So you’re ready to invest your first $2,000 in ASX shares. Above all else, congratulations! In my opinion, far fewer Australians invest than they should. And in this low interest rate world we all live in, I think it’s more important than ever to do so.

But investing isn’t easy – it can even be likened to walking through a minefield. There are tricks and traps everywhere. That’s why most successful investors today got to where they are by learning how to avoid these mines. And perhaps by getting blown up once or twice along the way!

So with that sobering thought in mind, here are 3 things I think all investors should do before investing their first $2,000 into ASX shares.

1) Find a broker

Before you buy ASX shares, you’ll need a broker. In the past, brokers used to be someone you would call up and pay a commission to for buying shares on your behalf. Today, most brokers are more akin to the ‘eBay’ of stocks. That is, they represent an online marketplace where you can buy and sell shares.

Of course, they all still charge for the privilege, so finding one that suits your needs is important. The brokerages offered by the Big Four banks are always a good place to start. This includes something like Commonwealth Bank of Australia’s (ASX: CBA) CommSec or National Australia Bank Ltd.’s (ASX: NAB) nabtrade.

2) Work out a strategy

Investing can be a tight line to walk. You need to find enough money to invest without worrying about whether or not you’ll unexpectedly need the money within at least the next 5 years. It’s pretty awful if you’re forced to sell your shares in the middle of a market crash because your income changes or you prang your car.

So, before you start investing your first $2,000, you’ll need to work out how much you can afford to invest. This includes making sure you still have enough cash around to meet any future needs – whether they be expected or unexpected.

3) Find the right ASX shares to invest in

Many first-time investors start off by trying their hand at highly speculative shares. These might include biotech companies or small-cap miners. Not only will these investments probably not turn out well for a beginner, but they may also result in the unfortunate side-effect of putting a new investor off shares altogether. That’s why I think most new investors should start simply with something like a market-tracking index fund or a managed trust.

The Vanguard Australian Shares Index ETF (ASX: VAS) is always a solid choice. Or you could go for more internationally-focused funds like the iShares Global 100 ETF (ASX: IOO) or Magellan Global Trust (ASX: MGG).

These kinds of investments won’t make you rich overnight – but then again, most solid investments don’t aim to.

More reading

• 2 ASX growth shares I’d buy before Afterpay shares
• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• Why Kogan, NAB, Qantas, & Sydney Airport shares are racing higher
• Is today’s BHP, NAB or Afterpay share price a good investment?
• Why today might be a good day to buy NAB and Westpac shares

The post Ready to invest your first $2,000 in ASX shares? Do these 3 things first appeared first on Motley Fool Australia.

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It’s been an up and down year so far for the ASX real estate investment trusts (REITs) in 2020.

While the S&P/ASX 200 Index (ASX: XJO) is down 11.05% this year, many Aussie real estate shares have struggled.

Despite the volatility, I think there are still some good buying opportunities at current prices. Here are a couple of my favourites to check out today.

2 ASX REITs to buy with $1,000 today

I think it’s hard to ignore National Storage REIT (ASX: NSR) right now. 

National Storage specialises in self-storage units and business could be set to boom. Shares in the ASX REIT are trading at $1.84 per share – exactly where they started the year.

That’s despite a failed $1.9 billion takeover bid by a couple of private equity groups earlier this year. 

However, the current economic environment could be good for National Storage. People may be looking to downsize and lower their rental or mortgage payments as COVID-19 continues to hit the economy hard.

There could also be more relocations, as people adjust to a new remote working setup. That’s good news for self-storage facilities, as it could likely result in people looking to store some of their belongings for the time being.

Another ASX REIT that could be worth watching is Mirvac Group (ASX: MGR).

Mirvac is a diversified property developer with interests in residential, commercial and industrial real estate.

Many people have been expecting a large property crash in 2020. However, interest rates are at record lows and many Aussies are still desperate to buy.

Add in the re-opening of Aussie retail stores and offices around the country and in my opinion this ASX REIT may outperform in 2020.

Of course, nothing is certain right now. The Mirvac share price has fallen 23.52%, year to date, so investors don’t look to be convinced that earnings will be strong in August.

Foolish takeaway

These are just a couple of the ASX REITs I’ve got my eye on in 2020. REITs can provide consistent portfolio income and could be a good income option for long-term buyers.

More reading

• We’re in recession. What does that mean for investors?
• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• 3 of the best ASX 200 tech shares for your watchlist
• The Kogan share price is surging higher following another positive business update
• Is the Westpac share price too high?

Motley Fool contributor Ken Hall 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.

The post 2 ASX REITs to buy with $1,000 today appeared first on Motley Fool Australia.

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Treasurer Josh Frydenberg admitted the inevitable, on Wednesday.

Australia is in a recession.

Under the accepted definition of a ‘technical recession’, Australia would need two quarters of GDP contraction in a row.

(Don’t get me started on arbitrary labels. That’s a rant for another day.)

And Wednesday’s GDP numbers for January to March showed a decline of 0.3%.

In ordinary times, that’s the first shoe to drop, and we’d all wait to see what the April – June quarter brings, hoping madly to avoid having to use ‘the R word’.

But these aren’t ordinary times.

Everyone accepts that coronavirus restrictions will bite — hard — making the current quarter an absolute lock for economic contraction.

So sure are we all that even the most optimistic, clinging-to-the-faintest-hope politician needs to admit that we’re in recession.

