If you’re just starting out with investing, I wouldn’t worry if you don’t have tens of thousands of dollars to invest. Even if you only have $5,000 to invest each year, you can still generate material wealth if you do it consistently and think long term.
According to research by Fidelity, the Australian share market has generated an average total return of ~9.2% per annum over the last three decades. Based on this, if you invested $5,000 each year for the last 30 years (and earned the market return), your portfolio would now be valued at a massive ~$773,000.
Overall, I believe this shows just how rewarding it can be to make regular investments over a long period.
But which shares should you buy with your first $5,000? Two ASX shares that I think could provide market-beating returns over the long term are listed below:
Afterpay Ltd (ASX: APT)
Although it is a reasonably high risk option because of its lofty valuation, I still believe Afterpay could be a great long term investment. I believe the buy now pay later provider is well-positioned for growth over the next decade and beyond thanks to the growing popularity of the payment method with consumers and merchants and its massive market opportunity in the United States.
In addition to this, I believe the company is very likely to expand into new territories in the near future. I suspect mainland Europe could come first and then probably the Asian market with the support of its substantial shareholder, WeChat. If it makes a success of these expansions, then Afterpay could become a payments giant in the future.
Altium Limited (ASX: ALU)
I think it is fair to say that 2020 has been a disappointing year for Altium. Unfortunately, it is one of the few tech companies which have been negatively impacted by the pandemic. Nevertheless, I believe this is a short term headwind and expect its growth to accelerate again in FY 2021.
Especially given how it is exposed to the growing Internet of Things (IoT) market. According to a company presentation, global technology spending on IoT is expected to reach US$1.2 trillion in 2022. Given that the vast majority of IoT devices have printed circuit boards inside them, this should lead to strong demand for its award-winning electronic design software.
And here are more exciting shares which could be destined for big things in the future…
One trick to potentially generating life-changing wealth from the stock market is to buy early-stage growth companies when their share prices still look dirt cheap.
Motley Fool’s resident tech stock expert Dr. Anirban Mahanti has identified 5 stocks he thinks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
More reading
- ASX 200 down 0.2%: Afterpay hits record high, TPG Telecom merger vote
- Why Afterpay, APA, Evolution, & Sonic shares are storming higher
- Coronavirus second wave potential could drive investment portfolio changes
- Best growth shares to buy with $4,000
- 5 things to watch on the ASX 200 on Wednesday
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 Altium. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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