How you can become rich buying and holding ASX shares

CSL Limited (ASX:CSL) and this ASX share could be top options for investors looking to make buy and hold investments….

| More on:
ladder going between 2020 and 2030

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

I'm a big fan of buy and hold investing and believe it is the best way to generate wealth. And there's a very good reason for this.

For example, according to data out of Fidelity, as of the end of 2020, the Australian share market had provided an average total return of 8.55% per annum over the last 30 years. That's even after taking into account market meltdowns during the GFC and pandemic.

This means that a single $10,000 investment three decades ago and earning the market return would now be worth just under $120,000.

What about if you beat the market?

If you invest wisely in companies with strong business models and equally strong growth prospects, you could potentially beat the market.

For this example, let's say you were able to earn a return of 10% per annum over the period. That would turn your single $10,000 investment into $175,000 in 30 years. Not bad for a single investment! 

And if you were able to add to your investment over the years, you would be generating even more wealth as it compounds.

Overall, this demonstrates just how rewarding investing with a long term view can be.

Which shares would be good buy and hold investments?

The good news for investors is that there are a number of quality options on the Australian share market that have the potential to generate market-beating returns over the next decade and beyond.

One such share is biotechnology giant CSL Limited (ASX: CSL). It appears well-placed once the pandemic passes due to its in demand plasma-therapies and its lucrative research and development pipeline. Underpinning the latter is an almost US$1 billion annual investment in these activities. A sharp pullback in its share price in recent months arguably makes it even more attractive.

Another top buy and hold option could be Altium Limited (ASX: ALU). This electronic design software provider could have a very bright future due to its industry-leading software and the growing demand for it due to the proliferation of electronic devices globally. The latter is being driven by the artificial intelligence and internet of things booms, which show no signs of slowing.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Altium. The Motley Fool Australia owns shares of Altium. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Growth Shares

A man in full American NFL playing kit crouches over with his arms across his chest in a defensive stance against a dark background.
Growth Shares

Here's why these two ASX 300 shares are great ones to own

These businesses are two of the fastest-growing stocks in the ASX 300 and are liked by fund manager WAM.

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Growth Shares

3 ASX growth shares you'll wish you bought in June

Analysts think these shares could be destined for big things in the future.

Read more »

Father and daughter with hands on a small plant.
ETFs

Focused on growth? Here are 3 ASX ETFs to consider

Growth investors must ignore the current market noise about tariffs and focus on the long-term horizon.

Read more »

A female broker in a red jacket whispers in the ear of a man who has a surprised look on his face as she explains which two ASX 200 shares should do well in today's volatile climate
Growth Shares

Top brokers name 3 top ASX growth shares to buy now

Why are brokers feeling bullish on these names? Let's find out.

Read more »

Two plants grow in jars filled with coins.
Growth Shares

3 ASX 200 growth stocks up more than 100% in 1 year that could charge higher

It's been a memorable year for shareholders of these 3 companies.

Read more »

Afterpay share price a happy shopper with a wide mouthed smile holds multiple shopping bags up around her shoulders.
Growth Shares

The pros and cons of buying Zip shares in June

Should investors buy now or wait until later?

Read more »

A smiling woman holds a Facebook like sign above her head.
Growth Shares

3 ASX growth shares I'd buy for the next 10 years

Let's see why these shares could be top picks for the long term.

Read more »

wheelchair user in an office talking on mobile phone
Growth Shares

Why I'd buy this ASX growth share instantly

I’m calling on this stock to deliver strong returns.

Read more »