Becoming a millionaire is a dream that many Australians have.
Whilst the quickest way to achieving millionaire status would be by winning one of the lotteries run by Tabcorp Holdings Limited (ASX: TAH) or striking it very lucky at Crown Resorts Ltd (ASX: CWN), the odds are certainly not in your favour.
Another way to become a millionaire is to invest patiently and smartly in the share market.
Long term investing.
I would suggest investors focus on growing their wealth steadily over the long term.
For example, as of the end of December, the Australian share market had provided an average return of 9.1% per annum over the last 30 years according to research by Fidelity.
If it were to do the same in the future, a single $10,000 investment each year earning the market return would grow to be worth over $1 million in 26 years.
And if you keep going, four years later that investment would have grown to be worth over $1.5 million. Not done there? Keep going another five years and the magic of compound interest will take the value of your investment to almost $2.5 million.
I believe this shows how starting early and investing consistently in the market can generate significant wealth in the future.
Where should you invest?
But where could you get returns like that? You could simply invest in an index tracking ETF, or you could look to expedite your millionaire status by generating even better returns through individual shares.
Whilst it is impossible to know what things will be like in 30 years, I believe the next decade is more predictable.
I believe companies such as printed circuit board design software provider Altium Limited (ASX: ALU), biotech giant CSL Limited (ASX: CSL), sleep treatment specialist ResMed Inc (ASX: RMD), and business and accounting software provider Xero Limited (ASX: XRO) are all well-positioned to deliver strong long-term earnings growth over the next decade that could generate outsized returns for shareholders.
And here are five buy-rated shares that could help you on your path to becoming a millionaire. I think all five are too cheap to ignore right now, potentially making it a great time to pounce on them.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and Xero. The Motley Fool Australia owns shares of and has recommended Crown Resorts Limited. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019