it is worth remembering that past returns are not a guarantee of future returns, this level of return is broadly in line with historical averages on Wall Street. So, it isn't unreasonable to target this in the future.
But what if $155,000 isn't enough for you? What if you want more? Well, let's see what our options are.
Generating more money
There are two ways to generate even more money when investing in ASX shares. One is out of your control and the other is firmly within it.
The first method is beating the market. Most people will not beat the market, but that doesn't mean that it isn't possible.
Warren Buffett has achieved an average return of 19.8% per annum for his Berkshire Hathaway (NYSE: BRK.B) business since 1964.
If you were able to grow your $10,000 investment by that level, you would absolutely supersize your wealth. After 30 years of compounding at Buffett's return, you would have grown your ASX share portfolio to $2.25 million.
Matching Buffett's return is near impossible but there's nothing to stop you from following his investment strategies to try. Even if you can't get to the Oracle of Omaha's level, any returns above the market return (aka alpha) would be a bonus to your portfolio.
Within your control
Another option that is within your control is adding to your original investment.
For example, if you start with a $10,000 investment and then put $500 into ASX shares each month, your portfolio would grow to be worth almost $1.2 million in 30 years thanks to compounding.
Think you can afford to invest an additional $1,000 a month? Well, if you matched the market return your portfolio would be closer to $2.2 million in three decades.
Overall, investing in ASX shares can be a very rewarding experience. The key is to come up with a long-term plan and stick with it through thick and thin.
