In my view, 2020 could be the perfect time to get a credit card. There’s a lot of economic uncertainty right now, which has been reflected in how volatile the S&P/ASX 200 Index (ASX: XJO) has been lately.

But before you start spending like crazy on the plastic, here are a few things to consider…

Why 2020 could be a good time for a credit card

I think one of the biggest advantages of using credit is keeping your money for longer. For instance, your card provider might afford you 60 or 90 days before payment is required.

That means your money could be sitting in a savings account or used elsewhere for those 90 days. It might seem like small amounts of money, but these can add up over time.

But the main reason why 2020 could be a good year for a credit card is the extra protection it can provide. When you pay on a debit card, that money is gone when you transact.

However, when paying on credit, the risk really remains with the credit provider. That could be especially helpful if you’re booking travel in 2020.

You might book a hotel or flight a few months ahead of time. If you pay by credit, and the hotel or airline cancels your booking, you could try and get a charge-back from the credit provider.

It’s a similar story with buying from retailers right now. If you pay by credit card and the retailer folds before you receive your goods, you have a better chance of getting your money back than if you paid by debit.

But… credit isn’t for everyone

The important thing with credit cards is to not overspend. That can be particularly hard to do when economic times are tough.

If you don’t trust your self control, paying by credit may not be the best option. Credit card debt can quickly spiral if you don’t have a good handle on your expenditure.

There’s also the potential fees involved. Reward programs and sign-up bonuses can be enticing, but a no-fee credit card could be a better option depending on your goals.

You could also look to dip your toe in the water with a service like Afterpay Ltd (ASX: APT) to see if you can control your spending without paying by debit card.

More reading

• Should you buy ASX shares or hold cash right now?
• Building a $100,000 portfolio with Afterpay shares and 3 other ASX companies
• What ASX shares should you invest in during a bull market?
• What the 10 largest companies in the world have in common
• Why is it so hard to outperform the ASX 200 index?

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. 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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Earning an income from traditional interest-bearing assets like term deposits is becoming increasingly difficult.

Right now, Westpac Banking Corp (ASX: WBC) is offering 1% per annum yields on 12-month term deposits. This is broadly in line with what other banks are offering.

This means that even if you invested $1 million into these term deposits, you’d only get $10,000 of income from them.

Fortunately, the Australian share market is home to a number of ASX dividend shares which offer vastly superior yields.

Three dividend shares which I think would be great as part of a balanced income portfolio are listed below. Here’s why I would buy them:

Dicker Data Ltd (ASX: DDR)

Dicker Data is one of my favourite ASX dividend shares. It is a wholesale distributor of computer hardware and software which has consistently grown its earnings and dividends at a solid rate for many years now. This looks set to continue in FY 2020 with management intending to increase its full year dividend by 31% to 35.5 cents per share. This represents a 4.5% fully franked dividend yield.

Rio Tinto Limited (ASX: RIO)

Another dividend share to consider buying is Rio Tinto. It looks well-positioned to deliver strong profits in the near term thanks to sky high iron ore prices and its world class and low cost operations. Last month analysts at Morgans suggested that Rio Tinto’s shares could offer a fully franked ~8.5% FY 2021 dividend yield.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

A final option for income investors to look at is the Vanguard Australian Shares High Yield ETF. It invests in a wide range of high yielding dividend shares. This includes mining giants, the banks, and many other blue chip favourites. I like this exchange traded fund because of the diversity it gives investors. Which, as we have seen during the pandemic, is very important to have. I estimate that its units offer a forward dividend yield of at least 5%.

More reading

• ASX 200 closes higher, banks keep rising
• Brokers name 3 ASX shares to buy today
• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• Is the Westpac share price too high?
• Why today might be a good day to buy NAB and Westpac shares

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Dicker Data 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.

The post Forget term deposits and buy these high yield ASX dividend shares appeared first on Motley Fool Australia.

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I’m a big fan of buy and hold investing and believe it is one of the best ways for investors to grow their wealth.

To demonstrate how successful it can be, every so often I like to pick out a number of popular ASX shares to see how much a single $20,000 investment 10 years ago would be worth today.

This time around I have picked out the three ASX shares that are listed below:

Aristocrat Leisure Limited (ASX: ALL)

Aristocrat is a gaming technology company which has been a strong performer over the last decade. This is thanks largely to the popularity of its poker machines and the emergence of its lucrative and fast-growing digital business. Combined, they have underpinned strong earnings growth and market-beating returns for investors. Over the last 10 years its shares have generated an average total annual return of 21.9%. This would have turned a $20,000 investment into $145,000 today.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

Thanks to its successful expansion throughout Australia and in several international markets, this pizza chain operator has been growing its earnings at a very strong rate over the last 10 years. This has led to Domino’s shares generating an average total return of 29.9% per annum over the period. Which means that a $20,000 investment in its shares in June 2010 would now be worth a cool $275,000. The good news for shareholders is that Domino’s is aiming to grow its store footprint materially over the next five years. I believe this could lead to further strong returns over the next decade.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

Despite losing almost a third of its value since hitting its high in December, this airport operator has still been a great place to invest over the last decade. Increasing international tourism from China and the United States and growing ancillary revenues have underpinned solid income and distribution growth since 2010. This has led to Sydney Airport’s shares beating the market with an average total return of 13.1% per annum over the period. This would have turned a $20,000 investment into $68,500 today.

More reading

• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• Why Kogan, NAB, Qantas, & Sydney Airport shares are racing higher
• These top ASX dividend shares could be perfect for income investors
• 3 large cap shares beating the ASX 200 this year
• 3 of the best ASX shares to buy with $3,000 right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Domino’s Pizza Enterprises 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.

The post How to turn $20,000 into $275,000 in 10 years with ASX 200 shares appeared first on Motley Fool Australia.

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