Buy and hold investing is one of the most popular investment strategies and used (to great effect) by legendary investor Warren Buffett.
The strategy sees investors buy quality shares and then hold onto them for the long term, allowing compound interest to work its magic.
To demonstrate how successful it can be, every so often I like to pick out a number of popular ASX shares to see how much a single $20,000 investment 10 years ago would be worth today.
With that in mind, here’s how $20,000 investments in these ASX shares would have fared:
Aristocrat Leisure Limited (ASX: ALL)
Thanks to its industry-leading pokie machines and its expansion into digital and mobile gaming via some very successful acquisitions, Aristocrat Leisure has been a strong performer over the last 10 years. This has led to above-average sales and earnings growth, which has underpinned market-beating returns for investors. Over the last decade, the Aristocrat Leisure share price has generated an average total return of 25% per annum. This would have turned a $20,000 in 2010 into $186,000 today.
Over the last decade this property listings company has benefited greatly from the shift online and carved out a leadership position in the industry for itself. Unsurprisingly, this has supported very strong earnings growth since 2010, much to the delight of long term shareholders. Over the 10 years, the REA Group share price has generated an average annual total return of 29.2%. This means that a $20,000 investment would be worth $259,000 today.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
Despite losing almost a third of its value over the last 12 months due to the impact of the pandemic on the travel industry, this airport operator’s shares have still smashed the market since 2010. Thanks to its position as the busiest airport in Australia and the global tourism boom, Sydney Airport shares have provided investors with an average total return of 11.9% per annum over the last 10 years. This would have turned a $20,000 investment into almost $62,000.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.