If you have been thinking about investing but haven't taken the plunge, this may be the perfect time to start. Investing in ASX shares is a great way to build wealth over time. While the idea might seem daunting, getting started is easier than you think—and the earlier you begin, the more you stand to gain.

Here’s why investing in ASX shares is worth considering, along with a helpful tool, the Rule of 72, which can guide you in understanding how your investments can grow over time.

Why Should You Start Investing in ASX Shares Now?

The Australian Securities Exchange (ASX) provides access to a wide range of companies across multiple sectors, including finance, healthcare, energy, and technology. Investing in ASX shares means you’re buying a small part of these companies, which can grow your money as the companies grow.

Stock markets, including the ASX, tend to rise over the long term. While short-term fluctuations are inevitable, history shows that staying invested can generate significant long-term growth. Many ASX-listed companies pay dividends, offering you a source of regular income in addition to potential capital gains. With access to various sectors, the ASX allows you to spread your investments across different industries, reducing risk.

What Are the Benefits of Investing in ASX Shares?

Investing in ASX shares offers several advantages:

• Diversification: With a variety of sectors like healthcare, finance, and energy, you can diversify your portfolio easily.
• Dividends: Many ASX-listed companies offer regular dividend payments, which provide passive income.
• Capital Growth: Over time, your shares can appreciate in value, leading to capital gains.

These factors make ASX shares a solid choice for building wealth over the long term.

How Can the Rule of 72 Help You Grow Your Wealth?

Understanding how your money grows over time is critical for successful investing. This is where compound interest and the Rule of 72 come in.

The Rule of 72 is a simple formula that helps estimate how long it will take for your investment to double, based on a fixed annual return. The formula is:

Years to Double=72 Annual Rate of Return\text{Years to Double} = \frac{72}{\text{Annual Rate of Return}}Years to Double=Annual Rate of Return 72​

For example, if you invest in ASX shares with an expected return of 6% annually, the Rule of 72 tells you that it will take approximately 12 years for your investment to double (72 ÷ 6 = 12).

What Is the Rule of 72 and How Does It Work?

The Rule of 72 is a handy tool for setting realistic expectations about your investment growth. For example:

• At a 6% return, your money doubles in 12 years (72 ÷ 6 = 12).
• At an 8% return, it doubles in 9 years (72 ÷ 8 = 9).
• At a 10% return, your investment doubles in 7.2 years (72 ÷ 10 = 7.2).

This simple calculation allows you to compare different investments and see how quickly your money can grow.

Getting Started with ASX Shares: A Step-by-Step Guide

Starting your investment journey doesn't require a large amount of money or deep financial knowledge. Here’s how to begin:

1. Open a Brokerage Account: Choose an online brokerage platform that offers low fees and user-friendly tools.
2. Start Small: Begin with a modest investment amount, which allows you to learn without putting too much at risk.
3. Do Your Research: Look into the companies or sectors that interest you. Check their performance history and growth potential.
4. Consider ETFs: Exchange-Traded Funds (ETFs) offer an easy way to diversify your portfolio by investing in a basket of shares.

Why ETFs Are a Great Option for Beginner Investors

ETFs, such as the iShares Core S&P/ASX 200 ETF (ASX: IOZ), allow you to invest in multiple companies at once, spreading your risk. For beginners, this offers an easy and affordable way to enter the stock market with built-in diversification.

How do you Manage Risk in Investment? 

All investments come with risk, and shares are no exception. Share prices can go up or down in the short term. However, understanding the long-term growth potential of your money through tools like the Rule of 72 helps you manage your expectations and make informed decisions.

How to Set Realistic Expectations for Investment Growth

Many investors expect rapid growth, but the Rule of 72 offers a reality check. For instance:

• To double your money in 5 years, you'd need a return of 14.4% annually (72 ÷ 5 = 14.4%), which is quite high and uncommon in traditional investments.
• A more achievable annual return of 6-8% would double your investment in 9-12 years.

This highlights the importance of patience and a long-term outlook when investing.

Why Time Is Your Best Asset When Investing

When it comes to investing, the earlier you start, the more time your money has to grow. The power of compounding means that small, consistent investments over time can lead to significant financial growth. Even if you start small, the key is to stay invested for the long term.

How to Start Investing in ASX Shares for Long-Term Wealth

Starting your investment journey with ASX shares doesn’t have to be complicated. By opening a brokerage account, investing small amounts, and understanding tools like the Rule of 72, you can set yourself on the path to building long-term wealth. The key is to start early, stay consistent, and focus on the long-term growth potential. Investing in ASX shares offers an accessible way for beginners to grow their wealth steadily over time, securing a stronger financial future.