Here's how $500 could set an ASX stock market beginner on the path to riches in 2025!

Here's how beginners could set themselves up for the future.

a couple clink champagne glasses on board a private aircraft with gourmet food plates set in front of them. They are wearing designer clothes and looking wealthy.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Starting your investment journey with ASX stocks may be intimidating. It may also seem futile when you don't have a lot of capital behind you.

But even modest beginnings can lead to life-changing wealth if approached with patience and discipline.

In 2025, setting aside just $500 each month and investing it into ASX stocks could put a beginner investor on the path to long-term financial success.

Building wealth with ASX stocks

The key to building wealth in the share market lies in the power of compounding.

This is what happens when you generate returns on top of returns. It essentially supercharges your wealth creation and can dramatically grow your portfolio.

With an average annual return of 10%, which is in line with historical long-term stock market performance but not guaranteed in the future, investing $500 monthly could grow into some significant.

In fact, if everything went to plan, your $500 investments would grow to become worth a whopping $1 million after 30 years.

Be patient and picky

Legendary investor Warren Buffett famously quipped:

The stock market is designed to transfer money from the active to the patient.

Rather than chasing quick gains, Buffett advocates focusing on high-quality businesses with sustainable competitive advantages. These are companies that dominate their industries, have strong balance sheets, and can sustain growth over the long term.

There are plenty of ASX stocks out there that could be classed as Buffett stocks. Companies such as ResMed Inc. (ASX: RMD) and TechnologyOne Ltd (ASX: TNE) could be good examples and worth considering when their share prices trade at fair levels.

Alternatively, for a beginner, exchange-traded funds (ETFs) could be an easy way to invest your funds. This is because they remove the need to pick stocks and help to diversify a portfolio.

The Buffett-inspired VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT) could be a good option. It invests in companies that Buffett would buy for his Berkshire Hathaway (NYSE: BRK.B).

Alternatively, iShares S&P 500 ETF (ASX: IVV) and the BetaShares NASDAQ 100 ETF (ASX: NDQ) track the performance of Wall Street's largest companies, giving a beginner exposure to the broader market at low cost.

Foolish takeaway

Overall, by staying the course, focusing on quality, and embracing patience, even a beginner with just $500 a month can harness the power of compounding to set themselves up for financial independence over the long term.

Motley Fool contributor James Mickleboro has positions in BetaShares Nasdaq 100 ETF, ResMed, and Technology One. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway, BetaShares Nasdaq 100 ETF, ResMed, Technology One, and iShares S&P 500 ETF. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF and ResMed. The Motley Fool Australia has recommended Berkshire Hathaway, Technology One, VanEck Morningstar Wide Moat ETF, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on How to invest

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
How to invest

Rate cuts in focus: Why Warren Buffett says they impact every asset class

Buffett tells us that lower rates are good news for investors...

Read more »

A young woman sits with her hand to her chin staring off to the side thinking about her investments.
How to invest

When is the best time to sell ASX shares?

The best time to sell shares is never. But we need to be flexible.

Read more »

A woman looks questioning as she puts a coin into a piggy bank.
How to invest

Getting rich: Why Charlie Munger says the first $100,000 is both hardest and most important

Charlie Munger knew a thing or two about getting rich.

Read more »

A group of young ASX investors sitting around a laptop with an older lady standing behind them explaining how investing works.
How to invest

Why it's a stock picker's market and how to maximise your returns

It pays to be selective in 2025.

Read more »

Person handing out $100 notes, symbolising ex-dividend date.
How to invest

How $500 a month in ASX shares could make you wealthy

Investing consistently could be the key to becoming rich in the future. Here's how.

Read more »

A woman in hammock with headphones on enjoying life which symbolises passive income.
How to invest

A new age: What safe-haven investments look like in 2025

Looking beyond the traditional definition.

Read more »

Smiling woman with her head and arm on a desk holding $100 notes out, symbolising dividends.
How to invest

How to earn $1,000 a month in passive income from ASX shares

Want a wage from the share market? Here's how to do it.

Read more »

Male hands holding Australian dollar banknotes, symbolising dividends.
How to invest

How to build a $250,000 ASX share portfolio by 2035

Here's how you could potentially reach $250k from zero in just a decade.

Read more »