One of the biggest myths about investing in the share market is that you need a lot of money to get started.
The truth is, with the power of compounding, even small, consistent investments into quality ASX shares can grow into something much larger over time.
If you have ever wondered how to turn modest savings into serious wealth, here is how to make it happen.
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Start small, but stay consistent
You do not need tens of thousands of dollars to begin. Even putting $200 or $500 a month into ASX shares or exchange traded funds (ETFs) is enough to start building momentum.
The key isn't the size of your first investment, but the habit of investing regularly and letting time do the heavy lifting.
As an example, if you were to invest $500 a month and earn an average 10% annual return (in line with historical share market performance, though not guaranteed), you would have approximately $100,000 in 10 years.
Push out the timeline to a total of 20 years and your portfolio would balloon to approximately $360,000, all else equal.
Focus on quality ASX shares
It is worth remembering that not all shares are created equal.
The best results usually come from owning ASX shares with strong business models, competitive advantages, and growth potential. On the ASX, that could include blue chips like Goodman Group (ASX: GMG) or ResMed Inc (ASX: RMD), as well as growth shares such as WiseTech Global Ltd (ASX: WTC) and Xero Ltd (ASX: XRO).
If you prefer diversification, ETFs like the Vanguard Msci Index International Shares ETF (ASX: VGS) or the iShares S&P 500 ETF (ASX: IVV) give you exposure to hundreds of companies in one trade.
Let compounding do the work
The real magic of investing is compounding. By investing consistently and reinvesting dividends, your portfolio returns starts to snowball.
Someone once called compounding the "eighth wonder of the world" — and it certainly is an accurate statement.
Foolish takeaway
Overall, I think that this demonstrates that you do not need a fortune to start building wealth.
By investing consistently in quality ASX shares or ETFs and giving compounding time to work its magic, even small monthly contributions into your portfolio can grow into a life-changing portfolio.
The key is to start now and stay the course. Your future self will no doubt be very thankful that you did.
