In today’s world of high-speed trading and short attention spans, it might seem unfathomable to hold any given stock for years, let alone decades. But the world’s best investors know all too well the best way to consistently beat the market is to buy high-quality stocks and hold them for extended periods.

To that end, we asked three Motley Fool contributors to each discuss a growth stock they think investors could do well to buy and hold for the next 50 years. Read on to learn why they chose Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), iQiyi (NASDAQ:IQ), and Shopify (NYSE:SHOP).

The rationale for each of these stocks is that they have the potential for significant long term growth. People who invested in American companies like AT&T, General Motors, Coca Cola, or Eastman Kodak early in the 20th century had at least 50 years of growth. These stocks grew with the US economy as phone service was extended to every corner of the land, more and more people had a car or two or three, everyone took photos, and everyone loved to have a Coke. It is useful to note that only Coca Cola has passed into the century relatively unscathed while digital photography essentially killed Kodak, General Motors lost out to foreign competition and passed through bankruptcy, and AT&T was broken up in anti-trust proceedings.

Reasons to Invest in Alphabet Stock

The rationale for investing in Alphabet is that they are using the dominance of the world of internet searches to fund their expansion into multiple, potentially very profitable arenas. Today eight of their products have more than a billion users each. These are Google Play Store, Gmail, YouTube, Android, Chrome, Google Drive, Google Search, and Google Maps. With their restructuring, they are now active in self-driving cars with Waymo, lifespan extension with Loon, drone delivery with Wing, life science products with Verily, and high-speed internet with Fiber. This “multiple bets” approach takes advantage of the huge number of smart people working for Alphabet and positions them for further growth in markets that are not dependent on the original internet search focus. This strategy will, hopefully, help them avoid the fate of Kodak whose business model became extinct, AT&T which was taken apart by anti-trust action, or General Motors whose product line came under unceasing attack from foreign competition.

Reasons to Invest in iQiyi

iQiyi is a Chinese company that was spun off from Baidu a year ago but which maintains a close relationship. The company is referred to as the Netflix of China. They aim to make premium subscription videos their core business. Right now they serve 20% of Chinese households compared to the 70% of American households that use Netflix. Considering that China has 1.3 billion people compared to 311million in the USA, the company has a lot more room to grow. Additionally, they are in video games and working on virtual reality. Right now the stock price is attractive because of the trade war between the USA and China. But, this is a Chinese company doing business in China and, would seem to be a Chinese company safe from tariffs. This company can be compared to Netflix, Microsoft, Apple, and other tech stories or to the early to mid-twentieth century stories of General Motors, AT&T, Coca Cola, and Eastman Kodak.

Reasons to Invest in Shopify

The rationale for investing in this company is that they appear to be well-positioned to take advantage of an expanding market in e-commerce. They are the “pick and shovel” approach when everyone wants to dig for gold. That is to say, Shopify assists businesses both large and small in selling their services and products online. This business niche is expected to grow to $25 Trillion by 2025. This company has a nice growth story but not the same sort of story as Alphabet or iQiyi when it comes to a fifty-year investment.

Is There a Safe Fifty-year Investment?

As we noted at the beginning, the Motley Fool article with its three suggested investments brought us to ask the question, is there a safe fifty-year investment? We write about the concept of intrinsic stock value so much that our readers can be forgiven if they get bored with the idea. Nevertheless, the best stocks to invest in are almost always ones that do well in intrinsic value analysis. However, this sort of fundamental analysis needs to be repeated on a routine basis. That is simply because the fundamentals change over time. New technologies replace old and Kodak goes from being the king of film, process, and printing photos to a footnote. Antitrust actions catch up with AT&T and break it up. The development of container shipping to support the Vietnam War effort brings cheap foreign products to America and undercuts American businesses including General Motors. The point is that in order to pick a safe fifty-year investment you need to be able to see into the future. What sort of investments will still be paying off half a century from now?

Your Home Is a Safe Fifty-year Investment

This is another point that we bring up every time that we write about how to start investing. You need a place to live and it is cheaper to own than to rent. The federal tax break for mortgage interest is unlikely to go away in the next fifty years. It is popular on both sides of the political divide and serves a good purpose of societal and financial stability. So, is there a safe fifty-year investment in home ownership? You bet there is and you should be taking advantage of that as early in your investing life as possible.

Are Investments That Don’t Lose Money Really Safe Investments?

We have written about how to invest without losing any money. Over the duration of a US Treasury, Bank CD, or AAA Bond, these are safe investments. You give up the potential for larger gains in return for protection against financial loss. But, over a fifty-year time span is there a safe investment in this arena? The problem with long term bank deposits, Treasuries, and AAA Bonds is that they may barely keep up with inflation or may even fall behind. As such, you will preserve your dollars at the same time that your dollars inflate and become less valuable. The closer you are to needing your investments in retirement the more you will want to be invested in this manner but over a fifty-year timespan, you need an investment that grows faster.

