I believe that buying shares and holding onto them for the long term is one of the most efficient ways of building wealth.
This is because buy and hold investing allows investors to benefit from compound interest. This is essentially interest on top of interest or returns on top of returns when it comes to shares.
A $1,000 investment earning a 10% return will be worth $1,100 after one year, but almost $2,600 after 10 years.
And then if we look even further into the future, this single investment becomes almost $120,000 in 50 years if you continue to earn the same level of return.
With that in mind, here are a few top shares which I think would make great buy and hold investments. They are as follows:
Appen Ltd (ASX: APX)
The first share to consider buying and holding is Appen. It is a leading developer of high-quality, human annotated datasets for the machine learning and artificial intelligence markets. Due to the growing importance of machine learning and artificial intelligence, these markets are expected to continue growing materially in the future. I expect this to underpin strong earnings growth over the next 10 years.
Nanosonics Ltd (ASX: NAN)
This pandemic has shown us just how important infection control is. I believe this bodes well for Nanosonics' industry-leading trophon EPR disinfection system for ultrasound probes. In addition to this, the company is planning to launch several new products in the near future which have similar addressable markets. All in all, I feel Nanosonics is well-positioned to be a market beater over the next decade and beyond.
SEEK Limited (ASX: SEK)
Another share to consider buying with a long term view is this job listings giant. The pandemic will certainly put a lot of pressure on job listings in the near term, but I expect listings to recover once the crisis passes. Looking ahead, SEEK is aiming to grow its revenues to $5 billion later this decade. This will be a big increase on the revenue of $1,537.3 million it recorded in FY 2019.
