It is fair to say that a good number of Australians aspire to become a millionaire, with many playing one of the lotteries run by Tatts Group Limited (ASX: TTS) in the hope of matching six numbers. But the odds of that happening are a staggering 8,145,060 to 1, so it's unlikely.
But the good news is that I believe the best way to becoming a millionaire is through investing in the share market. How soon you can become one depends upon your initial investment.
If investors have $60,000 that can be invested, I firmly believe it is possible to turn this into $1 million in 25 years. This has been done many times before and I have no doubt it will be done many times again.
A lot comes down to picking the right shares. I have little doubt that an investment of $60,000 in Telstra Corporation Ltd (ASX: TLS) would provide you with great returns. But I'm not sure it would get us to the $1 million mark.
The reason for this is that a company the size of Telstra simply cannot grow at the required rate we would need to turn $60,000 into $1 million. To be able to do this we need our chosen shares to provide us with an average total shareholder return of 12% per annum.
This is a big ask of course, but there are a good number of shares on the Australian Stock Exchange which have accomplished even greater returns than this in the past. I have picked out four tech shares which I believe could at least provide the kind of returns required to get you on the path to being a millionaire in 25 years. They are as follows:
Catapult Group International Ltd (ASX: CAT)
Catapult is one of the most exciting shares on the market in my opinion. It may have been on a tear in the last month climbing a massive 22%, but I believe there is so much more room for growth for this leading sports analytics company. Management has estimated that the addressable market it operates in will be worth $4.7 billion in a few years. With an incredibly low churn rate, high-quality products, and a growing client list, I believe Catapult could be a fantastic long-term investment.
MNF Group Ltd (ASX: MNF)
MNF Group is probably better known as My Net Fone. This growing provider of voice-based internet communications has produced fantastic returns for shareholders in the last 10 years, and I feel it could easily do the same in the next 10 years. The global VoIP market is growing rapidly and although there are huge companies such as Verizon and Deutsche Telekom competing with it, I believe the company remains well positioned to grow its market share.
TPG Telecom Ltd (ASX: TPM)
TPG Telecom has managed to provide shareholders with an incredible average total shareholder return of 39.2% per year in the last decade. Due to opportunities in mobile, I believe it can continue growing its earnings at a rate that provides strong returns for shareholders for a good number of years to come. Currently the company has a disappointing 2% share of the mobile market. But that could all be about to change if a much-speculated takeover of Vodafone Australia does in fact occur. The two companies have a combined market share of approximately 17.2%.
XERO FPO NZX (ASX: XRO)
Xero is a cloud-based accounting software provider with incredible potential. The company currently boasts an average customer tenure of 7 years and a low churn rate of around 1%. Clearly the software is going down well with consumers, which bodes well for this growing company as it embarks on expansion into the lucrative US and UK markets. Competition will be fierce, but the software speaks for itself. This is a company with a very bright future, in my opinion.
Foolish takeaway
I believe a $60,000 investment spread across these exciting four companies could set investors off on a path to $1 million in the next 25 years. It's a long road and some years will be better than others, but as long as their long-term prospects remain unchanged I believe they will provide strong returns for their shareholders.