It’s a foregone conclusion.

So the market crashed on the news, right?

Not so fast, Olly.

The ASX 200 was up 1.8% on Wednesday, the very day the news was announced.

Huh?

Not only that, but we’ve gained around 20% since the mid-March lows.

The economic news keeps getting worse. The ASX keeps getting better.

So much for the doom-and-gloomers, thus far at least.

Buy why? How?

Before we get to that, Flight Centre Travel Group Ltd (ASX: FLT) and Corporate Travel Management Ltd (ASX: CTD) (I own shares in the latter) were up 8% yesterday on nothing more than an announcement that Qantas was tripling its number of daily flights: from ‘bugger all’ to ‘not quite bugger all’.

No actual extra flights, yet. No extra bookings, yet. Just an announcement, of an intention, by one airline, while the other domestic airline remains mired in administration.

Huh?

Has the market lost its marbles, or is there some sanity prevailing here?

I think it’s the former. Here’s why:

I want to present you with a simplified version of the sort of algebra that wonky analysts do to value companies.

In the full, complicated (but really useful) version, they forecast growth, and allow for an expected return. They also recognise that if $1 in 5 years time is worth less than $1 today (because, why wait for the same return if you don’t have to?). That’s the ‘time value of money’.

So the summary below is woefully simplified for the purpose of valuing a company, but is useful to illustrate a point.

Let’s say you have $100, and I offer you 10% a year for 5 years.

Assuming I’m as good as my word, in 2025 you’ll have $150 (your $100 back, plus $10 per year).

Now, let’s say I came to you and said ‘Look, there’s this coronavirus thing. I can’t pay you this year. But it’ll be over soon enough. I’m pretty sure I can pay you next year, and we’re both convinced I’ll definitely be able to pay you in 2022’.

Your investment won’t deliver $150 any more.

The $10 payment in 2020 is gone. And 2021 is uncertain. Maybe a 50% chance.

Your $150 is reduced by $10 for 2020, and we’ll lop $5 off our expected 2021 payment.

Instead of getting $150, you reckon $135 is more likely.

Your money is now worth 10% less than it otherwise would have been worth ($135 divided by $150).

Apply that to the sharemarket (with the caveats I outlined above), and shares should fall by 10%. And maybe 15% once you factor in all of that ‘time value of money’ stuff.

So how much did the market fall between mid-February and mid-March? About 38%, give or take.

Seems kinda overdone in hindsight, doesn’t it?

And, given that, the rally over the past 6 – 8 weeks seems rather logical, rather than blind optimism.

And even more so, given the regular stimulus announcements made during that time, adding more cushioning for a struggling economy.

The ‘don’t panic’ message is one I’ve tried to hammer home in this space ever since the beginning of the pandemic. So far, it’s been the right approach.

I’m not a ‘victory lap’ kinda guy. And even if I was, it’s patently obvious the race isn’t over.

There are a multitude of things that could go wrong, for the economy and for markets, over the coming months. Frankly, the most likely cause of a market fall is probably investor sentiment, I reckon. Investors and traders run in packs.

Right now, they’re all believing in each others’ confidence. If that starts to wane, the pack can reverse course quickly. That’s how we ended up with the stock market’s pandemic overreaction (not to the health crisis, but to the economic impacts) in the first place!

About now, you might be thinking “Yeah, but the economy!”

It’s true, the economy is suffering right now. But ‘the economy’ isn’t really a thing, other than a conglomeration of the people that make up business owners, employees, parents, kids, retirees and everyone else. 

So it’s important to remember that it’s not the economy that suffers, but people.

And, as WSJ columnist Jason Zweig tweeted yesterday:

“It is deeply uncomfortable to watch Wall Street party while Main Street emerges from lockdown into tear gas, but the market isn’t taking a moral position.”

It is uncomfortable.

But don’t let that blind you, as an investor, to the way you need to think about markets.

Share prices are, at their core, ‘the sum total of all future cash flows, discounted for the ‘time value’ of when that cash is received’.

And, as with my super-simplified example above, even a dead stop in profits for one year doesn’t impact the underlying value of a company as much as you might think (or as much as the market assumed, in March).

Remember, too, that while shares are up 20% over a couple of months, they’re still around 17% down from the late February high point.

Context is a funny thing. “How on earth are shares up 20%?” and “Shares are down almost 20%” are both correct — but the starting points (and dates) are different.

I understand the feeling of not wanting to invest until ‘the coast is clear’.

But it’s important to remember that by that time, prices will likely be much higher.

The stock market is absolutely connected to the economy, but the timeframes are hugely different.

Wednesday’s GDP was a snapshot of a recent — yet past — three month period.

Share prices are an estimate of all — future — cashflows, from here to eternity.

It requires a very particular effort to partition those things, and treat them separately.

Many can’t. That’ll probably cost them a fortune.

We confuse those two things at our peril.

And I think you and I should keep investing, with our eyes not on yesterday or today, but on the long-term horizon.

Fool on!

More reading

• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• 3 of the best ASX 200 tech shares for your watchlist
• The Kogan share price is surging higher following another positive business update
• Is the Westpac share price too high?
• Is today’s BHP, NAB or Afterpay share price a good investment?

Motley Fool contributor Scott Phillips owns shares of Corporate Travel Management Limited. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Flight Centre Travel Group 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 We’re in recession. What does that mean for investors? appeared first on Motley Fool Australia.

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