How I would use these 3 ASX shares to build a portfolio from scratch

A view of competitors in a running event, some wearing number bibs, line up together on a starting line looking ahead as if to start a race.

A view of competitors in a running event, some wearing number bibs, line up together on a starting line looking ahead as if to start a race.

Building up an ASX share portfolio from scratch is no easy feat. For a beginner investor, there are so many shares to choose from, so many places to get advice, and so little time.

So let’s make the whole process easier by discussing three ASX shares I would use to start a share portfolio from scratch today.

3 ASX shares I would use for a beginner portfolio

Vanguard Australian Shares Index ETF (ASX: VAS)

I think a beginner investor should start simple, and there are fewer investments simpler than this exchange-traded fund (ETF). Index funds like the Vanguard Australian Shares ETF hold multiple shares within them, making them very easy to get some healthy diversification right off the bat. In this ETF’s case, it holds the 300 largest shares on the market.

That means an investment into this fund is an investment in everything from Commonwealth Bank of Australia (ASX: CB)A, BHP Group Ltd (ASX: BP) and Telstra Corporation Ltd (ASX: LS) to Woolworths Group Ltd (ASX: WOW), Ampol Ltd (ASX: ALD) and JB Hi-Fi Limited (ASX: JBH), all in one easy investment.

This ETF will give an investor the returns of the broad Australian share market, no more no less. It has returned an average of 8.79% per annum, including dividend returns, since its inception in 2009. That includes its competitive fee of 0.1% per annum.

iShares S&P 500 ETF (ASX: IVV)

ASX shares are great. But the reality is that most Australian investors don’t bother looking beyond our shores, happy with the dividends and franking credits that shares like CBA, Telstra and Westpac Banking Corp (ASX: WBC) offer.

But the US markets are home to companies that are just on another level to our best businesses. Think Apple, Alphabet (owner of Google), Amazon, Mastercard, McDonald’s, Tesla and Netflix.

These are some of the best companies on the planet and are all found in this index fund that tracks the 500 largest American companies. And again, you can get all of them in one, simple investment.

As such, this ETF can add even more diversification, geographic as well as currency, to a beginner portfolio. This ETF has averaged a return of 17.26% per annum over the past decade.

MFF Capital Investments Ltd (ASX: MFF)

Our last two investments have been simple index funds. But MFF Capital – a listed investment company (LIC) – adds some active management to our starter portfolio.

MFF, as a LIC, doesn’t blindly track an index. Instead, the company owns a portfolio of other shares itself, which its management team runs on behalf of its investors. Its current boss is Chris Mackay, who is one of the co-founders of Magellan Financial Group Ltd (ASX: MFG).

MFF typically invests in a small portfolio of quality US shares. Some of its long-term top holdings include Mastercard, Amazon, Visa, American Express and Microsoft. I think this LIC is a great way of adding some investing expertise to a portfolio and compliments our two index funds nicely.

The post How I would use these 3 ASX shares to build a portfolio from scratch appeared first on The Motley Fool Australia.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. American Express is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Sebastian Bowen has positions in Alphabet, Amazon.com, American Express, Apple, Mastercard, McDonald’s, Mff Capital Investments, Tesla, Vanguard Australian Shares Index ETF, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon.com, Apple, Mastercard, Netflix, Tesla, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet, Amazon.com, Apple, Jb Hi-Fi, Mastercard, Netflix, Westpac Banking, and iShares S&p 500 ETF. 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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