Where should you invest $1k into ASX shares?

Investing in shares on the ASX could be great way to build your wealth for the long-term. You don’t need $10,000 to start investing. You can start with $1,000 (or even just $500).

There are lots of potential ideas, whether you go for individual ASX shares or a portfolio investment like an exchange-traded fund (ETF).

Here are three potential ideas to invest $1,000 into:

Share 1: BetaShares Global Quality Leaders ETF (ASX: QLTY)

ETFs are an easy way to invest into the share market. But you don’t want diversification just the sake of it, that may lower your potential returns for no real benefit. There are some ETFs that just invest in high quality businesses like the BetaShares Global Quality Leaders ETF.

It doesn’t invest in ASX shares, it invests in global leaders which rank highly on four quality metrics. Those metrics are: return on equity, debt to capital, cash flow generation ability and earnings stability. It’s these qualities that can combine to make good shareholder returns.

The quality theory has certainly been proven with the returns of the ETF. Since inception in November 2018, the ETF has returned an average of 19.75% per annum.

There are around 150 businesses within this ETF. Some of the biggest holdings are: Nvidia, Accenture, Intuitive Surgical, L’Oreal, Adobe, Apple, Cisco and Alphabet.

I think it would be possible for this ASX share to be your only investment, if you wanted it to be. It’s quality and diversified.

Share 2: Pushpay Holdings Ltd (ASX: PPH)

Pushpay is one of the most exciting ASX shares in my opinion. It’s a digital giving business that enables people to electronically donate. Its biggest customer base is the large and medium church sector. This provides Pushpay a somewhat consistent level of donations on an annual basis – indeed, the average donation is actually growing.

The ASX share has done a good job of offering all of the tools that its clients may need.

COVID-19 conditions are causing more people to donate electronically due to shutdowns and social distancing. The option of livestreaming church services is very useful.

The company steadily increased its guidance during its FY20. It’s now expecting FY21 earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to at least double. That’s very strong guidance, in my opinion.

The company is aiming for US$1 billion of annual revenue from the US church sector. But American Christians are not the only people that Pushpay can aim to service in the future. There are plenty of other countries and indeed other philanthropic causes that Pushpay can become a market leader of. 

It’s trading at 33x FY21’s estimated earnings.

Share 3: Magellan Global Trust (ASX: MGG)

This is a listed investment trust (LIT) which only invests in high quality global shares.

I like investing in closed-end investment vehicles because you can sometimes buy them for a cheaper price than their assets. In other words, you can buy $1 of assets for $0.90, or whatever the discount is. Magellan Global Trust is trading at a 5% discount to its net assets value (NAV). That’s a solid discount, though occasionally it does trade at larger discounts.

Some of its current top positions include: Alibaba, Alphabet, Atmos Energy, Eversource Energy, Microsoft, Tencent, Facebook, Visa, Mastercard and Reckitt Benckiser.

I think that the Magellan Global Trust strategy of investing in both defensive and growth shares is a good mix. It should mean that it can outperform in most share market conditions.

Since inception in October 2017 it has returned 11.4% per annum after fees, outperforming the MSCI World Net Total Return Index by 1.2% per annum.

As a bonus, the ASX share aims for a 4% distribution yield. This is a solid starting yield that should grow as the NAV grows over time.

Foolish takeaway

I like all three of these ASX shares. It’s hard to pick a winner, I think all three can deliver strong returns over the long-term. If I had $3,000 I’d want to invest $1,000 in all three. At the current prices if I had to pick one I’d go for Pushpay for the potential growth of the next few years.

More reading

• 3 ASX growth shares that could be long term market beaters
• Got $1,000? You should buy 1 of these 6 ASX shares
• The smartest ASX shares to buy if you have $2,000
• My top 5 ASX growth shares to buy in FY 2021
• 3 five-star ASX shares to buy

Tristan Harrison owns shares of MAGLOBTRST UNITS. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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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