One of the most successful investors in modern times is Warren Buffett.
The legendary investor has consistently generated market-beating returns over several decades.
In fact, at the end of 2019 Buffett's Berkshire Hathaway had achieved an annual average return of 20.5% since it began trading in 1965.
To put that into context for you, if you had invested just $1,000 into Berkshire Hathaway in 1965, then your investment would have been worth a staggering $23.6 million at the end of last year.
The incredible thing with this is that Mr Buffett has achieved all this despite using a relatively simple investment strategy – buy and hold investing.
This strategy will see an investor buy shares in companies with strong business models, competitive advantages, talented management teams, and positive long-term outlooks. Investors then hold onto the shares over a long period of time (barring any fundamental changes that impact the investment thesis) and let the magical power of compound interest do the rest.
How can you do this today?
There's nothing to stop readers from following in Warren Buffett's footsteps and investing this way.
All you need to do is look for those quality companies that you can invest in with a long term view.
The good news is that there are a decent number of companies on the S&P/ASX 200 Index (ASX: XJO) which I believe have the potential to generate strong returns for investors over the next decade and beyond.
These include artificial intelligence data company Appen Ltd (ASX: APX), radiology IT software and services provider Pro Medicus Limited (ASX: PME), and cloud-based business and accounting software provider Xero Limited (ASX: XRO).
I believe all three are high quality companies that have massive global addressable markets which they can grow into over the long term.
