Day: 22 May 2020

Is the REA Group Limited (ASX: REA) share price a buy? It has been a strong performer since 23 March 2020. It’s an interesting question now that property activity is returning.

The REA Group share price has risen by around 50% since 23 March 2020. It’s now only down by 15% from 21 February 2020. That’s some recovery considering how much the landscape had been hit for REA Group.

Property listings were down significantly a few weeks ago. In April national residential listings were down 33% with Sydney listings down 18% and Melbourne listings down 24%.

Obviously REA Group is quite reliant on volume to make up a lot of its profit and cashflow. With some restrictions being lifted in different states, property listings, auctions and open houses can start to go back to normal. A return of property listings is good for the REA Group share price.

I’m not sure how many people will be wanting to list their properties in this environment with buyers agents reporting that house prices in some areas have already dropped 10% compared to pre-coronavirus prices. There will always be some sales going on due to personal circumstances, which should keep things ticking over.

Is the REA Group share price a buy?

I think it’ll be very interesting to see what happens when the bank mortgage holidays stop and jobkeeper ends. Will there be lots of forced sellers coming onto the market? More volume would be good news for earnings and the REA Group share price. I definitely prefer it to Domain Holdings Australia Ltd (ASX: DHG) as it comes with potential international growth. 

Lower interest rates do justify higher asset prices, but I’m not sure if a share price of around $100 is worth buying in the shorter-term. Patience may be the way to go for now. It certainly isn’t cheap considering the earnings hit in 2020.

More reading

• 3 super strong ASX 200 blue chip shares to buy right now
• Investing $1,000 in these 3 ASX shares would be a smart move
• 3 ASX 200 blue chip shares I would buy today
• 4 ASX 200 shares exposed to a fall in house prices
• The newspaper killers: 3 ASX 200 online classifieds shares dominating the market

Motley Fool contributor Tristan Harrison 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.

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Is the Wesfarmers Ltd (ASX: WES) share price a buy? The conglomerate announced yesterday that it will be culling many Target stores across the country.

Wesfarmers is a diversified business with several different divisions. It runs Bunnings, Officeworks, Kmart, Target, Catch and other industrial businesses.

Target has been a disappointment for Wesfarmers for some time. It has tried to turn it around but this coronavirus period seems to have been the catalyst for Wesfarmers to decide to make a big change to Target. Investors didn’t seem to mind either way about the announcement either way, the Wesfarmers share price was essentially flat.

What was in the Wesfarmers announcement?

Wesfarmers said between 10 to 40 large Targets will be converted to Kmarts, subject to landlord support. “Approximately” 52 Target Country stores will change to small format Kmart stores. Around 10 to 25 large Target stores and the remaining 50 Target Country stores will be closed. The Target store support office will be significantly reduced.

Kmart Group will take a non-cash impairment of between $430 million to $480 million. The industrial and safety division will also take a non-cash impairment of approximately $300 million.

The FY20 will include a number of significant items. Both the negative ones I just mentioned and the gain of the sale of Coles Group Limited (ASX: COL) shares.

Time to buy Wesfarmers at this share price?

The two department stores of Kmart and particularly Target are struggling. But it’s important to remember that Bunnings, Officeworks and Catch are actually performing well during this period. If earnings hold up well then the Wesfarmers share price should be able to keep doing well too.

I think the key will be what Wesfarmers does with its large balance sheet. It’s positioned to be able to make one or more large acquisitions. This could be a great time to do it with some businesses being distressed. If Wesfarmers acquires well then it could be a buy, otherwise it might be wise to wait for another market selloff considering the Kmart Group weakness and restructuring.

More reading

• ASX 200 drops 1% on Friday
• Myer share price bounces after announcing its doors will be reopening across the nation
• ASX 200 down 0.2%: Wesfarmers overhauls Target, Sydney Airport has no plans to raise equity
• Wesfarmers share price lower after announcing major Target overhaul
• 3 high yield ASX dividend shares you can buy right now

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers 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.

