Million-dollar strategies that are proven to make Aussies richer

Having seven figures in the bank remains a formidable achievement. Experts share their tips to get richer.

One million dollars doesn’t pack as much punch as it did decades ago, but it’s still enough to be life-changing for most people.

While the potential for a quick million can come from lottery wins or News Corp Australia’s Win a Million campaign, the vast majority of people must work for it.

There are many ways to make a million bucks, and financial specialists say it requires commitment, time and patience – often spanning decades. Here are five.

1 INVEST IN GROWTH

Growth assets such as shares and property have produced countless millionaires, and money coach Karen Eley says it’s “much easier” today to be an investor.

“My preferred wealth accumulation strategies are share investing and superannuation,” she says.

“Both have become more accessible to all Australians. Twenty years ago you needed at least $50,000 to access a stockbroker or adviser.

Invest in property and shares early, and compound interest can work wonders. Picture: iStock

“However, today with the rise of online brokers and micro investing apps and ETFs we have access to both quality Australian and overseas shares at our fingertips – or mobile phone.”

Residential property prices continue to climb and offer homeowners tax-free gains, and Eley says Australian shares produced an average annual compound return of 9.1 per cent over the past 30 years.

“Start early – a million dollars can take several decades to accumulate, so the earlier you start, the lower amount you need to contribute on a regular basis,” Eley says.

“If you start with $5000, invest in an Australian shares index and then invest $5000 each year, based on historic returns, you’d get to $1 million in around 31 years. If you could invest more than $5000, say $10,000 per annum, you’d reach $1 million in approximately 22 years.”

2 USE YOUR SUPER

Superannuation is Australia’s best savings vehicle because of low taxes for savers and zero taxes for retirees, plus government incentives such as tax deductions and $500 annual co-contributions for people who pump extra into their fund.

“Employers are obligated to pay 11 per cent of our salary into our retirement funds so we’re all accumulating more wealth in our super funds than we were 20 years ago,” Eley says.

Extra contributions to super and diversification across different assets within super can smooth the path to a million, she says.

“Stay the course, even through volatility … you will be rewarded for your patience and discipline.”

The compounding of money in super stretches over decades and can have a huge impact on peoples’ overall wealth.

3 EMBRACE THE TORTOISE

Tribeca Financial CEO Ryan Watson says people should decide why it is important to accumulate $1 million, and “truly understand why it is important”, to translate to everyday life and help them make the right choices around saving and avoid frivolous spending.

“It is the tortoise that wins the race to accumulating $1 million in wealth, and not the hare,” he says.

“Those people who have a financial plan, put the right structure in place and stick to that plan on a weekly, fortnightly, monthly and annual basis with be the ones that have a much greater chance of achieving financial independence.

Smart, slow and steady strategies are proven ways to become a millionaire. Picture: iStock

“Spend less than you earn, and contribute at least some of this savings into an investment.”

Watson says Tribeca clients consistently save 20-40 per cent of their after-tax income to invest.

“Be willing to take some smart-brave risks with your investment,” he says.

4 BUILD A BUSINESS

Wealth can be turbocharged if you leverage the power of employees to help grow yours, but owning a business can be high risk and not for everybody. Business start-ups often fail.

Lightbulb Wealth managing director Heinrich Jacobs says people can start simply, perhaps with a side hustle.

“Generating additional income streams through a side business or freelancing can help you reach your financial goals faster,” Jacobs says.

5 GET HELP

Wealthy people often have a team of professionals surrounding them, from accountants and financial advisers to property specialists, business coaches, finance brokers, solicitors and estate planners.

Jacobs says licensed financial advisers can help people deliver personal strategies tailored to their goals and risk tolerance.

“Consider investing in diversified portfolios such as shares, managed funds, and real estate to potentially grow your wealth over time,” he says.

Originally published as Million-dollar strategies that are proven to make Aussies richer