I do not think investors need dozens of holdings to build serious wealth over time.
Diversification is important, but there is also a point where a portfolio can become so crowded that the best ideas barely move the needle.
If I were aiming for $1 million in retirement using ASX 200 shares, I would keep the plan simple. I would try to own around 10 high-quality businesses, invest regularly, reinvest dividends, and give compounding as much time as possible.
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Where to start
Let's say an investor starts with $10,000 and adds $500 a month.
If that portfolio returned an average of 9% per annum, it could grow to more than $1 million in around 30 years.
That return is not guaranteed. Share markets do not move in a straight line, and some years can be painful. But I think the example shows why time, consistency, and reinvestment are so powerful.
The investor does not need to find the next tiny stock that rises 20-fold. They need a sensible plan and the discipline to keep going through different market conditions.
Why just 10 ASX 200 shares?
I would not want my retirement plan to depend on one or two companies. That is too much single-stock risk.
But I also do not think I need to own every company on the ASX.
Owning 10 carefully selected ASX 200 shares could give exposure to different sectors, earnings drivers, and growth opportunities without making the portfolio too diluted.
For example, a portfolio could include Commonwealth Bank of Australia (ASX: CBA) for banking quality and fully franked dividends, Macquarie Group Ltd (ASX: MQG) for global financial exposure, BHP Group Ltd (ASX: BHP) for resources and copper, and Wesfarmers Ltd (ASX: WES) for retail and industrial strength.
I would also want healthcare exposure through ResMed Inc (ASX: RMD) and CSL Ltd (ASX: CSL), digital infrastructure through Goodman Group (ASX: GMG), property platform exposure through REA Group Ltd (ASX: REA), enterprise software through TechnologyOne Ltd (ASX: TNE), and global technology through WiseTech Global Ltd (ASX: WTC).
That is not a perfect list for every investor. But it shows the sort of balance I would want.
What I'd look for
The share price is only one part of the decision.
If I were building a retirement portfolio, I would care more about the quality of the business than whether the stock looks cheap on the day I buy it.
I would want companies with strong competitive positions, capable management, durable demand, and the ability to keep reinvesting for growth.
Dividends would also matter. Over decades, reinvested dividends can make a huge difference. Fully franked income from some ASX 200 shares can also be useful, depending on an investor's tax situation.
But I would not build the whole portfolio around yield. A retirement portfolio still needs growth.
Staying the course
The hardest part of this plan would not be choosing the 10 shares. It would be holding them through market falls.
Over 30 years, there will almost certainly be recessions, interest rate scares, earnings disappointments, commodity sell-offs, and company-specific problems.
That is normal. I would review the portfolio regularly, but I would not want to trade it constantly. The aim would be to own strong businesses for long enough that their earnings, dividends, and reinvestment have time to compound.
Foolish takeaway
A $1 million retirement portfolio can sound like a distant target, but it becomes more realistic when the plan is broken down.
I would start with quality, keep the portfolio focused, add money consistently, and let time do its work.
Ten ASX 200 shares will not remove every risk. But if they are chosen carefully and held patiently, I think they could form the backbone of a portfolio capable of building serious retirement wealth.
