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5 tech shares that could make you a millionaire

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One of the keys to investing is looking to the long term as patience pays better than anything else in building a fast-growing investment portfolio.

Over the short term individual share prices will often follow market sentiment or sector swings up and down, but over the long term share prices will follow earnings growth and expectations for ever greater cash flows being dished out to investors as time passes by.

In fact if you are able to identify businesses that can consistently grow earnings at double-digit rates over 3, 5, or even 10-year time horizons you are likely to be an extremely successful investor.

Just $50,000 invested today and $1,000 added on a monthly basis will see you build a portfolio of $1,041,962 after just 17 years. This is possible achieving a 12% per year total return, which means it should be achievable without taking excess risk.

This is important as taking excess risk and not sufficiently diversifying your investment portfolio is not recommended and normally a recipe for disaster.

Below I have five companies that have the potential to deliver these kinds of returns over the long term.

XERO FPO NZ (ASX: XRO) is the cloud accounting business that reported strong global user growth today with a huge global addressable market of small business users to tap into. A capital compounding machine built for the future, I expect it will produce strong returns in the years ahead. Shares sell for $14.40.

Vocus Communications Limited (ASX: VOC) is a founder led fibre-optic internet, data centre, and broadband services business. Its growth has been strong thanks to some powerful digital tailwinds and the fact it owns plenty of fibre optic cable internet infrastructure in Australia. The implementation of the NBN and the opportunity to win market share across this new internet backbone looks another big growth opportunity. Shares sell for $8.90.

iSentia Group Ltd (ASX: ISD) is a media monitoring business that provides reporting services to public and private enterprises in order to keep them up to date with online mentions in the fast evolving digital media. Leveraged to the explosive growth of social media and scaleable this business could keep growing strongly for a long time. Shares sell for $3.80.

Freelancer Ltd (ASX: FLN) is the online marketplace that lets employers like small businesses recruit freelance staff to carry out tasks that are commonly digital in nature. These could include website design, or SEO optimisation and social media promotion. The business is cashflow positive and building a network effect that could deliver years of strong growth. Shares sell for $1.61.

REA Group Limited (ASX: REA) is the online operator of realestate.com.au in Australia and an excellent example of how a network effect can deliver years of double-digit growth for website operators. Outside Australia, it part-owns US website move.com, which is now delivering strong growth thanks in part to the backing of REA’s majority owner News Corp (ASX: NWS). REA Group also owns multiple early-stage real estate businesses in SE Asia with eye-watering growth potential over the long term. Shares sell for $54.54.

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Motley Fool contributor Tom Richardson owns shares of REA Group Limited, Vocus Communications Limited, and Xero.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of Xero. 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 Bruce Jackson.

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