There are many ways to build wealth. You can put your savings under the mattress, invest in real estate, or buy bank bonds and CDs to generate interest income, to name just a few ideas. But of all the investment vehicles available, the stock market has been the most consistent creator of long-term wealth.
Since 1980, the benchmark S&P 500 has generated an average annual total return (including dividends) greater than 11%. Keep in mind that this figure takes into account Black Monday, the dot-com crash, the Great Recession, and the coronavirus crash.
Perhaps the best thing about the stock market is that you don’t need to have the investing intelligence of Warren Buffett to achieve financial independence. The simple act of buying game-changing companies and holding them for long periods of time is the key that can help the average investor become a millionaire. I am convinced that the following four actions can help John and Jane Q. Investor reach this financial milestone.
The first is the fintech stock Square (NYSE: SQ), which is leading the war on cash and the digital payments revolution. Even though Square has skyrocketed since the coronavirus pandemic, the growth of cashless payments is still in its infancy.
For about a decade, Square’s seller ecosystem has been its foundation. This is the operational segment that provides point-of-sale devices and analytics to help businesses succeed. Driven by merchant fees, the seller ecosystem has grown from $ 6.5 billion in gross payment volume (GPV) in 2012 to what will likely exceed $ 130 billion in 2021, based on 33.1 billion dollars of GPV crossing its network in the first quarter of 2021.
Additionally, we are seeing larger companies latching onto the seller ecosystem. In the first quarter, 61% of all GPVs were from companies with at least $ 125,000 in annualized GPV, up from 52% in the same quarter two years earlier. Square is no longer reserved for small traders.
However, it’s the digital peer-to-peer Cash App platform that should grab your attention. The monthly number of active Cash App users has more than quintupled to 36 million by the end of 2020, with gross profit per user of $ 41, compared to less than $ 5 in costs to attract each new user. Cash App gives Square a number of new ways to generate income (for example, Bitcoin trading), and quickly became the company’s premier gross margin generator.
Innovative healthcare actions are a good bet to enrich patient investors over the long term. With that in mind, there is a good chance that the backbone of telemedicine Teladoc Health (NYSE: TDOC) can help the average investor in their quest to achieve millionaire status.
If you think Teladoc was in the right place at the right time during the pandemic, you wouldn’t be wrong. Virtual tours on its platform are catapulted from 4.14 million in 2019 to 10.59 million last year. But it’s more than just a pandemic, as evidenced by the company’s average annual sales growth of 74% between 2013 and 2019.
Telehealth services offer a number of enduring benefits that will make them a mainstay of the American therapeutic landscape. On the one hand, virtual visits are considerably more convenient for patients than office visits. Conversely, it is also easier for physicians to keep tabs on their sickest / chronically ill patients via virtual consultations. While this convenience is not a substitute for all medical visits, it does take a step forward in improving patient outcomes, which insurance companies are sure to appreciate (ie.
Teladoc’s growth story also includes the cash and equity acquisition of Livongo Health in the fourth quarter of 2020. Livongo is a leading applied health signals company with approximately 658,000 diabetic members, as of March 2021. Livongo collects a large amount of patient data. and with the help of artificial intelligence, send them tips to help them lead healthier lives. Although in the early stages of its growth, Livongo was profitable on a recurring basis at the time of its acquisition.
The average investor can also earn a load of money by betting on an industry where expenses never seem to go down: pets. This is why the pet health insurer Trupanion (NASDAQ: TRUP) can be a millionaire maker.
According to the American Pet Products Association, nearly $ 110 billion is expected to be spent on pets in 2021, including more than $ 32 billion for veterinary care and product sales. It’s been no less than a quarter of a century since pet spending has declined year-over-year in the United States, making the pet industry such a sure growth trend. than that which exists in this country. With pet owners ready to do whatever is necessary to keep their four-legged family members as healthy as possible, Trupanion is an obvious buy.
At the end of the first quarter, Trupanion had approximately 944,000 registered pets, of which 610,000 subscribed to a monthly subscription service. Both digits have steadily increased by a double digit percentage. But the crazy thing is that Trupanion has only entered about 1% of the US pet market. If it were simply to match the UK, where 25% of pet owners purchase insurance for their furry family member, Trupanion would have an addressable market of over $ 32 billion.
Trupanion also has competitive advantages. It has built relationships with veterinarians at the clinical level for two decades and offers software to clinics that can handle payment at the time of service. Trupanion may be the very smallest on this list, in terms of market cap, but it packs an incredible ‘paw-try’.
Finally, take a look at Singapore-based large cap stocks. Limited sea (NYSE: SE) to offer the average long-term patient investor. Sea’s success is a reflection of its three (yes, Three) rapidly growing operating segments.
Currently, Sea’s digital entertainment division is the only one of the three to generate positive earnings before interest, taxes, depreciation and amortization (EBITDA). In particular, Sea’s mobile games were a global hit, with the company approaching 649 million active game users per quarter at the end of March. More importantly, 12.3% of those users paid to play, which is a significantly higher pay-to-play conversion rate than the mobile gaming industry average.
Arguably the most exciting of the three segments is the Shopee e-commerce platform. It’s currently the most downloaded shopping app in Southeast Asia, and it’s growing rapidly in Brazil. With a focus on fast-growing emerging markets with burgeoning middle classes, Shopee has seen the amount of merchandise purchased on its platform skyrocket from $ 10 billion in 2018 to $ 12.6 billion. dollars in the first quarter of 2021 alone.
The third operational segment of interest is digital financial services. In March, Sea had more than 26 million people paying for mobile wallet services. With many emerging markets underbanked, mobile wallets offer a way to access basic banking services.
Look for Sea Limited as one of the fastest growing large cap stocks on the planet this decade.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.