Can you spare $3 each day to invest in your future?
That's less than the price of a cup of espresso.
If you can manage that, I reckon you could soon have a steady flow of passive income that could make your life more comfortable.
Imagine cash coming into your bank account that you didn't have to work for.
Check this out for a hypothetical:
Image source: Getty Images
The hunt for double-digit CAGR
Let's assume you can start with an ASX stock portfolio of $40,000.
The average Australian has about that much saved up, according to research this year by comparison site Finder, so it's a fairly realistic figure.
If you can construct a well-diversifed portfolio of ASX shares that can generate a compound annual growth rate (CAGR) of 10%, we're on our way.
It doesn't matter if they are ASX growth shares or dividend stocks — whatever you are comfortable with.
As long as they are mixed with diverse sectors, geography, and client bases, you are managing the risk that one or two bad apples could send you broke.
Take popular S&P/ASX 200 Index (ASX: XJO) stock BHP Group Ltd (ASX: BHP) as an example.
The share price has risen about 47% over the past five years, equating to a CAGR of 8% from just the capital growth.
Add the fully franked dividend yield of 5.5%, then you easily reach double-digit CAGR.
…then five-digit passive income
If $3 each day means you add $90 each month to this basket of stocks, that $40,000 portfolio will grow fairly rapidly.
After 10 years, your stocks will be worth $120,962.
From there on if you sell off the 10% CAGR each year, you have yourself annual passive income of $12,096.
How good is that.
That's a nice overseas trip each year that you didn't have to work for. Maybe some years it will pay for home renovations.
That's the power of compounding combined with ASX shares.
Just $3 a day could take you to places you always dreamt about.
