Superannuation is naturally suited to long-term investing.

For many Australians, the money could remain invested for decades. That gives compounding plenty of time to work.

And I think some of Warren Buffett’s most famous investing principles fit that timeframe remarkably well.

Start with businesses you understand

Buffett has spent decades investing in companies whose economics he understands.

I think that is a sensible place to start when choosing ASX shares for a self-managed superannuation fund (SMSF).

Rather than chasing whichever sector is attracting the most attention, I would focus on businesses where I can clearly explain how they make money, why customers keep coming back, and what could make them more valuable over time.

That could include a major bank such as Commonwealth Bank of Australia (ASX: CBA), a resources giant such as BHP Group Ltd (ASX: BHP), or a healthcare business such as CSL Ltd (ASX: CSL).

The important point is not owning those particular companies. It is being able to understand the investment well enough to remain confident through inevitable periods of market volatility.

Look for lasting competitive advantages

Buffett has frequently focused on businesses with sustainable competitive advantages.

For an ASX investor, I would look for qualities such as strong brands, loyal customers, economies of scale, valuable technology, or services that would be difficult for competitors to replicate.

Pro Medicus Ltd (ASX: PME) is one example that comes to mind.

Its Visage medical imaging platform has become embedded within major hospital systems, where reliability and performance are extremely important. Replacing critical healthcare software is not something a hospital is likely to do casually.

That type of customer relationship can help a strong business keep growing for many years.

I think these are exactly the sorts of companies worth looking for when the goal is building wealth over decades rather than finding the next quick winner.

Let compounding do its job

Buffett’s extraordinary wealth was not created from one brilliant investment. A huge part of the story is the length of time his capital has been compounding.

Superannuation investors have an advantage here because retirement savings are usually invested over a very long period.

If a company can keep increasing its earnings, reinvesting successfully, and becoming more valuable, shareholders can benefit as that process continues.

This is why I would be reluctant to constantly trade a superannuation portfolio. A great business does not suddenly become a poor long-term investment because its share price has a difficult month.

Giving strong companies time can be one of the most important parts of the strategy.

You don’t have to pick shares

There is another Warren Buffett lesson I think is especially relevant.

Despite his remarkable success selecting individual companies, Buffett has repeatedly argued that most investors can do very well with a low-cost index fund.

Australians could apply that idea through a broad exchange-traded fund (ETF).

The Vanguard Australian Shares Index ETF (ASX: VAS), for example, provides exposure to hundreds of Australian companies through one investment.

An investor wanting greater international diversification could also consider a broad global fund or something like the iShares S&P 500 AUD ETF (ASX: IVV).

This approach removes the need to identify which individual companies will outperform. Investors can instead capture the returns generated by a large collection of businesses and concentrate on remaining invested.

That may sound less exciting than trying to find the next ten-bagger, but Warren Buffett’s philosophy has never been about making investing exciting.

It is about making sensible decisions and allowing time to work in your favour.

Foolish takeaway

I would not try to turn a SMSF portfolio into a replica of Berkshire Hathaway.

Instead, I would borrow the principles that have helped Warren Buffett invest successfully for decades: understand what you own, favour strong businesses, think long term, and avoid unnecessary activity.

For investors who enjoy researching shares, that could mean patiently owning a collection of high-quality ASX businesses.

For everyone else, a low-cost diversified ETF could make the process much simpler.

The post How to build your superannuation the Warren Buffett way appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in CSL, Commonwealth Bank Of Australia, and Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway, CSL, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended BHP Group, Berkshire Hathaway, CSL, Pro Medicus, 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.

I believe the ASX share market is the best place to find passive income opportunities due to the large dividend yields. ASX dividend shares are a great place to hunt for ideas.

When you combine a generous dividend payout ratio with franking credits, you can end up with an impressive dividend yield.

I’m going to highlight two listed investment companies (LICs) in this article, both of which offer impressive dividend yields.

LICs enable investors to invest in a portfolio of shares in a single investment. The structure allows the LIC to turn long-term investment returns into a steady (and rising) payout.

I’m going to talk about two of my favourites.

PM Capital Global Opportunities Fund Ltd (ASX: PGF)

This LIC targets global shares to generate impressive returns. Its investment focus can change over the years, but currently some of the themes it has invested in include European banks, industrial metals, healthcare, industrials, USA banks, consumer and staples, leisure and entertainment, and housing in Ireland and Spain.

It currently has 40 positions, which I think is ample diversification for a professionally-run portfolio.

Past performance is not a guarantee of future performance, but its portfolio has returned an average of 16.8% per year since December 2013. That level of return has allowed this ASX dividend share to deliver share price growth, a rising dividend and a good dividend yield.

