How you could turn $5,000 into $750,000 in the Australian share market

One of the most effective ways of growing your wealth in the past has been through investing in the share market on a regular basis over a long period of time.

Over the last three decades the Australian share market has provided investors with an average return of 9% per annum according to research by Fidelity.

This means that if you invested $5,000 in the share market 30 years ago and earned the market return over that period, that single investment would have grown to be worth $66,000.

Whilst this is a great return, it would have been significantly better if further annual contributions had been made.

For example, an investment of $5,000 in the share market each year over the last 30 years would have grown to be worth $750,000 today if it achieved the market return. I believe this demonstrates just how rewarding it can be to invest in this manner.

And while there’s no guarantee that the share market will do the same over the next three decades, I’m optimistic that it will achieve something similar.

In light of this, here are three shares that I think would be great options for a $5,000 investment today:

Altium Limited (ASX: ALU)

Altium is an electronic design software company which I think would be a great long-term investment. Due to the explosive growth of the Internet of Things market, Altium has been experiencing incredibly strong demand for its software. Pleasingly, management appears confident that this will continue to be the case for the foreseeable future. Last month it announced an aspirational revenue target of US$500 million by 2025, which will be a 150% increase on the company’s revenue target for FY 2020.

Appen Ltd (ASX: APX)

Appen is the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence. This is another market which is expected to grow at a very strong rate over the next decade, potentially putting Appen in a position to continue its stellar growth for many years to come. Last month the company posted a 153% increase in underlying full year EBITDA to $71.3 million thanks to increasing demand for quality training data from the accelerating AI market.

REA Group Limited (ASX: REA)

I think this property listings company could be a great long-term investment option. Especially after it proved that its business model can continue to thrive even in a property downturn. In the first half of FY 2019 REA Group grew its revenue by 15% to $469.2 million, EBITDA by 19% to $289.1 million, and net profit by 20% to $176.6 million. I expect its growth to accelerate once conditions in the property market improve.

And here are three more highly rated shares that could be great buy and hold investments.

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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 and 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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