It may not sound like a life-changing sum of money, but $5,000 invested into the share market every year for a prolonged period certainly does add up.
As of last year, data provided by Fidelity reveals that the Australian share market has averaged an annual return of 9.1% over the previous 30 years.
If it were to replicate this success over the next 30 years and you invested $5,000 into the share market each year, your investment would eventually grow to be worth $825,000.
Then two years later you would be on the verge of breaking through the $1 million mark. I believe this demonstrates how rewarding investing with a long-term view can be.
With that in mind, here are three top shares I would consider investing that first $5,000 into:
Cochlear Limited (ASX: COH)
Cochlear is a leading hearing solutions company which I believe is perfectly positioned to deliver market-beating returns for investors over the long-term. As a leader in the industry with a wide distribution network, I expect demand for Cochlear’s products will increase greatly as the global population ages.
Domino’s Pizza Enterprises Ltd. (ASX: DMP)
This pizza chain operator has had a disappointing 18 months and fallen well short of the market’s expectations. Whilst this has resulted in quite a bit of short term pain, I believe in the long-term there is much to gain for shareholders. Especially with the company intending to more than double its store network over the next seven years. This, and the work management is putting in to increase its margins, could lead to strong long-term bottom line growth.
Xero Limited (ASX: XRO)
I think that this accounting software provider could be one of the best buy and hold investment options on the local market. I have been very impressed at the way the company continues to win market share in the ANZ and UK markets. If the company can replicate this success in the US market, then the sky is the limit for Xero.
That's the first $5,000. For the next $5,000 I think one of these star stocks ought to be considered. I'm tipping them for big things this year and next.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended Cochlear Ltd. and Domino's Pizza Enterprises 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.