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There has been much discussion lately regarding whether we have seen the worst of the economic fallout from coronavirus or if the bottom is yet to come. Could clues lie in the performance of Afterpay and its cohorts?

What can we learn from Afterpay and other ASX FinTechs?  

Afterpay Ltd (ASX: APT), Tyro Payments Ltd (ASX: TYR) and EML Payments Ltd (ASX: EML) have all provided business updates that shed light on how the Australian economy may have bottomed in April. 

Afterpay Business Update 

Afterpay’s business update highlighted that its sales moderated in the second half of March at a Group level. This coincided with the introduction of government-enforced lock-down measures across the world. Global underlying sales in the second half of March versus the first half of March were 4% lower. 

However, the company experienced positive growth in the first two weeks of April, with average daily underlying sales up approximately 10% on the second half of March globally. 

Tyro Payments COVID-19 Trading Update 

Tyro has committed to providing the market with weekly transaction value updates. These transaction volumes are derived largely from its EFTPOs terminals installed at customer cites. It has so far highlighted the following transaction volumes: 

• January up 27% 
• February up 30% 
• March up 3% 
• April down 38% 
• May to 15 May down 20%

EML Payments Business Update 

EML’s unaudited Group EBITDA for March was $1.9 million, down 37% on the prior corresponding period. This was significantly impacted by its gift and incentive (G&I) segment reflecting global mall closures. 

While social distancing and lockdown measures continued in April, the group’s unaudited EBITDA was $2.7 million. It expects a gradual reopening of malls in various countries during May and June 2020 onwards. This should represent an improvement to the trading conditions experienced in April.

Is it a Bottom? 

All 3 businesses collect some form of commission from an economic transaction across multiple sectors. Afterpay has broad sector verticals including retail, travel, health, entertainment and services. It operates across Australia, the US and the UK. Tyro Payments provides payment services to over 30,000 Australian merchants. From its prospectus back in June 2019, it cited that 77% of its customers were SMEs and 86% were in health, hospitality and retail sectors. Finally, EML provides G&I services to retailers, general purpose reloadables for salary packaging and gaming and virtual banking accounts.

Recovering revenues from lows in April across these 3 companies may be reflective of a broader improving economy. Sectors such as retail and hospitality have already reopened, albeit at a limited capacity. Meanwhile, other sectors such as entertainment and travel are expected to resume later on this year.

Foolish takeaway

The current challenge is buying shares at today’s prices, as many have already soared on the assumption that we have, in fact, seen ‘the bottom’. If this is not the case, however, and further economic pullback is still yet to come, I believe this would present greater opportunities to buy shares at much more optimal risk/reward levels.

More reading

• How these 3 ASX financial shares have proved their doubters wrong
• How to use ASX shares to become a millionaire
• Is the Afterpay share price a buy at $44?
• 3 ETFs perfect for an ASX growth investor
• 2 ASX stocks that could replace cash

Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited and Tyro Payments. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Emerchants 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.

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I’m a big fan of buy and hold investing and believe it is one of the best ways for investors to grow their wealth.

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.

This time around I have picked out the three shares that are listed below:

BWP Trust (ASX: BWP)

BWP is a real estate investment trust with a focus on commercial properties throughout Australia. The majority of its properties are large format retailing properties leased to hardware giant Bunnings Warehouse. Despite its relatively simple business model, its shares have generated market beating returns for investors over the last decade. Since this time in 2010, its shares have provided investors with an average total return of 11.04% per annum. This would have turned a $20,000 investment into almost $57,000.

InvoCare Limited (ASX: IVC)

Although there have been a number of ups and downs along the way, this funeral company’s growth through acquisition strategy has been a success over the last decade. During this time the company has grown its network to 290 funeral locations and 16 cemeteries across the ANZ region and Singapore. This has underpinned solid earnings and dividend growth over the period, which has led to strong total returns for its shareholders. Over the last 10 years InvoCare’s shares have generated an average total return of 9.6% per annum. This would have turned a $20,000 investment into $50,000.