Dividend Stocks for Long Term Investing

In our article about dividend stocks, we provided a list of companies that have been paying dividends for more than 120 years. To keep paying dividends for this long the company has to be making money. Over the years, dividend stocks tend to outpace the market. As such, a safe fifty-year investment might come from a list of dividend stocks.

Technology Stocks for Long Term Investing

Is there a safe fifty-year investment in the tech arena? The telephone, automobile, and the film camera were “high tech” at the beginning of the 1900s. Companies that got in early and performed well dominated American business for nearly a century. And then they didn’t. The risk with tech is that you need a company that can “think on its feet” and not “rest on its laurels.” IBM comes to mind as a company that dominated the computer world until they missed the boat with small computers. Their mistakes allowed companies like Apple and Microsoft to become giants in the ever-evolving computer world. In this regard, we like Alphabet as much because it is diversifying and hedging its bets as for its dominance of internet search.

Safe Fifty-year Investments Are Ones That You Keep an Eye On

The bottom line for picking long term investments is that you need to choose wisely and, more importantly, you need to stay in touch with your investments. Whether your choice is an ETF that tracks the S&P 500 or an individual stock like Alphabet, you need to know why you choose that investment and you need to keep track to make sure that the investment still meets your criteria.

If your goal is to invest for retirement a list of good stocks would be nice to have. But, when it comes to stocks what is a good investment or stock today and will it remain a good investment tomorrow? If we look back three decades, just at the dawn of the personal computer era, IBM was the stock to have. The company and the stock price had grown for years and many investors never sold IBM despite its run up in price. They sold a few shares if they needed cash but, otherwise, expected the most powerful computer company in the world to keep growing forever. In 1976 the late Steve Jobs, Steve Wozniak, and Ronald Wayne founded Apple – APPL – and by the time IBM woke up to the challenge they nearly missed the boat on personal computing. More importantly for IBM stock the ability to network many personal computers and the invention of the GUI (graphic user interface) hugely reduced the need for IBM mainframe computers. Because IBM hurried into designing the PC (personal computer) they needed help. They paid the founders of Microsoft – MSFT – for their disc operating system and, as Bill Gates said, the flaws in the design of the PC made many millionaires out of those who created fixes.

If you had asked yourself what is the best investment for my money back in the 1980’s when Microsoft went public you would not have known that the stock would grow in huge multiples making millionaires and billionaires out of early investors. Today, after becoming one of the largest corporations in the world, Microsoft is not a growth stock but it certainly comes to mind when thinking of investing in companies with cash . Microsoft is a cash cow with good dividends and a dominant position in the computing world, much like IBM was three or more decades ago. The point of these two examples is that trusting in an individual stock can be tricky if your goal is to invest for retirement. A better approach is to find a stock with strong fundamentals and a low PE ratio and buy when prices are down. Follow the stock at least monthly and take profits if the price seems to have gone to high. Keeping enough cash for a least a few months of expenses in the bank will protect you against having to sell stock during a market downturn. A little cash also gives you the ability to buy stocks at bargain prices when the opportunity arises or to invest in US treasuries just before interest rates drop sending the values of existing bills sky high. To invest for retirement requires a long timeline, diversification, and attention on one’s investment portfolio along the way.

More Resources

Stock screening tools help in finding what stocks to invest in. There are many online as well as private screening programs. The investor can look for penny stocks, low cap stock, mid caps, or large cap stocks. Then he can select market sector, earnings, and level of debt as examples. The computerized program will present him with a list of stocks that fit the screening criteria that he entered. Then the investor needs to decide what is the best investment for my money from among the stocks listed. If the investor is looking for a constant income stream he may want to see dividend stocks that have paid out quarterly every year for decades. If he is looking for a rapid return on investment he may look for a low price to earnings ratio of a stock with a promising new product line. The rationale for investing in such a stock might be that when the rest of the market catches on to how good a stock it is that the price will be bid up and the investor can sell and take his short term profit.

Finding what stocks to invest in, forces the investor to investigate stocks in several market sectors. By doing so he seeks to balance his stock portfolio so that one set of factors will not adversely affect all of his stocks. For example, many stocks in manufacturing or transportation may fall in value as energy prices rise. A big oil stock will typically rise in value as the price of oil goes up. Investing in gold in the form of gold ETFs or gold mining stocks will often help offset the drag on a portfolio from the fall of the value of the dollar during inflationary times. Investing in consumer product companies can help protect a portfolio from the effects of a recession. Finding what stocks to invest in during an economic downturn may be as simple as investing in companies that make toothpaste or investing in beer distributors.

More Resources