Over the past year, the PM Capital Global Opportunities Fund share price has risen by well over 100%. Its annual dividend per share has been hiked every year over the past decade aside from FY23 when it maintained its payout. That’s an impressive record of reliability.

The business intends to hike its annual payout in FY27 by 10% to 16 cents per share. That translates into a grossed-up dividend yield of 6.8%, including franking credits, at the time of writing. I expect the future payouts will be even bigger.

WAM Leaders Ltd (ASX: WLE)

The other ASX dividend share I want to highlight is WAM Leaders, a LIC run by Wilson Asset Management (WAM) that targets large, quality ASX shares.

By being active with its holdings, rather than just passively holding the largest stocks, WAM Leaders has managed to deliver an average return per year of 12.1% since its inception in May 2016, outperforming the ASX share market by an average of close to 3% per year.

Currently, some of its ‘overweight’ investments are focused around real estate businesses and major property developers.

That investment style, as well as having a good understanding of macroeconomic conditions, has allowed WAM Leaders to hike its annual dividend per share every year since FY17.

Its latest annual dividend per share was 9.6 cents in FY26. That equates to a grossed-up dividend yield of 10.3%, including franking credits, at the time of writing.

The post Get paid huge amounts of cash to own these ASX dividend shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Replacing a salary with ASX dividend shares is the goal that drives most income investing.

A $90,000 income is a realistic target for many Australians.

That level sits just below average full-time earnings, which reached $2,083.70 a week in May 2026, or roughly $108,000 a year before tax.

So what would it actually take to generate $90,000 without working for it?

Why ASX dividend shares can do the job

Australian companies pay out more of their earnings than almost anywhere else in the world.

Franking credits are the reason.

Our system refunds the company tax already paid on dividends, which encourages generous payout ratios and makes ASX dividend shares unusually effective for generating income.

The maths on a $90,000 income

Let us use a real fund rather than a hypothetical portfolio.

Vanguard Australian Shares High Yield ETF (ASX: VHY) tracks the FTSE Australia High Dividend Yield Index.

The ETF holds 92 companies, charges 0.25% a year and manages a little over $8 billion.

The fund carries a forecast yield of 4.2%, or 5.5% once franking credits are included.

At 4.2%, generating $90,000 in cash distributions requires about $2.14 million. On the grossed-up figure of 5.5%, the number falls to roughly $1.64 million.

That difference is entirely franking credits.

These credits arrive as a tax offset rather than as cash in your account, so the answer lies somewhere between those two numbers depending on your marginal rate.

What you would actually own

VHY ETF is concentrated by design.

Its largest holdings are Commonwealth Bank (ASX: CBA), BHP Group (ASX: BHP), Westpac (ASX: WBC), National Australia Bank (ASX: NAB) and ANZ Group Holdings Ltd (ASX: ANZ).

That is a portfolio dominated by the major banks and one very large miner.

Performance has been strong recently, returning 17.87% over the year to 31 July 2026, and 10.22% annually over the past decade.

Distributions are paid quarterly, which suits anyone trying to replace a fortnightly or monthly pay packet.

How long it would take to get there

Someone investing $2,000 a month at VHY’s decade-long return of 10.22% would pass $1.6 million in a little over 20 years.

Add a lump sum of $100,000 at the start and that timeline shortens by about three and a half years.

Reinvesting distributions also contributes to the compounding.

Drawing income early slows down your progress because every dollar spent along the way is a dollar that never compounds.

The catch with relying on ASX dividend shares

Dividends are not contractual.

Banks cut them in 2020, and miners cut them whenever commodity prices fall.

A 4.2% yield also assumes you never need to sell units to cover a shortfall.

Inflation is the other problem, and it is the one most income investors underestimate.

With the cash rate held at 4.35% and the Reserve Bank warning that inflation is still too high, a fixed $90,000 buys less every single year.

An income portfolio needs to grow its distributions, not simply pay them.

Foolish takeaway

Somewhere between $1.6 million and $2.1 million is the most representative answer.

That may sound like a large number, and it takes decades of contributions and compounding to reach.

The encouraging part is that you do not need to get there in one leap.

Reinvesting distributions along the way does most of the heavy lifting.

For anyone building toward financial independence, ASX dividend shares remain one of the most practical tools available.

The post How much do you need invested in ASX dividend shares to replace a $90,000 salary? appeared first on The Motley Fool Australia.

More reading

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• 3 reasons to buy CBA shares following its results
• Bell Potter names the best ASX shares to buy in August
• Want income for life? Here’s how I’d build an ASX dividend portfolio
• How much is needed in superannuation for $1500 in weekly passive income?

Motley Fool contributor Mark Verhoeven has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group and Vanguard Australian Shares High Yield ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.