I firmly believe the best way for investors to grow their wealth is to make long term investments in quality shares with strong business models and equally strong growth prospects.
Three shares that I think could provide outsized returns for investors and put them on the path to an early retirement are listed below.
Here's why I think they are great long term options:
CSL Limited (ASX: CSL)
This global biotherapeutics company's shares have consistently been market-beaters over the last decade. Pleasingly, I believe they have the potential to repeat this success over the next decade. This is thanks to the quality of its therapies, its talented management team, and the high level of investment in research and development it makes each year. For example, in FY 2019 CSL invested a massive US$832 million in R&D activities across its businesses. This is more the market capitalisations of some ASX 200 companies! I believe these investments have positioned the company for solid earnings growth over the long term, making it a great buy and hold option.
REA Group Limited (ASX: REA)
Concerns over the impact the COVID-19 pandemic will have on the housing market and property listings have weighed heavily on the realestate.com.au operator's shares over the last couple of months. While these concerns are certainly not unwarranted, I believe the selling has been more than overdone. The short term may be a little bumpy, but I believe its long term outlook is very positive. In light of this, it could be worth taking advantage of its recent share price weakness and investing with a long term view.
Xero Limited (ASX: XRO)
A final blue chip to buy is Xero. The cloud-based business and accounting software provider is one of my favourite tech shares and there's good reason for this. Xero has been growing its recurring revenues at an explosive rate over the last few years thanks to the stickiness and quality of its product and increases in both its subscriber base and the average revenue it generates per user. And with cloud-based accounting products still only capturing 20% of the overall global English-speaking market, I believe Xero has a significant runway for growth.
