There are many ways to make a million dollars in the stock market, but one method is more reliable than the other.
History shows that patient investors can build a multimillion-dollar portfolio using modest annual returns over long periods of time. This is a good description of master investor Warren Buffett’s strategy, and an even better fit for index fund legend John Bogle. So if you’re looking for a million-dollar investment idea, you should really look for companies and stocks that can remain relevant and financially healthy for decades to come.
On that note, I’d like to introduce you to three tenacious stocks that can carry that heavy weight. Amazon (NASDAQ: AMZN), International business machines (NYSE: IBM)and Buffett’s Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) should at least match the average return on the stock market in the near future. If you invest regularly in these robust stocks, you can become a millionaire over time.
The secret sauce of sustainable winners
The most important quality in long-term business empires is flexibility. My three choices are very different examples of this trait:
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IBM has been around for over a hundred years. What started as a maker of punched card calculators grew into a powerhouse for mainframe computers and a pioneer in PC systems. Now IBM is leaning on the big opportunities of cloud computing and artificial intelligence (AI) services.
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Berkshire was once a major fabric manufacturer. Buffett liquidated his textile factories to finance acquisitions in various areas. Today it is a giant of the insurance, manufacturing, transportation and consumer goods industries with deep interests in other areas. iPhone maker Apple (NASDAQ: AAPL) has been Berkshire’s largest holding company since 2018.
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Amazon started as a pure online bookseller, managed in founder Jeff Bezos’ garage. The company added more products to its catalog until it became synonymous with the concept of e-commerce in North America. Amazon is expanding its operations around the world, adding a world-class shipping network and a massive cloud computing system along the way, and is always looking for the next big idea.
These companies are always willing to change with the times. You’ll often find them at the forefront of the next market-wide change. That’s exactly what I want to see in my long-term investments.
Smart ways to invest like a future millionaire
Past performance is no guarantee of future results, but these three companies have proven they can stay ahead of the times.
Over the centuries, Berkshire has built a cross-industry conglomerate, led by some of the world’s best businesspeople. Big Blue is turning decades of AI research into a great short-term growth engine, sure to be followed by another unexpected strategy shift that will be useful in the 2040s and beyond. Amazon has been around for thirty years, but still acts like a hungry small upstart with countless undiscovered markets and business ideas.
You can choose any combination of these stocks to drive a diversified investment portfolio over the long term. Getting started today with a robust investment is a good start, but you’ll do even better if you commit to building on that investment for years to come. A dollar-cost averaging strategy allows you to buy more shares when they’re cheap and fewer when they’re not, averaging out market volatility as you go. Automating the process with weekly, monthly or annual stock purchases can help you stay on track.
And don’t forget to enable a Dividend Reinvestment Program (DRIP) for IBM, where the generous dividend payments make a big difference to your long-term returns:
There you have it: IBM, Berkshire Hathaway, and Amazon can help you become a millionaire in the coming decades. They may not get the job done quickly, but investments in wealth building always take time. You will follow in the footsteps of Bogle, Buffett and many other investing geniuses. They should always be part of a diversified portfolio, but these ultra-flexible companies are almost single-ticker index funds in their own right.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Anders Bylund holds positions at Amazon and International Business Machines. The Motley Fool holds positions in and recommends Amazon, Apple, and Berkshire Hathaway. The Motley Fool recommends International Business Machines. The Motley Fool has a disclosure policy.
3 hard-hitting stocks that could make you a millionaire was originally published by The Motley Fool
