Expert reveals how to grow $875,000 share portfolio in just five years

A money guru has shared the simple way to make hundreds of thousands of dollars in a few years – with just one small caveat.

As a financial planner, to state the obvious, I help people set up financial plans.

When we put together these plans, it takes some work and time to get there, but ultimately everyone chooses a path that leads to some good financial outcomes.

But not everyone gets the results they plan for.

When people fall short of the outcomes they’re after, I sometimes take it a little bit personally. They want to succeed and I want this for them too, and more than the money, you’re looking for the lifestyle results that flow from nailing it with your finances.

Whenever someone misses the mark with their plan, there can be a lot of reasons why. But ultimately, in almost every case, it boils down to the fact they didn’t take the action that was needed to get the results they wanted.

It’s easy (and natural) to explain away this lack of action by talking about how something unexpected happened, how the targets weren’t quite right or how there just was “too much going on” to focus on money.

But the real reason was that these people weren’t motivated enough to make the planned results happen. That isn’t to say they aren’t motivated, because they are. It’s just that motivation levels aren’t quite high enough to drive the action needed to get the results they were seeking.

I’ve spent a lot of time thinking about the barriers to this motivation, and through this thinking along with a lot of conversations with my clients, I believe I’ve found the single biggest roadblock.

Not everyone gets the financial results they plan for. Picture: iStock

Consider this example.

Starting with $0 today, you save $20 a day and invest the money into an index fund that tracks the long-term return on the Australian sharemarket of 9.8 per cent. Over the first five years, your $20 daily would grow to be worth a total of $46,859 – not bad, but also not a life-changing amount of money.

But here’s the thing – if you keep this going for another 30 years, in the final five years you’re investing, your money would increase by a whopping $875,864. This shows the power of compounding, but also the power of playing the long game.

In the early stages of your money, the progress is the slowest. I can tell you for sure that no matter where you are today, the progress you’ll make in the next 10 years from today will be the slowest it will ever be.

Going back to our example above, in the final five years, your money would grow by more than $875,000. This $875,000 is pure growth on top of the $20 daily of savings you put in and in addition to the money you already have in your investment account. This is clearly pretty awesome and would make for a pretty exciting five years.

But if we wind back to the first five years, your investments would only grow by a relatively minuscule $46,859. You put in the exact same amount of money through this five-year period, but because you haven’t yet built your money momentum, the investment growth seems tiny in comparison to how much you’re putting in.

But here’s the thing. The work you put in throughout those first 10 years is the only thing that delivers the growth needed so you can get the $875,000 of growth in the last five years of your investment. Without the work done in these first five years, the results in the last five years wouldn’t be possible.

The work you put in throughout those first ten years is the only thing that delivers the growth needed so you can get the $875,000 of growth in the last five years of your investment. Picture: iStock

The real risk and the trap most people fall into is thinking that because the growth and progress in the first 10 years isn’t very high, that it’s OK to do less (or nothing at all). Instead, the intention is to just pick things up when you can do (save and invest) more and make more progress.

But money doesn’t work this way.

Regardless of where you want to get to, you have to put in the early work. You can choose to do this early work in your 20s, or you can choose to do it in your 50s. But the later you get started, the more work you have to do to put yourself in the same position, and the longer you leave it, the more likely you’ll be forced to settle for an outcome significantly below what you really want.

The wrap

The good news is that you don’t have to settle. This can all be avoided if you can just build enough motivation to take action and get started, and then keep your motivation up so you can keep going.

I’m not saying it will be easy, but the results will be worth it.

Disclaimer: The information contained in this article is general in nature and does

not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.

Ben Nash is a finance expert commentator, podcaster, financial adviser and founder of Pivot Wealth, and the author of soon-to-be-released Virgin Millionaire. He runs regular free online money education event which you can book here

Originally published as Expert reveals how to grow $875,000 share portfolio in just five years