Q: We live in Sydney, earn $180k a year, have no debt no kids and no mortgage. What can we do as a couple to become wealthy in the next five years? – Daniel Flack
A: Hi Daniel, Congratulations on the $180K salary. That sounds awesome. With no kids and no debt, you are your spouse can invest as much as you care to.
Unfortunately, I am not going to suggest how you might get wealthy in the next five years; that’s simply too short of a time-frame for my taste. Any investments that you make could experience short term “adjustments” (that’s declines in lay speak 😉 ).
I would suggest investing your money with a longer term goal, say 10, 20, even 40 years. If you could invest 15% of your salary — that’s the minimum that most financial advisors would recommend that you invest — in a broad-based index fund. Here in the states, you might select the S&P 500 index fund. Of course, that fund could work just as well for Aussies too.
If you invest a portion of your money in such and index fund and a portion in short term government financial instruments, you might realize a 7% return over the long term. That might not sound like much, but with 15% of your wages — that’s $27K — invested annually for 40 years, you will have over $5.8 million! (Of course past performance is no guarantee of future results, but there is about 90 years of back-testing supporting this approach.)
Sorry I couldn’t advise you for the near term, but I am only comfortable discussing long term investment ideas.
originally published: quora.com