The performance of the S&P/ASX 200 Index (ASX: XJO) over the past decade may have trailed Wall Street's S&P 500, but that doesn't mean there haven't been any exceptional returns recorded by individual stocks.
In fact, some top ASX 200 growth shares have delivered mouth-watering returns for investors over the period and built significant wealth for them.
For example, here's a selection of how some stocks have performed:
- Goodman Group (ASX: GMG) – 21.1% per annum
- Nextdc Ltd (ASX: NXT) shares – 24.8% per annum
- Pro Medicus Limited (ASX: PME) shares – 69.4% per annum
- TechnologyOne Ltd (ASX: TNE) shares – 25.5% per annum
If a 40-year-old were looking to build a portfolio from scratch based around high-quality ASX 200 growth shares, let's have a look at what certain investment values could become when retirement arrives at 67 years of age.
Investing in ASX 200 growth shares for retirement
The share market has historically generated a return of 10% per annum. As you can see above, it is possible to achieve a significantly greater return if you can find the right growth stocks to invest in.
However, for the purpose of this article, I'm going to stick with the assumption that your investment portfolio grows at 10% each year.
With that in mind, if you were able to invest $1,000 into the share market each month, you would see your investment grow to $1.5 million over the 27 years if you earned a 10% per annum return.
That would ensure that you are able to live a very comfortable retirement.
But what if you want more? Well, you have two options. One you can control and one that you can't.
The first is investing more. If you could invest $1,500 a month into ASX 200 growth shares, you would see your investment portfolio increase in value to a whopping $2.3 million, all else equal. That's almost $800,000 more than if you invested $1,000 a month. Not bad!
The alternative is targeting a bigger average annual return. However, that is far from guaranteed and shouldn't be relied upon.
Investing $1,000 a month with an average total return of 12% per annum would grow into $2.15 million after 27 years. That extra 2% adds a cool extra $650,000 to your wealth over the period.
Foolish takeaway
Investing in ASX 200 growth shares can be a great way to grow your wealth.
The key is to come up with a plan that fits your budget, stick with it over the long term, and invest in the highest quality growth shares you can find.
