As I mentioned here yesterday, the Australian share market has generated an average total return of 9.2% per annum over the last three decades.

Although we have had a poor start to the current decade, I still feel confident that the market will generate a similarly strong return over the next 30 years.

In light of this, I think investors should look to invest what they can in the share market consistently over the long term to take advantage of compounding.

For example, if you were to invest $5,000 every year into the share market for 30 years and earned a 9.2% return per annum, your investments would grow to be worth almost $775,000 at the end of the period.

And if you can maintain this for just another 5 years, you’ll see the value of your investments rise to over $1.2 million.

To help you on your way with the first $5,000 investment, I have picked out three top shares that I think would be great long term options. They are as follows:

Altium Limited (ASX: ALU)

The first share to consider investing $5,000 into is Altium. It is an electronic design software platform provider which is leveraged to the rapidly growing Internet of Things (IoT) market. Given its leadership position and the explosive growth expected from the market, I believe it is well placed to deliver strong earnings growth over the next decade.

Cochlear Limited (ASX: COH)

Another great long term option could be this hearing solutions company. While Cochlear is facing a few headwinds at the moment from the pandemic, I expect it to bounce back once the crisis passes. After all, hearing doesn’t generally fix itself. So, the sales it is missing out on now are not likely to be lost completely. In addition to this, with populations ageing around the world, I believe demand for its products will grow over the next decade or two.

SEEK Limited (ASX: SEK)

A final option to consider is SEEK. As with Cochlear, it is facing headwinds from the pandemic. But I’m confident things will improve when the crisis passes and for its growth to resume. Management has set itself an aspirational revenue target of $5 billion by FY 2025. While I suspect this may need to be pushed back a touch, I expect it will achieve it this decade. This will be a big lift on FY 2019’s revenue of $1,537.3 million.

More reading

• 5 things to watch on the ASX 200 on Thursday
• $3,000 invested in these 3 ASX industries could make you a fortune in the future
• Do the Altium and Xero share prices still represent good long-term buys?
• 3 fantastic ASX shares to buy now to get rich later
• Should you throw $3,000 into Altium shares today?

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended Cochlear Ltd. 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.

The post How to become a millionaire with a $5,000 investment in ASX 200 shares each year appeared first on Motley Fool Australia.

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Afterpay Ltd (ASX:APT) shareholders watch out, a global tech giant is launching a challenge.

Shopify is a Canadian based eCommerce giant which has one million merchants that uses its platform. 

Shopify held a conference today. Aside from a number of other Shopify-specific announcements, there was one key thing that Afterpay needs to watch closely. 

What did Shopify announce?

The eCommerce global giant is launching ‘Shop Pay Installments’. Sounds like Afterpay’s instalments right? This could be challenging even though Afterpay is growing strongly. 

As part of the announcement, Shopify said:

“It’s not just merchants who are struggling with cash flow right now; their buyers are feeling the pinch, too. To help, we’re announcing the launch of Shop Pay Installments, coming to merchants and buyers in the U.S. later this year.

Shop Pay Installments allow buyers to pay for purchases in four equal payments over time, with no interest or fees. Merchants will receive the full purchase amount upfront, and Shopify will collect the remaining installment payments, meaning there’s no risk to merchants. This flexible payment option will allow buyers to stretch out their payments, making purchases more convenient. This, in turn, will help merchants increase cart sizes and overall sales.

Installments will be fully integrated into the Shop Pay accelerated checkout, meaning merchants can continue to offer buyers a seamless checkout experience.”

I think a key part of that is that it seems Shopify will be giving merchants “the full purchase amount upfront”. There was no mention of a high merchant fee like the one Afterpay charges.

Why this could hurt the Afterpay share price

The US is a huge growth target for Afterpay. If you were a US merchant are you more likely to want a customer to use Shopify’s service (which has a lower merchant fee per transaction) or Afterpay’s service?

It could mean Afterpay will have to make a difficult choice in the future between market share and margin. It’s this type of announcement which would make me nervous about holding Afterpay shares for the long-term. At a share price of $44, Afterpay doesn’t appeal to me at all. I’d actually be thinking about taking profit off the table.

More reading

• These ASX payments shares could be long term market beaters
• ASX 200 down 0.2%: Afterpay hits a record high, Aristocrat Leisure update disappoints
• Why Afterpay, AMA, NRW, & Santos shares are racing higher
• Why I’d invest $1,000 in this ASX tech share today
• Afterpay share price on watch after hitting 5 million active US customers

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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.

The post A global tech giant wants to challenge Afterpay appeared first on Motley Fool Australia.

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The AFL season will officially resume on 11 June following an unprecedented suspension of play. This could spell good news for the Pointsbet Holdings Ltd (ASX: PBH) share price and peers such as Tabcorp Holdings Limited (ASX: TAH). 

Furthermore, as highlighted in a recent article published on the ESPN website, the US now has 18 states with regulated sports betting markets. This means just over 30% of the US population has access to legalised sports betting. The article goes on to say that more than half of all US states will offer legal sports betting within the coming years.

Also, earlier this month, 2 sports betting bills passed a vote in the Senate in Louisiana. These bills will now move to the House of Representatives. If both bills pass through the House, it’s possible sports betting will be legal in that state by the year’s end.

What does this mean for the Pointsbet share price? 

The more sports betting markets that open up, the more turnover will result for bookmakers like Pointsbet. In the company’s Q3 update for its Australian business, Pointsbet saw clients transferring to higher margin products such as thoroughbred, harness and greyhound racing. This was as a result of the suspension of AFL and NRL and the the timing could not have been better for the company. After all, it had just executed a Tier 1, Australian horse racing partnership with Channel 7.

Pointsbet’s turnover in Australia increased 58.3% in Q3 FY20 vs. Q3 FY19. Despite this being 3.5% down on Q2 FY20, this is still a strong result, particularly given the impact of coronavirus. 

With coronavirus restrictions beginning to ease, the UFC is running 3 events this month, the AFL has locked in a start date and many sports leagues around the world are planning their returns. This can only mean good news for Pointsbet’s revenue, growth and share price. 

Pointsbet in the US 

Pointsbet currently derives most of its US revenues from the state of New Jersey. It also has access in Iowa, Indiana, Kansas and Colorado. The company’s US turnover tells a similar tale to its performance in Australia. Turnover soared 285.4% between Q3 FY20 vs. Q3 FY19, but fell 19.4% on Q2 FY20 results. 

Pointsbet’s response to COVID-19 includes scaling down its major expenses including employee, sales and marketing costs. Its business costs are highly correlated with betting turnover, revenue and deposit/withdrawal volumes. As such, these costs will likely reduce proportionally with the expected fall in these metrics. Its marketing expenses are also variable in nature, and the company is preparing to significantly reduce this expense for the quarter to 30 June 2020.

Foolish takeaway 

I think the favourable regulatory conditions in the US will create a great springboard for Pointsbet’s growth as things return to ‘normal’. The company has an unbelievably strong cash position of $149.4 million, relative to its market capitalisation. It also has no borrowings. Pointsbet is cashed up and, I believe, poised for future share price growth. 

More reading

• ASX 200 market close: Share market up 1.8%
• ASX gambling shares on watch as sporting codes make plans to resume
• 3 ASX shares I should have bought last month
• Are ASX shares about to surge higher in 2020?
• Why I’m holding onto my Pointsbet shares

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. 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 post Is the Pointsbet share price poised for future growth? appeared first on Motley Fool Australia.

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