Investing for the long-term makes a lot more sense to me than trying to beat the market in short-term time periods. Things become a lot easier when you give yourself more time to achieve something. If you aim to run the marathon in a months’ time then that’s probably not a good idea. If you give yourself three years then that’s much more achievable. I think the same approach can be taken with investing – it’s much easier to beat the market if you think about the three years or beyond as your timeframe. Trying to beat the market over…
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Investing for the long-term makes a lot more sense to me than trying to beat the market in short-term time periods.
Things become a lot easier when you give yourself more time to achieve something. If you aim to run the marathon in a months’ time then that’s probably not a good idea. If you give yourself three years then that’s much more achievable.
I think the same approach can be taken with investing – it’s much easier to beat the market if you think about the three years or beyond as your timeframe. Trying to beat the market over 12 months will give you much less chance of success.
Holding shares forever allows compounding to work, saves on brokerage and means minimal capital tax gains events.
So, which shares are buy-and-hold-forever ideas? Here are two:
Vanguard MSCI Index International Shares ETF (ASX: VGS)
Firstly, it has been proven over the long-term that you can beat many investors simply by achieving average market returns. High fees and poor investment choices usually lead to disappointing returns.
So why not just invest in the whole market? Not just the ASX or the US market, but the global share market through an index fund. That way, you’re not reliant on a top stock picker or yourself to choose the shares.
This index’s top holdings include all of the best global businesses like Apple, Facebook, Alphabet (Google), Berkshire Hathaway and Amazon.
This particular low-cost global Vanguard exchanged-traded fund (ETF) will mean you don’t miss out on any share market region that does well – Asia could be the place to be over the next decade or two.
Pleasingly for buyers, its valuation has declined by 6% since 4 October 2018.
InvoCare Limited (ASX: IVC)
There are only two things certain life as the saying goes: death and taxes. Until immortality is invented this will continue to be the case.
Despite the morbid sector that InvoCare operates in, I think it could be a good option. It has a market share of a third of the funeral industry which means it generates a good almost-guaranteed level of revenue and earnings each year.
Death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050. Even after 2050 the number of deaths may continue to rise, just at a slower pace.
The share price has been hit considerably in recent times due to the short-term pain of renovating its properties to be brighter, modern and more celebratory locations. The number of deaths has also been lower due to a pleasing benign flu season. However, in a future period the number of deaths will be even higher to ‘make up’ for it.
Over the long-term I think it will be InvoCare’s impressive return on equity, growing profit and increasing dividend which will likely dictate a decent market-beating returns.
InvoCare is currently trading at 22x FY19’s estimated earnings.
I’d be happy to own both of these shares forever, I certainly plan on doing so with my InvoCare shares. I don’t own any Vanguard units yet, but if the market drops then I do so to increase my international share exposure.
Another share I’d be happy to hold for the long-term is one of these top stocks which has a strong tailwind thanks to the ageing demographics of Australia.
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Motley Fool contributor Tristan Harrison owns shares of InvoCare Limited. The Motley Fool Australia has recommended InvoCare Limited and Vanguard MSCI Index International Shares ETF. 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.