I’m a big advocate 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.
With that in mind, here’s how $20,000 investments in these ASX shares would have fared:
Breville Group Ltd (ASX: BRG)
The Breville share price has been an exceptionally strong performer over the last 10 years. Thanks to consistently strong earnings growth due to the increasing popularity of its appliances and its international expansion, Breville shares have thoroughly beaten the market since 2010. During this time they have generated an average total return of 26.9% per annum. This would have turned a $20,000 investment into a whopping $215,000.
Fortescue Metals Group Limited (ASX: FMG)
It hasn’t been a smooth ride over the last 10 years, but the Fortescue share price has still generated market-beating returns for investors. This is thanks largely to its performance over the last few years following a significant reduction in its costs and buoyant iron ore prices. This has led to Fortescue shares generating an average total return of 14.9% per annum over the period, which would have turned a $20,000 investment in 2010 into $80,210 today.
Resmed Inc. (ASX: RMD)
The growing prevalence and education of sleep disorders and its industry-leading solutions has led to this medical device company delivering consistently strong earnings growth over the last decade. As you might expect, this strong earnings growth has underpinned equally strong returns for its shareholders. Over the last 10 years ResMed shares have provided investors with an average total return of 21.8% per annum. This means that if you were lucky enough to have invested $20,000 into its shares 10 years ago, your investment would have grown to be worth ~$144,000 in 2020.
While not all shares will generate as strong returns as the ones above, I believe if you look for companies with strong business models and positive long term outlooks you have a good chance of generating market-beating returns.
The key is to invest wisely, be patient, and let the power of compounding work its magic.