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Where I would invest $5,000 in the share market

An investment of $5,000 a year may not sound like it has the potential to be a life-changer, but over a long enough period of time it certainly can be.

Based on the local market’s average return of 9.8% over the last three decades, $5,000 invested every year over that period of time would have grown to be worth approximately $875,000 today if it had matched the market return.

Just two years later, if the market return stayed the same, this investment would have grown to approximately $1,055,000. Not bad for a total investment of $160,000.

While there is no guarantee that the market will provide the same level of return over the next three decades, I remain optimistic that it will and believe it is well worth considering this strategy.

With that in mind, here are three shares that I would consider investing that first $5,000 into:

Altium Limited (ASX: ALU)

Although this electronic design software company’s shares look expensive at present, I believe its leading position in a rapidly growing industry goes some way to justifying this premium. Management is targeting 100,000 active subscribers of its flagship product, Altium Designer, by 2025. If it achieves this, it believes it will compel key stakeholders within the manufacturing and supply chain industry to support its agenda to transform electronic design and its realisation. I think this makes it a great buy and hold option.

Cochlear Limited (ASX: COH)

Cochlear is a hearing solutions specialist and, in my opinion, one of the highest quality companies on the local market. In August the company posted a 10% increase in net profit after tax to $245.8 million. I expect similarly solid growth in FY 2019 and beyond thanks to its exposure to the ageing populations trend. As populations around the world get older, demand for hearing products is expected to grow strongly. Pleasingly, with Cochlear’s industry-leading products sold in over 100 countries worldwide, I feel it is well-positioned to profit from this tailwind.

Webjet Limited (ASX: WEB)

Over the last 10 years Webjet’s shares have been amongst the best performers on the local market. And with the inbound and outbound tourism boom showing no signs of slowing, ticket prices increasing, and more and more travel bookings being made online, I believe it is well-positioned to continue its stellar growth for many years to come. Especially given how its numerous brands continue to grow bookings ahead of the industry average growth rate.

And this buy-rated share could be a great option for that second $5,000 if you ask me.

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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 Altium. The Motley Fool Australia has recommended Cochlear Ltd. and Webjet 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.

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