I believe that buying shares and holding onto them for the long term is one of the most efficient ways of building wealth.
This is because buy and hold investing allows investors to benefit from compound interest. This is essentially interest on top of interest or returns on top of returns when it comes to shares.
A $1,000 investment earning a 10% return will be worth $1,100 after one year, but almost $2,600 after 10 years.
And then if we look even further into the future, this single investment becomes almost $120,000 in 50 years if you continue to earn the same level of return.
With that in mind, here are a few top shares which I think would make great buy and hold investments. They are as follows:
Appen Ltd (ASX: APX)
The first share to consider buying and holding is Appen. It is a leading developer of high-quality, human annotated datasets for the machine learning and artificial intelligence markets. Due to the growing importance of machine learning and artificial intelligence, these markets are expected to continue growing materially in the future. I expect this to underpin strong earnings growth over the next 10 years.
Nanosonics Ltd (ASX: NAN)
This pandemic has shown us just how important infection control is. I believe this bodes well for Nanosonics’ industry-leading trophon EPR disinfection system for ultrasound probes. In addition to this, the company is planning to launch several new products in the near future which have similar addressable markets. All in all, I feel Nanosonics is well-positioned to be a market beater over the next decade and beyond.
SEEK Limited (ASX: SEK)
Another share to consider buying with a long term view is this job listings giant. The pandemic will certainly put a lot of pressure on job listings in the near term, but I expect listings to recover once the crisis passes. Looking ahead, SEEK is aiming to grow its revenues to $5 billion later this decade. This will be a big increase on the revenue of $1,537.3 million it recorded in FY 2019.
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More reading
- The newspaper killers: 3 ASX 200 online classifieds shares dominating the market
- Why I would buy these exciting ASX growth shares right now
- Want to invest like Warren Buffett? Buy and hold these ASX 200 shares
- 4 top ASX shares to invest $4,000 into immediately
- 2 of the best ASX 200 healthcare shares to buy for the long term
James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Nanosonics Limited and SEEK 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.
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