Investing in these 3 ASX shares now could make you a millionaire retiree

If you're enjoying this time with your family, maybe you'd like to be in holiday mode permanently?

| More on:
A retiree relaxing in the pool and giving a thumbs up.

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

As you spend time with your family these holidays, do you wish you could relax like that permanently?

Quitting work for good with a million bucks to your name is not as far-fetched as it sounds.

A million dollars combined with 10% annual returns will allow you to retire with $100,000 of passive income each year for the rest of your life.

Allow me to show you some hypotheticals that use the power of ASX shares and compounding to make that happen:

3 ASX shares that have grown in the long run

Although there are many paths to the destination, I personally favour ASX growth shares for building up to the magic million.

I find it lower maintenance to not have to worry about reinvesting dividends, both in terms of stock picking and tax paperwork.

Three examples that are tempting buys at the moment are Lovisa Holdings Ltd (ASX: LOV), Avita Medical Inc (ASX: AVH) and Vaneck Morningstar Wide Moat Etf (ASX: MOAT).

Past performance is never an indicator of what will happen in the future. However, we can use their track record to demonstrate how fast your investment could reach a million bucks for retirement.

Over the past five years, the Wide Moat ETF has added 102% to its share price, Avita Medical has gained 171%, and Lovisa shares have rocketed 297%.

That's not bad considering that half-decade has included serious market shocks like the COVID-19 crash and the 2022 inflation sell-off.

A million in 16 years

Let's say conservatively that you're unable to pick the next Avita or Lovisa, but can manage to put together a portfolio that can perform similarly to the Wide Moat ETF.

That will provide a pretty decent compound annual growth rate (CAGR) of 15.1%.

If you start with the average Australian savings level of $40,000 and you can add $800 to it each month, the pot will grow nicely if you can show patience.

Based on monthly compounding, if you can have the discipline to keep the portfolio going for 16 years, you will have reached $1,079,219.

There's the million you craved.

Sixteen years may sound like a long time, but for many that will allow an early retirement. 

If you're 30 years old now, that means finishing work at 46. If you're fortunate enough to be reading this at 25, you could potentially put your feet up at 41.

Even if you're 40, that's retirement at 56, which is years ahead of the mandatory threshold of 67 years.

How good would that be!

Motley Fool contributor Tony Yoo has positions in Avita Medical, Lovisa, and VanEck Morningstar Wide Moat ETF. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Avita Medical and Lovisa. The Motley Fool Australia has recommended Avita Medical, Lovisa, 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 Investing Strategies

A female coal miner wearing a white hardhat and orange high-vis vest holds a lump of coal and smiles as the Whitehaven Coal share price rises today
Dividend Investing

Invest $10,000 in New Hope shares and get $1,006 in passive income

Many ASX investors buy New Hope shares for their high yielding, fully franked dividends.

Read more »

A man in a suit looks serious while discussing business dealings with a couple as they sit around a computer at a desk in a bank home lending scenario.
Dividend Investing

Forget term deposits and buy these ASX 200 dividend shares

Analysts have good things to say about these dividend options.

Read more »

An Australian farmer wearing a beaten-up akubra hat and work shirt leans on a fence with livestock in the background and a blue sky above.
REITs

Should you buy this ASX REIT for its 6% dividend yield?

This expert is telling investors to take advantage of a 6% yield...

Read more »

a man in a business suit points his finger amid a digitised map of the globe suspended in the air in front of him, complete with graphs, digital code and glyphs to indicate digital assets.
Investing Strategies

Future focus: How to diversify your portfolio with ASX AI ETFs

Looking for a simple and effective way to capitalise on the growth of AI technologies across global markets?

Read more »

A happy construction worker or miner holds a fistfull of Australian money, indicating a dividends windfall
Dividend Investing

Here's the BHP dividend forecast through to 2028

Will the Big Australian continue to reward shareholders with big dividends?

Read more »

Scared people on a rollercoaster holding on for dear life, indicating a plummeting share price
Cheap Shares

5 oversold ASX shares to buy in April 2024

Looking to snap up an ASX bargain this month?

Read more »

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Investing Strategies

How to invest in the future with ASX AI shares

Discover the potential of AI in transforming industries and enhancing investment portfolios with ASX-listed AI shares.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Dividend Investing

Analysts say these ASX 200 dividend stocks are best buys in April

What are analysts saying about these high quality companies?

Read more »