Got $5,000? Buy These 2 Stocks and Hold Them Until Retirement

For many individuals who invest, a small amount of money, such as a few hundred dollars, doesn't have a significant impact on their finances. However, having a few thousand dollars at stake is a game-changer. It may take a considerable amount of time and effort to accumulate such funds, and so it is crucial that it is not wasted. This is especially true when saving for retirement since time cannot be regained, making it essential to make the right choices during one's working years.

Given that, let's examine a couple of excellent options for your retirement funds, which you know you won't need to use in the near future. These two options operate in established industries that have been in existence for a substantial period of time, and are expected to remain in existence for many years to come. You can confidently invest $5,000 in each (or a fraction of that total for both), and hold onto these stocks for the next several years, or perhaps even a few decades.

You're probably familiar with Nvidia, the company that played a big role in popularizing personal computers in the 90s with its graphics cards. Even though it remains at the forefront of the stand-alone GPU industry, its main source of revenue has shifted away from computer graphics.

It appears that graphics cards have abilities that are useful not only for video games and animations, but also for the processing power demands of artificial intelligence (AI) software. Experts believe that Nvidia's processors can be found in at least 80% of AI computers across the globe. In fact, the sales of Nvidia for AI purposes now make up over 50% of its entire revenue, which is projected to increase by 47% in the ongoing fiscal year, and another 27% in the following year.

However, there is still a lot of potential growth that can be achieved.

Despite the much-talked-about potential of AI, its full market has yet to be unleashed. According to Precedence Research, the entire AI industry was worth $120 billion last year, with an expected surge to almost $1.6 trillion by 2030. The rise of AI hardware is one of the biggest contributors to this growth since these physical platforms are necessary to meet the high demands for processing data. In fact, Precedence Research anticipates that the AI hardware market will increase from just over $10 billion in 2021 to close to $90 billion by 2030.

If there are no advancements in technology, it's likely that Nvidia will make the most profit from the increase in demand. Artificial intelligence is becoming a vital part of many industries and it's unlikely that it will become irrelevant. It's becoming a key sector that will continue to grow in the long haul, which makes it a great investment opportunity.

Investors who are looking for good value for their money should take note that Nvidia's shares are not inexpensive. The current price of the stock is about 60 times what the company is expected to earn per share this year, and over 40 times what they are projected to earn next year. This is considered to be quite expensive.

In some situations, a company's accomplishments and future outlook deserve a high stock price. Nvidia has been valued at these levels since its transformation in 2018, and despite this, the stock has continued to increase in value. It's unlikely the market will quickly change its mind about the company's worth, so it may be a good idea to invest now.

"Merck's Surprising Diversification"

The pharmaceutical company Merck (MRK -0.07%) offers a completely different level of growth and value compared to Nvidia, but this doesn't make it any less deserving of investment.

This drug company is known for being one of the oldest, largest, and most renowned in the world. With a market capitalization value of $275 billion, it generated sales of nearly $60 billion from its medicines in the previous year, with Keytruda, a cancer drug, contributing to almost $21 billion in revenue. While this may seem impressive at first glance, it has raised concerns among potential investors who are seeking a pharmaceutical company to invest in for the long term.

Even though it's not a rare account, AbbVie has turned into a prime example for pharmaceutical companies that neglect to maintain their stocks. AbbVie's leading product, Humira, which was highly effective in treating arthritis and colitis, used to bring in nearly half of the company's revenue. But with Humira's patent protection now almost expired, AbbVie's complete reliance on the drug's sales has turned into a severe disadvantage. This is why the recent years have been tense and unsure for AbbVie's investors... and things could have been a lot worse.

Many investors might not realize, but Merck is getting ready for the future when Keytruda will no longer be the primary source of income, although that might be years away.

As an example, even though other news has taken over, Merck's cardiovascular drug development has grown threefold over the last year. The company is hoping that their cardiovascular research and development will bring in over $10 billion in new sales annually by the 2030s. Additionally, Merck's acquisition of Acceleron Pharma for $11.5 billion in 2021 is expected to finally pay off with the successful pulmonary arterial hypertension drug, Sotatercept, in phase 3 trials. Merck has also joined up with Opko Health to collaboratively work on an Epstein-Barr vaccine, a virus currently without a vaccine. The potential market for a vaccine could be worth up to $2 billion each year, according to Coherent Market Insights.

These advancements will calm retirement-focused investors who are concerned that Merck isn't planning for the future. However, Merck is consistently restocking its research and bringing innovative medicines to the market. In fact, it is designed to do so.

Even better, the innovative business not just earns sufficient profit to support its expansion but also provides an attractive dividend. Presently, the company pays a quarterly dividend of $0.73 per share, which results in a yield of 2.6% based on current stock prices, and the management has increased the payout for the past twelve years. These are the desirable traits you seek in a stock that you intend to hold for many years.

James Brumley does not possess any shares of the stocks stated. Merck and Nvidia are both held and endorsed by The Motley Fool. The disclosure policy of The Motley Fool remains valid.