One my favourite mind games to play is 'what if' games. It can be fun thinking about various things or scenarios and weighing up what you'd do.
Lots of people like thinking about what they'd do if they won $2 million in the lottery. But, there's a much easier way to become that rich – compounding wealth with shares.
You shouldn't feel like it's impossible to become a millionaire, even if you earn below the average wage.
If you invest just $500 a month and earn an annual 10% compound return on that money over 10 years your portfolio would be worth $102,422. In 20 years it would be worth $379,684. In 30 years it would be worth $1.13 million.
That's simply putting in $500 a month and earning the average historical share investment return. Easy!
If you could invest a bit more, say $750 a month, and slightly beat the market by achieving 11% returns then after 10 years you'd have $162,749. In 20 years it would be $649,229 and in 30 years it could be $2.1 million.
If we bump up the numbers just a bit higher to investing $1,000 a month and achieving 12% returns in 10 years it could be a balance of $175,829, in 20 years it might be $752,834 and in 30 years it could be $2.66 million.
The above calculations are not impossible at all. Saving $1,000 a month would be quite possible for a lot of households if they were careful with money. Achieving returns of 12% per annum is a lot less than Warren Buffett's long-term average. Indeed, it's only beating the market by only 2% a year.
Foolish takeaway
You can fairly easily outperform the market over the long-term by investing shares that have promising futures, good economics and a decent balance sheet such as Costa Group Holdings Ltd (ASX: CGC), Challenger Ltd (ASX: CGF) and Citadel Group Ltd (ASX: CGL).
