3 shares to buy and hold for the next 10 years


The buy and hold method of investing has been called into question more times than I care to count.

It’s been called boring and old fashioned, yet history has repeatedly shown us that investors reap greater rewards in the long-run by following this strategy than by constantly trading in and out of shares.

Sure, hearing a hot stock tip from a friend of a friend at a barbeque may seem more exciting, but those who have actually held onto shares of high-quality businesses over the course of five, or even ten years can appreciate just how exciting compounded returns are as well.

Of course, this method does take temperament. Even some of the most experienced investors are tempted to sell their shares, from time to time, in the hope of avoiding short-term pain. But by remaining patient and holding on for the long haul, the rewards can be truly phenomenal.

For those investors wanting to invest in some businesses that could pay off handsomely in the long-run, XERO FPO NZX (ASX: XRO) is an attractive option. The company provides a cloud-based accounting platform that is rapidly growing in popularity. Sure, it may look pricey right now as it invests heavily in development and customer acquisitions, but that investment should be rewarded over time thanks to its strong customer retention rates.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), or Soul Patts, is a pretty boring business and is thus often ignored by investors with a mandate for ‘excitement machines only’ in their personal portfolios. However, Soul Patts has withstood the test of time (it is the second-oldest surviving company listed on the ASX). It also maintains excellent diversification among a number of key industries, such as agriculture, telecommunications, construction and pharmacies. It has also doubled its dividend over the last 10 years, with the prospect of further growth over the coming decade.

Another company you could look to own for the long-term is Somnomed Limited (ASX: SOM), which provides treatment solutions for sleep-related breathing disorders such as sleep apnea. It’s a somewhat less intrusive (and cheaper) treatment compared to some of the alternatives, resulting in a high rate of compliance among those being treated. Compliance is vital and is monitored closely by the doctors treating the patients. This potentially makes it more likely they will recommend SomnoMed’s products in the future.

As Warren Buffett once said, “I buy on the assumption that they could close the market the next day and not reopen it for five years.” Committing to a long-term investment can be mentally challenging, but also truly rewarding if the investment thesis plays out.

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Motley Fool contributor Ryan Newman owns shares of Xero. 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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