Question: Is this plan realistic to become a millionaire by investing directly into stock market indices?

(Posted by: William M on 2010-01-24 06:57:57)

I am 18, have an interest in investing into the stock market. I enjoy trading FX or forex in practice accounts and I'm soon to open up a live account. I've read books and internet sites about investing/ trading into FX and stocks. I am also looking to get a job soon that could pay £300+/ week or £15, 600/ year+ which I will probably get £100/ week out of to spend on what I want. I have a few thousand pounds in savings as well too, also. I am just wondering is if, say, I invest my few thousand pounds into a stock market index fund that grows 10 %/ year compounded and I pour all my dividend yields back into the investment in the indice, not only that, but invest my £100 spare I have to spend each week into the fund also so it compounds and grows even quicker and if I trade FX as well and make an extra few thousand(s) every week/ month or so and make as much as I can that way and pour it into the stock market index fund, could I become a millionaire? it this realistic and has anybody ever done anything like this before? Please help/ advise as all help would be much appreciated. Thanks.

Posted by: ThinKabootit on 2010-01-24, 07:08:35

You will become a millionaire far quicker if you skip the nonsense about Forex (a zero-sum game...you can only make money when someone else loses money!) and stick to quality growth stocks in reputable companies. If you invest £100/ week (or £5,200/ year) and reinvest all dividends and distributions, long-term it is realistic to expect to earn 8-10%, so you could have a million in about 33 years... (Long-term, the average index fund returns about 8.5%)

Posted by: Htownflash on 2010-01-24, 08:10:29

I think the fact that you have a plan is definitely a great first step to getting started on your track to becoming a millionaire through investing. I think I would stay away from anything related to forex though. It's really a tough racket, more power too you if you can beat it but from what it sounds like you are not going to have even close to enough money to trade currencies. You should check out this investment contest if you are really interested in investing. I know it helped me learn quite a bit and you can even win cash prizes trading fake money. They even have quite a bit of information & you can learn from some of the other investors & traders.

Posted by: Common Sense on 2010-01-24, 09:34:45

Based on your question.... you're about 5 years away from being ready to start investing in anything... let alone something as hard as FX. First lesson.... paper trading can teach you about the mechanics of trading... but is no indication of how your results will be with real money. Can you become a millionaire by investing? YES... you can. Let's say you put in 2000 pounds this year @ 10% you'll have 2200 pounds in a year. Of couse if the market drops the next year by 10% you'll have 1980 pounds... 10% a year average may be a very high expectation in this new economy. 7-8% may be more realistic. An understanding of basic math and componding will be a good place to start for you. Mind you... I think it's great that you're interested in investing. but knowledge needs to meet reality... and so far you haven't made that connection. Good luck. Time is on your side. Learn more. Understand it.... and you'll be on your way to your goals.