The share market is a great place to grow your wealth.
And if you're lucky enough to already have some funds to play with, you're already halfway there.
But is it possible to grow a $25,000 ASX share portfolio into $250,000? Let's do some calculations and find out.
Turning $25,000 into $250,000 with ASX shares
There are two ways to go about growing your ASX share portfolio. The first way is to simply let compounding work its magic and leave your funds to grow.
Historically, the share market has generated an average annual return of 10% per annum. It's worth remembering that there's no guarantee that this will be the case in the future, but I feel it is fair to base our calculations on this level of return.
With that in mind, if I were able to achieve a 10% per annum return from a balanced $25,000 portfolio of high-quality ASX shares, my portfolio would be worth $250,000 after a little over 24 years.
But what if I don't want to wait 24 years for my $250,000? Well, it is possible to speed up the process by making contributions to a portfolio.
Getting there the quick way
If I were in a position to add $500 to my ASX portfolio each month, which equates to $6,000 each year, I would speed up the process meaningfully.
All else equal, it would take me just over 13 years to grow my portfolio to $250,000 if I added $500 to it each month.
And what if I have more disposable income to spare? Well, it certainly is worth putting it into the share market because every contribution shaves time off my investment timeframe, accelerating wealth creation.
For example, by increasing my investment contribution to $1,000 per month, which is the equivalent of $12,000 a year, it would get me to $250,000 in a touch over 9 and a half years.
This means that if I were to start with a $25,000 investment in ASX shares today and then added $1,000 a month, I could potentially have a $250,000 portfolio by the middle of 2034.
Overall, the key to succeeding with this goal is to make an investment plan, stick with it, and invest in the highest quality companies that you can find on the Australian share market, such as CSL Ltd (ASX: CSL) or Goodman Group (ASX: GMG). Doing this will give you the best chance to create significant wealth from ASX shares.
