Given the weak outlook for interest rates in Australia, if I had $5,000 sitting in a bank account I would consider putting it to work in the share market.
Especially given how the Australian share market has provided an average annual return of 9.1% over the last 30 years according to research by Fidelity.
If it can achieve this again over the next five years, then that $5,000 investment will be worth almost $8,000.
Whereas if you leave the funds in a savings account, you’ll be lucky if it has reached $5,400 by the end of the five years.
But where should you invest? There are a lot of quality options on the local market, but three that I think are amongst the best are listed below:
LiveTiles Ltd (ASX: LVT)
If you have a high tolerance for risk then LiveTiles could be one to consider. The small cap tech company provides a digital workplace platform which helps businesses boost their employee engagement through the creation of internal dashboards, intranet portals, and collaborative online working environments. In FY 2019 LiveTiles reported a 167% increase in annualised recurring revenues (ARR) to $40.1 million. Management appears confident this strong growth can continue and is targeting ARR of $100 million by the end of June 2021.
REA Group Limited (ASX: REA)
I think that this property listings company is a great buy and hold blue chip option due to its leadership position, strong pricing power, new revenue streams, and robust business model. The latter led to REA Group reporting an 8% increase in revenue to $874.95 million and a 6% lift in net profit from core operations to $295.5 million in FY 2019 despite the housing market downturn. And with conditions in the housing market improving, now could be an opportune time to buy its shares.
Transurban Group (ASX: TCL)
If you’re looking for income options then I think this toll road operator could be a good option. Transurban was a strong performer in FY 2019, reporting a 12.3% increase in proportional EBITDA excluding significant items to $2,016 million. Pleasingly, management remains positive on its outlook and further solid growth appears likely in FY 2020. In light of this, the company has plans to increase its distribution by 5.1% to 62 cents per security. This equates to a forward 4.2% distribution yield.
As well as Transurban, here are three top shares which are growing their earnings and dividends at a strong rate. All three have recently been named as shares to buy.
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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 and has recommended Transurban Group. The Motley Fool Australia has recommended LIVETILES FPO and 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.