People think of the share market as being the riskiest asset class out of choices like cash, bonds, property and shares.
However, I wouldn't describe shares as the riskiest, just the most volatile. Risk and volatility shouldn't be seen as the same thing if you're a long-term investor.
Being a long-term investor is easy, you just hold your investment for a long time. The important part is that you choose an investment that should beat (or at least match) the market over the long-term.
Here are two of my favourite ideas for long-term investing:
InvoCare Limited (ASX: IVC)
InvoCare is the market leading provider of funerals in Australia, with a market share of around 25%. It also has operations in New Zealand and Singapore.
Funerals may not sound like an industry with a strong 'moat', but brand power and reputation is important, InvoCare states that around 70% of business is from referrals and repeat business.
InvoCare has over 250 locations, including 16 cemeteries and crematoria. The business owns many brands, some of which are national and some are local. Its business model delivers efficiencies from consolidation.
Management believe that strong year-on-year growth of the number of deaths should result in good long-term growth for InvoCare, which should grow the operating earnings per share (EPS) by 10%.
In the half-year result to 30 June 2017, revenue grew by 1.7%, expenses dropped by 0.6%, operating earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 9.9% and operating EPS grew by 13.2%. InvoCare also grew the dividend by 8.8%.
InvoCare is currently trading at 28x FY18's estimated earnings with a grossed-up dividend yield of 3.85%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
The name is quite a mouthful, so people often shorten it to 'Soul Patts'.
Soul Patts is one of the oldest businesses on the ASX, it has been listed on the ASX since 1903 and has paid a dividend every year to shareholders. In-fact, it has increased its annual ordinary dividend every year since 2000.
It describes itself as an investment house with investments in a diverse portfolio of assets across a range of industries. This is an accurate description, Soul Patts owns a number of properties, but most of its money is invested in a few key businesses.
Some of its biggest holdings are in shares like TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW), Australian Pharmaceutical Industries Ltd (ASX: API) and New Hope Corporation Limited (ASX: NHC).
Soul Patts is a low-risk investment, yet it has outperformed the market. Over the last 10 years Soul Patts has delivered total shareholder returns (TSR) of 9.6% per annum and TSR of 12.8% per annum over the past 15 years.
It's currently trading at 16x FY18's estimated earnings with a grossed-up dividend yield of 4.32%.
Foolish takeaway
Both shares are trading at close to their all-time highs, just like most other shares with positive futures. I'd be comfortable making an ultra-long-term investment at the current prices, but I think a better price will present itself next year for both shares.
