As I've mentioned previously, a $5,000 investment once a year for a long enough period of time has the potential to grow into something significant due to the power of compounding interest.
Based on an average return of 8% per annum, an investment of $5,000 each year for a period of 30 years would grow to be worth a total of $612,000.
I believe this shows just how rewarding long-term buy and hold investing can be.
With that in mind, here are three shares to buy with that first $5,000:
Altium Limited (ASX: ALU)
I think this printed circuit board (PCB) design software company would be a great place to invest these funds. This is because I believe Altium is one of the best buy and hold options on the local share market due to its exposure to the Internet of Things market. As connected devices usually require a PCB inside them, I suspect demand for its software will continue growing strongly over the next decade. All in all, I expect this to allow the company to achieve its aspirational revenue target of US$500 million by 2025.
ResMed Inc (ASX: RMD)
I think the healthcare sector is a great place to look for buy and hold investments. One top share in the sector that I would consider investing the $5,000 into is ResMed. It is a medical device company focused on creating innovative solutions that treat and keep people out of hospital. It aims to achieve this through a portfolio of cloud-connected devices which care for people with sleep apnoea, chronic obstructive pulmonary disease, and other chronic diseases. Thanks to the quality of its products and its growing market opportunity, I believe ResMed could be a market beater over the next decade.
SEEK Limited (ASX: SEK)
Another top option for that $5,000 investment could be this job listings giant. Although its profit growth over the last 18 months has been a little subdued, it is worth noting that this is due to the company investing heavily in growth opportunities. I have confidence in SEEK's talented management team and believe these investments will lead to strong long-term profit growth. As a result, I expect its shares to provide strong returns for shareholders over the next decade, making it worth considering an investment today.
