Become a millionaire in 4 simple steps with ASX shares

You could become a millionaire in 4 simple steps with ASX shares.

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I think it's very achievable to become a millionaire with ASX shares in four simple steps.

None of these steps will be suggesting taking on hundreds of thousands of dollars of debt. Nor will I be suggesting to invest in residential property. This article is going to talk about ASX shares, which I think everyone should be invested in.

Earn

The phrase "you've got to have money to make money" is completely applicable to investing debt-free in shares.

To start investing in shares you need to make enough money to pay for all the bills & basics and have enough left over to invest a little.

The sad reality is that Australia has a high cost of living, particularly accommodation costs. Wage growth is low, which makes things difficult as well. It may take having a second job or a money-making hobby to earn enough to invest.

Spend less than you earn

Every budget is different, but it's an unavoidable fact that if you spend everything you earn there will be nothing left to invest. Even worse, a lifestyle funded by credit card debt makes a sustainable investing lifestyle even harder due to the interest and debt repayments.

Multi-millionaire actors and sportspeople have shown how it's possible to spend all of their wealth. If you have no knowledge of your finances or control of your spending then it's hard to get to the next stage of becoming a millionaire.

Common money-saving strategies include eating as much home-prepared food as possible, shopping at Aldi and taking pubic transport where possible.

Whether you spend less or earn more, or both, you just need to get your annual expenses below your annual after-tax income. All you need to start investing in shares is $500.

Invest

Investing is one of those things that you just have to get stuck into and start doing it.

There are many different investment options to choose from, it could be overwhelming.

One of the simplest ways to invest is through exchange-traded funds (ETFs). The best ETFs are low-cost and provide excellent diversification of industries and geographies. Two of the best ETFs are iShares S&P 500 ETF (ASX: IVV) and Vanguard MSCI Index International Shares ETF (ASX: VGS). These would make excellent buy-and-hold-forever choices.

Listed investment companies (LIC) can also be very good options for simple investing. A few of my favourite LIC ideas include WAM Microcap Limited (ASX: WMI), WAM Research Limited (ASX: WAX) and Naos Emerging Opportunities Company Ltd (ASX: NCC).

Otherwise, people wanting to invest in a quality portfolio of growing businesses. Some of my favourite long-term investment ideas include Challenger Ltd (ASX: CGF), Altium Limited (ASX: ALU), REA Group Limited (ASX: REA), Costa Group Holdings Ltd (ASX: CGC) and InvoCare Limited (ASX: IVC).

Keep going and be patient until millionaire

Millionaire status does not happen overnight. It takes many years of hard work to get there.

Share markets occasionally drop heavily in value, so you need to be patient to get to your goal.

If you start with just $1,000 and invest $500 a month for 30 years, earning the historical average of 10% a year for 30 years, you will end up a millionaire. If you can save a bit more, earn a bit more and invest a bit more then you can reach millionaire status quicker.

Another way to become a millionaire quicker is to create better investment returns than what is being delivered by Telstra Corporation Ltd (ASX: TLS) and Commonwealth Bank of Australia (ASX: CBA) by choosing better growth shares.

Motley Fool contributor Tristan Harrison owns shares of Altium, Challenger Limited, COSTA GRP FPO, InvoCare Limited, and WAM MICRO FPO. The Motley Fool Australia owns shares of and has recommended Challenger Limited, COSTA GRP FPO, and Telstra Limited. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended InvoCare Limited, REA Group Limited, and Vanguard MSCI Index International Shares ETF. 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.

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