I love investing in ASX shares for the long term and then just being patient. Compounding is a very strong financial force if given the time to generate wonderful results.
The tricky thing is knowing which investments can generate a good long-term performance. This article is going to be about two ASX shares which I really like as ideas for the next decade.
Johns Lyng Group Ltd (ASX: JLG)
I recently made this ASX share one of my larger positions after investing again in the company.
For starters, I like the value on offer – it's down 33% from April 2022 and it's currently valued at 28 times FY24's estimated earnings, according to Commsec.
This business is a building services group that delivers building and restoration services in Australia, the US and New Zealand. Its core business is about rebuilding and restoring a variety of properties and contents after insured events including impact, weather and fire events.
Clients include major insurance companies, commercial businesses, local and state governments, body corporates and owner corporations, and retail customers.
It's growing at a strong rate – in FY23, revenue rose 43.2% to $1.28 billion and net profit after tax (NPAT) improved 64.3% to $62.8 million. Business as usual revenue is expected to grow by another 18.5% in FY24.
I think this ASX share can grow in a number of ways – the core business can keep increasing in scale and it's benefiting from the growth in value of catastrophe work. The ASX share can also grow into different countries, lengthening the growth runway. Johns Lyng is expanding in fire, smoke alarm, electrical and gas safety and compliance, and it's acquiring body corporate managers – it's building impressive synergies between its core business and the growth areas I just mentioned.
In five to ten years, I think this could be a much bigger business with a stronger presence across various areas of the property maintenance and industrial world.
Vanguard MSCI Index International Shares ETF (ASX: VGS)
This is an exchange-traded fund (ETF) that gives Aussies the ability to invest in the global share market for a very reasonable fee of just 0.18% per annum. That means almost all of the fund's value stays in the hands of investors, rather than being eaten by management fees and performance fees.
It is invested in a large number of the world's biggest companies listed in "major developed countries" according to Vanguard. We're talking about around 1,440 holdings (at the time of writing) – that's a lot of diversification!
The biggest businesses have the largest allocation, though they don't dominate the portfolio because there are so many other names. They aren't ASX shares, but we can invest in names like Apple, Microsoft, Alphabet and Amazon.com on the ASX.
One of the main things I like about the global share market is that plenty of the businesses involved (with larger market capitalisations) retain a healthy amount of profit each year to reinvest in more growth activities. Plus, many of these holdings are among the strongest businesses the world has ever seen in their respective categories.
Over the five years to November 2023, the Vanguard MSCI Index International Shares ETF has delivered an average return per annum of 12.3%. A long-term return of more than 10% per annum would be very helpful for wealth-building over the next decade, though there's no certainty about what the future returns will be.
