February 8th, 2022 by igniite

Investing in ETF Right Now Could Make You a Millionaire.

The overwhelming majority of people who invest their way to millionaire status through share investment, don’t get lucky. They consistently put money in diversified, historically sound investments over the course of several decades. This disciplined approach can make you into a millionaire, even if you earn an average salary.

You don’t need to be an expert stock picker or own a ton of investments to build a seven-figure nest egg. An Exchange Traded Fund can make you an investor in hundreds of companies with a single purchase. If you want to retire a millionaire, this could be the perfect passive choice for you.

ETFs are managed funds that trade on the ASX just like ordinary shares.
Most ETFs track a benchmark of some sort (e.g. index, sector, commodity etc.) so they are a great way to get exposure to an entire market through one share transaction or small capital beginnings.
There are over 200 EFT’s listed on the ASX.
Let’s use one of Australia’s largest ETFs as an example.
The SPDR S&P/ASX 200 Fund (STW) aims to replicate the performance of the S&P/ASX 200 index by purchasing all its 200 constituents in a weighting like the index.
Any movement in the S&P/ASX 200 will result in a near identical movement in the STW Fund (less a 0.19% p.a. management fee).
So, if an investor were to purchases shares in STW they could expect to see a return highly correlated to the S&P/ASX 200 benchmark.

Even Warren Buffet is a fan;
My advice to the trustee [of my will] could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.”
– Warren Buffet

Let’s look an example.
If you started today with $30,000 that your late aunt gifted to you in a will and assume a return of 9.3%. (This is the 10-year rate according the ASX. https://www2.asx.com.au/)

You agree to tip in $5200 each year.

· In 10 years, your balance will be $135,355. You invested capital of $82,000 so you have earned interest of $53,000. Not bad.

· In 20 Years, your balance will be $409,508. Contributions were a mere $134,000, so you have earned interest of $275,000 (Over double your contribution in interest.) Wow.

· In 30 Years, your balance will be $1,071,412.00. Your contributions were a mere $186,000, so you have earned interest of $885,000.

Congratulations. For an investment of $186,000, time has now allowed you, the honour of becoming a millionaire.

That should make for a nice retirement.

I am convinced that so many people do not really understand the power of the time-honoured approach, of Compounding Interest. Do you? If you do, what are you doing about it?

Consistency is difficult, yet even more important, when you friends are making money in bonds or crypto.

Take a look at the results here:

This information is, general in nature and for information purposes only. It is important to do your own analysis, based on your own personal circumstances, before making any financial decisions. We do not know you personal financial details and we suggest you consult with a financial adviser for your own specific financial needs, regarding any information that you find on this website.

---

---

0 comment