I think that ASX shares could be the best way to grow your wealth in 2020.
When you look at S&P/ASX 200 Index (ASX: XJO) you can see that it’s still down by around 16% from the pre-coronavirus high. So when you think about how low the interest rate now is and the long-term earnings, this valuation for the ASX share market doesn’t look bad.
I’m not as confident about the US share market considering a second wave could shut down parts of the country again.
When you look at the other investment options, I think there’s only one winner – shares. Bonds and cash have very little yields. Property values and the rental income looks dicey at the moment. Who knows which way gold will go?
Businesses have the ability to keep growing profit. ASX shares are investing for growth and paying good dividends. It’s this power of business that allows for great compounding of your wealth. Some businesses are able to earn more than 20% on the profit that is retained in the business.
Some ASX shares like Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P) have stormed to all-time highs recently. I’m not so sure about investing in the buy now, pay later sector right now. It’s running very hot, but perhaps it’s justified with how COVID-19 is changing the retail landscape.
What ASX shares I think look good value
There are plenty of other ASX shares where the share price is lower but they still have very attractive long-term futures. I’m thinking of shares like CSL Limited (ASX: CSL), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW) and City Chic Collective Ltd (ASX: CCX).
I’d also be interested in some ETFs like Betashares FTSE 100 ETF (ASX: F100) and iShares S&P Global 100 ETF (ASX: IOO).
Some of the best opportunities this week could actually be these very exciting ASX stocks…
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As of 2/6/2020
More reading
- 2 UK shares to diversify your portfolio
- Could these ASX shares be the future dividend stars that make you rich?
- 10 ASX 200 shares that are fit for the Queen
- Is the Macquarie share price the best ASX bank to buy?
- 3 ASX 200 blue chip dividend shares to buy in June
Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, CSL Ltd., and ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Brickworks 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.
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