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.

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The share market has historically been a great place to grow your wealth.

Over many decades, it has delivered investors an average annual return of approximately 10%.

This has allowed investors to turn their excess capital into something significant.

But how long would it take to turn $20,000 into $100,00 with ASX dividend stocks? Let's find out.

Turning $20k into $100k with ASX dividend stocks

Firstly, if you're not in immediate need for the income generated from ASX dividend stocks, then it would pay to reinvest your dividends.

By doing so, you can take advantage of compounding fully to supercharge your returns.

Secondly, a return of 10% is what share markets have generated historically. I would expect the same again over the long term, but it is not a guarantee.

With that in mind, a single investment of $20,000 earning a 10% per annum would take 17 years to turn into $100,000.

But you don't necessarily have to settle for that. If you want to get to your goal sooner, you could make additional contributions.

For example, a $20,000 investment earning 10% per annum with $500 monthly contributions takes 7 years to turn into $100,000.

Beating the market

The 10% return is based on historic averages. Some investors will outperform the index if they can unearth market-beating ASX dividend stocks.

For example, the shares of footwear retailer Accent Group Ltd (ASX: AX1) have achieved an average total return of 14.8% per annum since 2014.

This would have turned $20,000 into approximately $80,000 over the last decade.

A company that has delivered even stronger returns for investors is computer hardware and software distributor Dicker Data Ltd (ASX: DDR). This ASX dividend stock has recorded an average total return of 27% per annum over the last 10 years.

That would have turned a $20,000 investment into approximately $220,000.

The key is to identify high quality ASX dividend stocks that have strong long-term growth potential, competitive advantages, and robust business models. If you can find these shares, you may get to $100,000 quicker than you think.

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 positions in and has recommended Dicker Data. The Motley Fool Australia has positions in and has recommended Dicker Data. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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