Magellan Financial Group Ltd (ASX: MFG)

This fund manager’s shares have been among the best performers on the Australian share market over the last decade. This strong form has been driven by its successful investments in high-quality global stocks that have benefited from a number of key themes over the past decade. These themes included the emerging consumer, the cashless society, and the dominance of business software giants. The sum of this was an average total return of 51.4% per annum over the last 10 years. This means a $20,000 investment in Magellan’s shares in May 2010 would now be worth a staggering ~$1.25 million.

More reading

• Why Downer, InvoCare, NRW Holdings, and Whitehaven Coal are dropping lower
• 3 high yield ASX dividend shares you can buy right now
• Why this ASX funeral share is well positioned for future growth
• Forget term deposits and buy these top ASX dividend shares
• Forget CBA and buy these top ASX dividend shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended InvoCare 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.

The post How to turn $20k into $1.25 million in 10 years with ASX shares appeared first on Motley Fool Australia.

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Here are three quick tips you can use to tidy your super in just 10 minutes this weekend!

Superannuation is probably the most overlooked asset in a typical Aussie’s net worth. Yet I think it’s vital for all Australian’s retirement prospects that we ensure our super is in order. Einstein didn’t call compound interest the ‘eighth wonder of the world’ for nothing, and that’s exactly what superannuation is designed to harness!

Super tip 1 – consolidate, consolidate, consolidate

I think everyone agrees that paying fees to your super fund manager isn’t fun. And yet there is far too many people paying at least double (often more) the fees than they otherwise should be. That’s the consequence of having two or more super funds. You don’t get a ‘buy one, get one free’ offer.

Unless you have a really good reason, I don’t think anyone should have more than one super fee or more than one fund taking their pound of flesh from your retirement. It’s won’t take more than a few minutes to consolidate your super, so make this weekend the time to do it if you haven’t already! It’s worth checking  – even if you don’t think you have more than one, you might be surprised!

Tip 2 – invest in an appropriate asset class

Most Aussies don’t give too much thought to how their super is invested on their behalf. In fact, superannuation giant AustralianSuper reports that over 90% of their customers opt for the ‘balanced’ option. But if you’re under 40 or have a higher risk tolerance, you might be missing out on some long-term gains by not selecting a more aggressive, share-dominated portfolio.

Balanced funds are designed to balance both risk and returns using ‘safer’, low-risk investments like cash and bonds. But risk management might not be really necessary if you’re decades out from retirement. And history shows that shares like those in the S&P/ASX 200 Index (ASX: XJO) are the best path to wealth creation

So have a think about your own risk tolerance and when you plan on retiring. You might come to the conclusion that you’re better off investing in a higher-growth option.

Tip 3 – focus on fees

There are only 3 things that will affect the amount of money you will have when you eventually decide to retire: the cash you put in, the returns you can get and the fees you pay. Of course, most people earn as much money as they can, so the first point is moot (although, you can also consider salary sacrificing). For the second point, see tip 2. 

But fees are something we can always control. The range of fees that various super funds charge is staggering. Some funds even charge their clients over 3% per annum. There are easy ways to compare your super fund’s fees online, so make sure you’re not overpaying for your retirement. These costs can literally drain tens of thousands of dollars or more from your retirement over a working life, so staying on top of them is something that you want to consider if you’re serious about retiring with as much money as possible.

More reading

• These were the worst performing ASX 200 shares last week
• Where to invest $1,000 in ASX ETFs today
• These were the best performing ASX 200 shares last week
• How these 3 ASX financial shares have proved their doubters wrong
• How to use ASX shares to become a millionaire

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

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Last week was another positive one for the S&P/ASX 200 Index (ASX: XJO). The benchmark index climbed a sizeable 1.7% to end the period at 5,497 points.

