Due to the power of compounding, I believe buy and hold investing is one of the best ways to grow your wealth.
Compounding is earning interest on interest in a bank account or returns on returns with investments.
It explains why an average 10% return per annum will double an initial investment in just over 7 years and more than triple it in 12 years. After which, it takes only 3 more years to quadruple that investment.
Clearly, this demonstrates that the longer you’re invested, the greater your potential returns.
With that in mind, here are three top ASX shares which I think would be great buy and hold options:
Ramsay Health Care Limited (ASX: RHC)
I think Ramsay Health Care would be a great buy and hold option. While trading conditions remain tough in the private hospital sector, I remain very positive on its long term outlook. This is due to the ageing global population and increased chronic disease burden. I expect this to lead to a sustained increase in demand for its services over the 2020s and beyond. Combined with potential earnings accretive acquisitions, I believe Ramsay can grow at a solid rate over the long term.
Xero Limited (ASX: XRO)
This cloud-based business and accounting software provider could be a fantastic buy and hold option. Xero has been growing at a very strong rate over the last few years thanks to the increasing adoption of its software by small businesses across the globe. Pleasingly, with less than 20% of the global English-speaking target market estimated to be using cloud-based accounting software at present, it still has a very long runway for growth. Especially given the overwhelming benefits of cloud-based software over alternatives like an Excel spreadsheet. I expect this to lead to more businesses switching to the cloud in the coming years.
Zip Co Ltd (ASX: Z1P)
I think this payments company would be worth considering after a sharp pullback in its share price. Zip has been a very strong performer in 2020, delivering very impressive sales, customer, and merchant growth. I believe it is well-positioned to continue this strong form in the coming years, especially if it makes a success of its expansion into the United States with its recently acquired QuadPay business.
Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now
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In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.
*Returns as of 6/8/2020
James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero and ZIPCOLTD FPO. The Motley Fool Australia has recommended Ramsay Health Care 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.
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