How to turn $5,000 into $1 million on the ASX

I think that one of the best ways to grow your wealth is to invest whatever you can spare into the share market consistently over a long period of time.

This is because historically the share market has provided returns that are vastly superior to bank accounts and term deposits.

In fact, according to data provided by Fidelity, as of the end of the 2018 financial year the Australian share market had provided a return of 9.1% per annum over the last 30 years.

This means that if you had invested just $5,000 per year during the last three decades and earned the market return, that investment would have grown to be worth almost $760,000 today.

Not bad for a total investment of $150,000.

Interestingly, due to the power of compounding, it would only take three more years of the same investments and returns to grow that sum into a cool $1 million.

What now?

While there’s no guarantee that the share market will provide the same level of return over the next three decades, I’m optimistic that the trend will continue.

In light of this, I think now could be a good time to consider that first $5,000 investment. Here are three shares I like the look of:

Appen Ltd (ASX: APX)

If you’re investing for the long term then I think that this developer of high-quality, human annotated datasets for machine learning and artificial intelligence (AI) would be a great option. Appen counts the likes of Facebook and Microsoft as customers, which I believe is a testament to the quality of its offering.

Aristocrat Leisure Limited (ASX: ALL)

Aristocrat Leisure is one of the world’s leading gaming technology companies. Due to a sharp decline in its share price in 2018, I think now is an opportune time to pick up shares with a long term view. Especially given its exposure to the fast-growing social and mobile gaming markets.

REA Group Limited (ASX: REA)

REA Group is the company behind the website and a number of international equivalents. I’ve been very impressed at the way the company can generate sizeable profit growth at all stages of the housing cycle and feel this demonstrates why it would be a quality buy and hold option.

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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 Appen Ltd. The Motley Fool Australia has recommended REA Group 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.

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