Although making a single $5,000 investment in the share market once a year may not sound like it would grow your wealth materially, if you do it long enough and let compounding interest do its magic, it certainly can.
Based on an average return of 8% per annum, an investment of $5,000 each year for a period of 30 years would grow to be worth a total of $612,000.
I believe this shows just how rewarding long-term buy and hold investing can be and how if you start early, you can retire very rich.
With that in mind, here are three shares to buy with that first $5,000:
Bravura Solutions Ltd (ASX: BVS)
This leading provider of software products and services to the wealth management and funds administration industries could be a great place to invest that first $5,000. I’m a big fan of the company due to its Sonata wealth management platform. Sonata has underpinned strong earnings growth over the last few years and looks set to continue doing so over the coming years thanks to its quality and large global market opportunity. In addition to this, the company is on the lookout to bolster its growth through earnings accretive acquisitions following a capital raising.
Cochlear Limited (ASX: COH)
Cochlear manufactures and distributes industry-leading cochlear implantable devices for the hearing impaired globally. I think it could be a great long-term investment due to its position as a market leader in a structural growth market which has high barriers to entry and attractive demographics. Overall, I feel this has positioned the company to continue being a market beater over the next decade.
REA Group Limited (ASX: REA)
A final option for that $5,000 is this property listings company. I have been very impressed with the way REA Group has continued to deliver solid profit growth despite the housing market downturn. So with recent data suggesting that the Australian housing market could be close to bottoming, there’s a fair chance that house prices will rebound in 2020. If this happens then it could lead to an increase in property listings and an acceleration in the company’s profit growth.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd and Cochlear Ltd. The Motley Fool Australia has recommended Bravura Solutions Ltd, Cochlear Ltd., and REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019