I’m a big fan of buy and hold investing and firmly believe it is the best way for investors to grow their wealth.
To demonstrate how successful it can be, every so often I like to pick out a number of popular ASX shares to see how much a single $20,000 investment 10 years ago would be worth today.
On this occasion I’m going to change the formula slightly and look at a 5-year period. This is because there are a few shares which I want to speak about that haven’t actually been listed for a decade.
With that in mind, here’s how $20,000 investments in these ASX shares in 2015 would have fared:
A2 Milk Company Ltd (ASX: A2M)
The a2 Milk share price has been on fire over the last few years thanks largely to the insatiable appetite for its infant formula in the lucrative China market. A combination of strong sales in mainland China and among daigou shoppers in the ANZ market, has underpinned rapid earnings growth over the last five years. This has been reflected in the a2 Milk share price, which has provided lucky investors with an average annual return of 93.1% over the period. This means that if you had invested $20,000 into its shares in August 2015, your investment would be worth $537,000 today.
Appen Ltd (ASX: APX)
Incredibly, the a2 Milk share price isn’t the strongest performer in the list. Over the last five years the Appen share price has outperformed it with a staggering average annual return of 114.4%. The catalyst for this has been incredible rise of artificial intelligence (AI) and the subsequent demand for Appen’s AI and machine learning data preparation services from major technology companies such as Facebook, Microsoft, and Apple. The latter used Appen to help it develop its Siri assistant. Overall, a $20,000 investment in Appen’s shares five years ago would be worth a mouth-watering $906,000 today.
NEXTDC Ltd (ASX: NXT)
Thanks to the seismic shift to the cloud and the ever-increasing amount of data being consumed by consumers and businesses, NEXTDC’s data centres have experienced a surge in demand over the last few years. This has particularly been the case during the pandemic, with NEXTDC reporting several major contract wins. This has led to the company bringing forward capacity additions and new developments. Over the five years, NEXTDC shares have generated an average return of 35.5% per annum. This would have turned a $20,000 investment into a cool $91,500.
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*Returns as of 6/8/2020
Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia owns shares of A2 Milk and Appen Ltd. 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.