According to data provided by Fidelity, over the last 30 years the Australian share market has provided investors with an average return of 9.2% per annum.
This is despite major setbacks along the way including the dot-com bust and the GFC.
I feel confident that the market will repeat this feat over the next three decades, making it a great place to invest with a long-term view.
What if you invested $1,000 per year?
A $1,000 investment may not seem like it would go far, but if you do it consistently and over a long enough period it can generate incredible returns.
For example, if you had invested $1,000 each year over the last 30 years and earned the market return, those investments would have grown to be worth over $150,000 today.
Given that your wage is likely to increase overtime, you'll probably be able to invest more than $1,000 a year after the first ten years.
If you had increased your annual investment to $3,000 in the second decade and then $5,000 in the third decade, your investment would have grown to be worth over $300,000 today.
Which shares should you buy?
If you want to earn the market return, less a small performance fee, you could simply put it in an index fund that tracks the performance of the local share market.
But if you want to try and beat the market then the shares listed below could be worth considering:
Altium Limited (ASX: ALU)
With the Internet of Things market tipped to grow at a strong rate over the next decade, I believe demand for Altium's award-winning printed circuit board (PCB) design software will grow strongly. I expect this to lead to above-average earnings growth, putting its shares in a position to generate outsized returns over the long term.
CSL Limited (ASX: CSL)
CSL is a global biotech company with a strong core business and lucrative pipeline of products under development. I think this and its top notch management team make it one of the best buy and hold options on the local share market.
REA Group Limited (ASX: REA)
REA Group is the property listings company behind the popular realestate.com.au website. It also has a wide range of operations internationally which I believe will underpin solid earnings growth over the next decade and beyond.
