I'm a big advocate of buy and hold investing and believe that it is a strategy that can create significant wealth for investors.
You only need to speak to long term shareholders of electronic design software company Altium Limited (ASX: ALU) to see just how successful the strategy can be.
Over the last decade Altium has gone from being a small cap share flying under the radar to a well-known tech star and part of the so-called WAAAX group of shares with WiseTech Global Ltd (ASX: WTC), Afterpay Touch Group Ltd (ASX: APT), Appen Ltd (ASX: APX), and Xero Limited (ASX: XRO).
This rise to prominence has led to its shares providing shareholders with an average annual total return of 44.8% over the last decade.
To put that into perspective, it means that a $10,000 investment in its shares 10 years ago would have grown to be worth a staggering $405,000 today.
While this level of return is admittedly rare, there are a good number of shares on the market that have provided similarly strong gains.
For example, the shares of ARB Corporation Limited (ASX: ARB), the 4×4 parts manufacturer, have generated an average annual total return of 22.6% over the period.
Billing software specialist Hansen Technologies Limited (ASX: HSN) has seen its shares average an annual total return of 31.1% during the last decade. This is despite its shares falling 28% from their all-time high this year due to a weak trading update in June.
And finally, Blackmores Limited (ASX: BKL) shares may be down 32% from their all-time high and trading close to a 52-week low, but they've still averaged an annual total return of 27.5% over the last 10 years.
The latter would have turned a $10,000 investment made 10 years ago into $113,000 today.
Overall, I believe these examples demonstrate the power of buy and hold investing and why it can be worth holding onto the shares of quality companies for long periods of time.