Unfortunately, not all shares were pushing higher with the market last week.

Here’s why these were the worst performing ASX 200 shares over the period:

The Southern Cross Media Group Ltd (ASX: SXL) share price was the worst performer on the index with a 9.4% decline. This media company’s shares have been very volatile during the pandemic due to concerns over weak advertising markets and its highly dilutive capital raising. This latest decline means the Southern Cross Media share price is now down 86% from its 52-week high.

The Austal Limited (ASX: ASB) share price was out of form and fell 8.3% last week. This shipbuilder’s shares have come under pressure this month after it was overlooked for a major U.S. Navy project. Austal was competing to construct Guided-Missile Frigates, but was pipped to the post by Italian rival, Fincantieri. According to Reuters, the 10-ship contract is believed to be worth upwards of US$5.5 billion.

The Unibail-Rodamco-Westfield (ASX: URW) share price was a poor performer with a 7.9% decline. This led to the shopping centre operator’s shares hitting a record low last week. Investors have been selling the company’s shares amid concerns over lockdowns and the state of bricks and mortar retailing across the world. The Unibail-Rodamco-Westfield share price is now down 70% from its 52-week high.

The NIB Holdings Limited (ASX: NHF) share price wasn’t far behind with a 6.5% decline. This follows the release of government data last week which revealed that thousands of people have dumped their private health insurance during the pandemic. APRA’s data showed that younger demographics have been cancelling their policies during the three months to March 31. Cost savings and the inability to use their extras is likely to be driving the cancellations.

More reading

• How to tidy up your super in just 10 minutes this weekend
• Where to invest $1,000 in ASX ETFs today
• These were the best performing ASX 200 shares last week
• How these 3 ASX financial shares have proved their doubters wrong
• How to use ASX shares to become a millionaire

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited. The Motley Fool Australia has recommended NIB Holdings 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.

The post These were the worst performing ASX 200 shares last week appeared first on Motley Fool Australia.

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Early retirement is a goal or dream I’m sure most people share. However I believe that with a little smart saving and investing early, over time this dream can become a reality.

To see how, we will start by looking at a persons total economic wealth, showing how they can move into the retirement phase from the accumulation phase more quickly.

Total economic wealth

At any time in a person’s life, total economic wealth is represented as the sum of their financial capital and human capital.

What is financial capital?

Financial capital is basically the sum of all your assets minus your debts.To calculate your financial capital, add up all your savings, share portfolio, superannuation, properties etc, and subtract any debts such as mortgages or student loans you may have.

Obviously financial capital is lower for most people when they are younger as they have not yet had the time to grow their wealth. However, this is where people who are more responsible with their money can see it grow much faster as the effects of compounding take hold. This will help push them closer to their retirement phase.

What is human capital?

Human capital can be thought of as the present value of a person’s expected income from employment throughout their entire life. As you enter the workforce, your human capital is at a maximum since you have the greatest number of years left to work until retirement. Hence as you age and work, your human capital decreases.

So what does this mean?

Roughly speaking, human capital and financial capital are inverse to each other. This can be seen through the chart below.

Chart by author

As a working person ages, their human capital begins to reduce as part of their future earnings are realised. A portion of this income will be saved and often used to pay down a mortgage. In addition, their superannuation will increase as it is paid by their employer. All of these items will increase their financial capital. This continues through the accumulation phase until enough financial capital has been raised to support them through retirement. 

So it appears that the solution to being able to retire early is by growing your financial capital as quickly as possible. This doesn’t mean through risky investments, but instead by starting early and investing regularly. Which is where I believe ASX shares should come into the picture.

How to grow your financial capital

ASX shares have been a phenomenal tool for people to grow their financial capital. This is something I don’t believe will change any time soon. In fact, looking into the majority of  superannuation funds, you will see large allocations to shares – both Australian and international.

