Buying your first ASX shares as a beginner can be a scary thing to do. It’s also something I believe too many people put off for far too long. But investing doesn’t and shouldn’t have to be scary. In fact, it will probably be one of the best things you ever do for your financial security.
Here at the Fool, we think everyone should eventually get to the stage of trying to beat the market with a diversified portfolio of well-chosen ASX shares. But getting to that point requires a lot of experience and emotional regulation. That’s why I think the best shares for beginners to start out with are passive or managed investments that don’t require too much research or hard decision making. So, in this light, here are the 2 ASX shares I would recommend to a beginner:
2 ASX shares for beginners
1) Magellan High Conviction Trust (ASX: MHH)
The Magellan High Conviction Trust is a listed investment trust (LIT) – which basically means it holds a bunch of shares. This particular LIT aims to hold between 8 and 12 global companies (mostly United States shares) that the management team views as being ‘the best in the world’. Right now, MHH holds companies like Alphabet, Facebook, Microsoft and Tencent Holdings — all unarguably top-tier, global businesses. MHH is well-suited for a beginner in my view because the management team will buy and sell shares on your behalf, without you having to give any thought to the process whatsoever.
This trust also aims to pay a 3% cash yield in the form of a dividend distribution every year. You can either choose to receive this payment as cash or reinvest it back into the fund at a 5% discount.
2) iShares Global Consumer Staples ETF (ASX: IXI)
This exchange-traded fund (ETF) is one of the ASX’s best-suited investments for a beginner, in my view. That’s because it only holds companies in the consumer staples sector. A consumer staple is any product that can more or less be considered a ‘need’ rather than a ‘want’. Think food, drinks, household essentials and personal hygiene products, as well as ‘vices’ like alcohol and tobacco.
These companies are hardly exciting and won’t make you rich overnight. But they are, in my opinion, also some of the safest share market investments you can make, due to the ‘essential’ nature of their products. Some of the companies that IXI holds include Nestle, Unilever, Procter & Gamble, Walmart, Coca-Cola, PepsiCo and Philip Morris International.
IXI also pays a dividend distribution, which right now is worth a trailing yield of 2.1%.
Foolish takeaway
I believe both of these ASX shares are perfect for a beginner investor. Both investments are managed on your behalf, which means that you can easily just buy them and put them in the back drawer (for a while at least). As such, I think they are a great way to take your first steps in the market and start a (hopefully) long and successful investing career!
Where to invest $1,000 right now
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Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
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More reading
- Where to invest $10,000 into ASX shares right now
- These 3 ASX ETFs are yet to recover from the market crash
- What are the best ASX shares for dividends?
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Coca-Cola, Pepsico, Procter & Gamble, Philip Morris International, Facebook, and Magellan High Conviction Trust. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Facebook. The Motley Fool Australia owns shares of iShares Global Consumer Staples ETF. The Motley Fool Australia has recommended Alphabet (A shares) and Facebook. 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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