If you’re not sure that a $5,000 investment in the share market is worth your while, give me a few minutes to try and change your mind.
As of 30 June 2020, the Australian share market has provided investors with an average return of 8.8% per annum over the last 30 years. This is even after factoring in the chaos caused by the coronavirus pandemic in 2020.
If you were to invest $5,000 every year into the share market for 30 years and earned an 8.8% return per annum, your investments would grow to be worth almost $715,000 at the end of the period.
And thanks to the power of compounding, you will need just a further 4 years of the same to take the value of your investments beyond $1 million.
I think this demonstrates why allocating $5,000 of your funds to the share market each year is worth it and can help you generate significant wealth in the future.
With that in mind, here is where I would invest $5,000 into the share market right now:
Altium Limited (ASX: ALU)
The first share to consider investing $5,000 into is Altium. I think the electronic design software platform provider would be a great option. This is because of its exposure to the rapidly growing Internet of Things and artificial intelligence markets. Given its leadership position and the explosive growth expected from these markets, I believe it is well placed to deliver strong earnings growth over the next decade.
Pushpay Holdings Ltd (ASX: PPH)
Pushpay is a donor management and engagement platform provider. In FY 2020 it reported a very impressive ~1,500% increase in EBITDAF thanks to strong demand for its platform, particularly during the pandemic. Pleasingly, this strong form is expected to continue in FY 2021, with management providing EBITDAF guidance of US$48 million to US$52 million. This represents a 91.2% to 107% increase year on year. But its growth won’t stop there. Management is aiming to grow its revenue to US$1 billion in the future. This compares to revenue of US$127.5 million in FY 2020.
ResMed Inc. (ASX: RMD)
A final option for your $5,000 investment is this sleep treatment-focused medical device company. I believe it could be a fantastic option due to its industry-leading products and massive market opportunity. Management estimates that there are close to 1 billion people impacted by sleep apnoea worldwide. But with only ~20% of these sufferers being diagnosed, it should have a long runway for growth.
These 3 stocks could be the next big movers in 2020
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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 and recommends Altium. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX and ResMed Inc. 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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