I'm a massive fan of buy and hold investing and believe it is one of the best ways for investors to generate wealth.
For example, as I've mentioned many times previously, a $5,000 investment once a year has the potential to grow significantly thanks to the wonderful power of compound interest.
According to research by Fidelity, as of the end of 2018, the Australian share market had generated an average total return of 9.1% per annum over the last three decades.
Which means that a single investment of $5,000 per annum for the last 30 years would have grown to be worth a total of $760,000 today. I believe this demonstrates just how rewarding long-term buy and hold investing can be.
With that in mind, here are three shares to buy with that first $5,000:
a2 Milk Company Ltd (ASX: A2M)
I think this fresh milk and infant formula company's shares could generate strong returns for investors over the next few years. This is thanks to the increasing demand for its products in China, it's strong pricing power, and expansion opportunities for its fresh milk segment in North America.
Cochlear Limited (ASX: COH)
Cochlear is a global developer, manufacturer, and distributor of cochlear implantable devices for the hearing impaired. I'm a big fan of the company due to its leading position in a market with high barriers to entry and strong growth prospects because of the ageing population tailwind. Overall, I believe Cochlear is well-placed to deliver above-average earnings growth long into the future.
Nanosonics Ltd (ASX: NAN)
Another place to consider investing that $5,000 is Nanosonics. It is an infection control specialist which I believe has significant growth potential because of both its industry-leading trophon EPR disinfection system for ultrasound probes and its plan to launch new products targeting other unmet needs in the near term. If these new products are half as successful as the trophon product, then Nanosonics' shares could provide stellar returns for investors.