Your superannuation in designed to support you during retirement, while our goal is to bring retirement forward. This means investing outside of your superannuation, regularly.

Growing a large portfolio to replace your income prior to retirement may sound daunting. However, one of my fellow writers has shown here that by investing just $1,000 a month you can achieve a share portfolio of $1,000,000 in less than 24 years. Breaking it down into monthly goals is a great way to make the process more achievable.

Of course the sooner you start the better, and I believe now is a great time when you’re focusing on 10, 20 or 30 years down the road.

I would consider investments today in shares like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Vanguard FTSE Asia ex Japan Shares Index ETF (ASX: VAE) and BetaShares NASDAQ 100 ETF (ASX: NDQ).

More reading

• How to reduce your work to part-time using ASX shares
• My 3 best ASX dividend shares to buy right now
• 2 top ETFs for high growth
• 2 ASX shares I plan to hold til I’m 100
• 3 Warren Buffett ASX dividend shares to buy right now

Motley Fool contributor Michael Tonon owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS and Washington H. Soul Pattinson and Company 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.

The post How to retire early using ASX shares appeared first on Motley Fool Australia.

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If you’ve saved up $1,000 and are looking to invest right now, ASX exchange-traded funds (ETFs) could be the way to go.

ETFs essentially allow you to buy units in a fund that invests in a diversified portfolio of shares. These funds come in many forms and can be specific to a particular country, like Vanguard Australian Shares Index ETF (ASX: VAS), or a sector like the ETFS Morningstar Global Technology ETF (ASX: TECH).

So, before you commit your hard-earned cash to the share market, let’s check out some of the best ASX ETFs to buy today.

Why should I buy ETFs in the first place?

ETFs are a great way to achieve instant diversification. Portfolio construction is critical but it takes time and money. If you’re just looking to invest $1,000 today, this may only buy you a few shares in the S&P/ASX 200 Index (ASX: XJO).

For instance, the CSL Limited (ASX: CSL) shares are currently trading at nearly $300 each which will eat up the majority of your investment for a grand total of only 3 shares in one company. 

However, an ETF like the Vanguard Australian Shares Index ETF gives you broad exposure to the S&P/ASX 300. This ETF essentially tracks the market and means you’re a passive investor.

Investing in ASX ETFs isn’t for everyone and many investors prefer to select individual shares to buy. If you’re a relatively new investor, however, or you like the diversification offered by ETFs, here are a couple of top funds to consider today.

Where to invest $1,000 in ASX ETFs today

I think ETFs have a place in almost any portfolio. Buying ETFs is an easy way to diversify or even target a specific sector or geography.

For instance, If you’re bullish about tech, the ETFS Morningstar Global Technology ETF can top up your exposure without buying shares in each individual tech company.

VAS and TECH aside, iShares S&P 500 ETF (ASX: IVV) could be a strong buy if you’re bullish about the United States. Federal Reserve Chair Jerome Powell is doing everything he can to keep the economy ticking along right now and we could see some strong gains in US markets as a result.

If you’re after an all-in-one solution, the Vanguard Diversified High Growth Index ETF (ASX: VDHG) could be for you. This fund is a diversified global portfolio with a heavier weighting towards the ASX.

Either of these could be great options if you’re just looking to invest $1,000 in a diversified portfolio but don’t know where to start.

More reading

• How to tidy up your super in just 10 minutes this weekend
• These were the worst performing ASX 200 shares last week
• These were the best performing ASX 200 shares last week
• How these 3 ASX financial shares have proved their doubters wrong
• 3 ASX shares that I’d invest $1,000 into EVERY month

Ken Hall owns shares of Vanguard Australian Shares Index and Vanguard Diversified High Growth Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and ETFS Morningstar Global Technology ETF. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

The post Where to invest $1,000 in ASX ETFs today appeared first on Motley Fool Australia.

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