If you’ve got $5,000 to spend, the world is your oyster. You could buy a new TV, a new iPhone or a not-so-new car.

But I think the best use of the money you have but don’t really need is investing in ASX shares. ASX shares are one of the best pathways to long-term wealth available, so why not set yourself up for the future and invest the $5,000 today!

If you do want to tread that path, here are 5 ideas to get started:

Afterpay Ltd (ASX: APT)

Afterpay is one of the best-performing shares you can buy on the ASX. In just the last 2 months, Afterpay has gone from $8 a share to over $40. I would definitely call this company a trend-setter and it remains at the vanguard of the fast-growing buy now, pay later sector. You could do a lot worse than this growth story.

Xero Limited (ASX: XRO)

Xero has an equally successful story, becoming one of the most popular accounting software programs in the country and soon (it seems), the world. Xero has a highly lucrative Software-as-a-Service (SaaS) business model, which allows for exponential revenue growth if it can keep its subscriber growth at a healthy rate.

CSL Limited (ASX: CSL)

CSL is now the largest company on the ASX, and it hasn’t claimed that crown by being a lousy ASX performer. CSL is a truly phenomenal global growth story. It only ‘IPOed’ for 77 cents back in 1994 (once you adjust for stock splits), so an investment then would have been a life-changing experience. Even though the company is now trading for over $300 a share, I still think this company has plenty of runway left and is also well on its way to becoming a formidable dividend payer.

Macquarie Group Ltd (ASX: MQG)

I’m not a big fan of investing in the ASX banks at the moment, but I do think Macquarie is a strong exception. It has very little exposure to ‘retail banking’ through mortgages and loans. Instead, Macquarie has built a successful asset management business and is also one of the best investment banks in the country. Thus, I think this company would make a great investment with current prices – they don’t call Macquarie the ‘millionaire factory’ for nothing!

iShares S&P 500 ETF (ASX: IVV)

We’ll finish with a simple choice – this exchange-traded fund (ETF). IVV tracks the largest 500 companies over in the US – the most popular index in the world. Over the past 10 years, an investment in this ETF would have returned around 15.54% per annum. You are getting top-notch US companies like Berkshire Hathaway, Alphabet, Apple and Microsoft, so need I say more. IVV is also one of the cheapest ETFs on the ASX, with a management fee of just 0.04%. 

More reading

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• 3 common mistakes millennials make investing in ASX shares
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO and Xero. The Motley Fool Australia has recommended Alphabet (A shares). 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 Got $5,000 to spend? Here are 5 ASX shares you can buy today appeared first on Motley Fool Australia.

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Analysts at Goldman Sachs have been looking over the iron ore market amid the weakening demand backdrop for the steel making ingredient.

The good news for iron ore producers such as BHP Group Ltd (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG), and Rio Tinto Limited (ASX: RIO), is that the investment bank doesn’t expect prices to fall to the levels we saw during the last downturn in 2014 to 2016.

How low will prices go?

Goldman Sachs expects the iron ore market to move into surplus in late May/June on higher Australian and Brazil shipments and lower (ex-China) steel demand.

It suspects this will lead to the iron ore price retracing to US$70.00 per tonne, before rebounding to US$85 per tonne in the fourth quarter on an expected recovery in global steel demand.

Its analysts offered five reasons why this is expected to be the case:

Reason 1. Goldman notes that the market was in a large surplus position (30-60Mtpa) during 2014-2016 due to the ramp-up of new supply from the iron ore majors. Whereas, this time the market was in a deficit before the pandemic.

Reason 2. In addition to this, the exit of high cost iron ore production (from China, SE Asia, India and West Africa) was slow during 2014-2016. It notes that higher cost supply did not return from 2017-2019 despite high prices, and reserve depletion is only accelerating amongst Tier 2&3 producers.

Reason 3. Another reason is that the majors brought on >300Mt of new capacity from 2014 to 2016. However, mining giants Rio Tinto and Vale have been struggling to increase their production in 2019-2020 due to ongoing operational issues.

Reason 4. Goldman also feels that the rise in Induction Furnace (IF) capacity in China that used scrap impacted iron ore demand previously. However, these IFs were phased out from 2016 and have been replaced by large blast furnaces which has boosted iron ore demand.

Reason 5. Finally, in 2014-2015 a policy-driven downturn in the Chinese property market impacted steel and iron ore demand significantly. This time around the Chinese property market is rebounding with improving sales and starts.

Overall, this should ensure that prices remain high and BHP, Fortescue, and Rio Tinto continue to generate significant free cash flows over the next 12 months.

More reading

• Looking for dividend income? Try these 3 ASX shares
• How to invest $1,000 like Warren Buffett today
• Why CBA, CSR, Fortescue, & Northern Star shares are pushing higher
• Safe dividend stocks to buy today for the COVID-19 world
• Why diversification is important and how to diversify your portfolio with ASX shares

Motley Fool contributor James Mickleboro 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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