Historically, the share market has been a great place to grow your wealth.
For example, the most recent Berkshire Hathaway (NYSE: BRK.B) letter to shareholders reveals that the S&P 500 index has generated an average 9.9% total return per annum since all the way back in 1965.
Importantly, this is largely in line with the returns that ASX shares have generated over the last 30 years.
And while we cannot say whether the same will happen over the next 58 years, I would be disappointed if the returns are not similar. We're also going to base our calculations on this potential return.
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Growing your portfolio to $100,000 in six years
Starting from zero and growing your wealth to $100,000 with ASX shares in six years may seem farfetched, but the maths says otherwise.
If you were to invest $1,000 into ASX shares each month for six years and two months and earned the market return, your portfolio would have grown to be worth our target amount.
At that point, investors have the option to use the funds for a purchase or keep the money invested and let compounding work its magic.
Unless it is absolutely necessary to withdraw the funds, I would sooner put them to work in the share market with the aim of growing my wealth further.
For example, if you left this $100,000 invested in ASX shares for a further six years, didn't make any more contributions, and earned the market return, your portfolio would grow to be worth $175,000.
And if you can keep going for a further four years, it would see you crack the $250,000 mark.
That's going from zero to $250,000 in just 16 years. Not bad!
The key is sticking with a plan, buying high quality ASX shares with strong long term outlooks, and letting compounding do the work for you.
