I continue to believe that the best way for investors to grow their wealth is to invest in quality companies with strong business models and growth prospects.
However, rather than trading in and out of them, I believe a long term focus should be taken. This is because by doing things this way, investors can benefit from compound interest.
Compound interest is what happens when you reinvest interest, instead of paying it out. It explains why a $20,000 investment generating a 10% return per annum will be worth $22,000 in one year and then ~$52,000 in 10 years.
With that in mind, I thought I would look at shares which I believe could provide outsized returns for investors over the next decade and beyond.
Three that I believe can achieve this are listed below. Here's why I would buy them:
Appen Ltd (ASX: APX)
The first ASX share to consider buying is Appen. It is a leading developer of high-quality, human annotated datasets for the machine learning and artificial intelligence (AI) markets. Due to the importance of machine learning and AI for businesses and governments, spending on these markets is expected to grow materially over the next decade. This bodes well for Appen due to its strong market position and long track record of working with tech giants such as Apple, Facebook, and Microsoft.
CSL Limited (ASX: CSL)
I think CSL would be a fantastic buy and hold option for investors. This is due to the quality and strength of the biotherapeutics company's CSL Behring and Seqirus businesses. I believe their life-saving therapies and vaccines, expansive plasma collection network, and lucrative research and development pipelines have positioned CSL perfectly for long term growth.
NEXTDC Ltd (ASX: NXT)
Another top option to consider buying is NEXTDC. It is an innovative data centre operator which has a collection of world class centres in key locations across the country. Demand for its services has been growing very strongly in recent years, underpinning solid earnings growth. Pleasingly, with demand expected to continue growing at a rapid rate for some time to come due to the cloud computing boom, I expect more of the same from NEXTDC over the next decade.
