If you're starting out with investing, don't worry if you don't have tens of thousands of dollars to invest in the share market.
This is because if you are able to invest $5,000 per year, you can still generate significant wealth if you do it over a long period of time.
For example, research by Fidelity shows that the Australian share market has generated an average total return of 9.1% per annum over the last three decades.
This means an investment of $5,000 each year for the last 30 years would have grown to be worth a total of $760,000 today if it earned the market return. I think this demonstrates just how rewarding long-term buy and hold investing can be.
With that in mind, here are three shares I would buy with that first $5,000:
A2 Milk Company Ltd (ASX: A2M)
I believe this infant formula and fresh milk company would be a great option for that $5,000 investment. I think a2 Milk Company is well-positioned to continue its strong growth in FY 2020 thanks largely to increasing demand for its infant formula in China, its strong pricing power, and the expansion of its fresh milk footprint in the United States. In FY 2019 the same drivers led to the company delivering a 41.4% increase in revenue to NZ$1,304.5 million and a 46.1% increase in EBITDA to NZ$413.6 million.
Nearmap Ltd (ASX: NEA)
With its shares down 42% from their high, I think now could be a good time to invest in this aerial imagery technology and location data company. Nearmap has really caught the eye over the last couple of years after growing its sales at an astonishing rate thanks to the increasing demand for its services in both Australia and North America. Due to the quality of its offering, new product releases, and its massive market opportunity in the United States, I remain confident that it will continue its strong form in FY 2020.
Xero Limited (ASX: XRO)
I think Xero could be a fantastic buy and hold option for investors due to its positive long-term growth outlook thanks to the large market opportunity its high quality business and accounting software has globally. It is quickly becoming the platform of choice for small and medium sized businesses across the globe. I've been impressed with its progress over the last few years and feel confident that there will be more of the same in FY 2020 and beyond.
