I’m sure plenty of Australians would love the idea of earning $75,000 a year in passive income and being able to retire at 45. I believe investing in ASX shares could be the best way to achieve that goal.

Some Aussies may love to work, while others may want to spend more time with loved ones, travelling or whatever else they want to do.

There are a variety of appealing reasons why reaching $75,000 of annual passive income could be compelling.

Let’s look at how we can unlock those targeted goals.

The power of compounding

Every investor who wants to retire early should view compounding as one of their closest financial friends.

Albert Einstein once supposedly said:

Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.

Compounding can help us benefit from investments that are growing on their own, over multiple years. When interest earns interest, investors can see their dollars grow into a much larger figure. Those investments are growing all by themselves, rather than requiring additional funding from our own finances.

To show how positively compounding can help Australians grow wealthier, I’m going to run through two potential examples.

Imagine someone who is 20 years old right now and manages to set aside $1,000 each month to invest in ASX shares. That implies an annual investment total of $12,000. Assuming the portfolio returns an average of 10% per year – which the share market has done over the long-term – it would grow into a value of $1.18 million after 25 years.

Turning to another example, let’s think about someone who starts five years later at 25. Hopefully that person would be able to earn more and save more. Let’s say they can invest $1,500 per month. If the portfolio also returned an average of 10% per year, it would grow to $1.03 million after 20 years.

Which ASX shares Aussies could buy for passive income to retire

If I use the two example portfolios above, a $1.18 million portfolio would require a dividend yield of 6.3% to make $75,000 of annual passive income. Meanwhile, a $1.03 million portfolio would require a dividend yield of 7.3%.

Those are certainly high dividend yields to target for income. It may be wise to consider building up the portfolio a bit further (for even just a year or two) before retiring, as that would allow investors to target a wider variety of investments.

If I were targeting dividend yields of more than 6%, or even above 7%, I would want to acknowledge that higher yields can come with a higher risk of being reduced.

But, there are a few names I’d include.

For portfolio average dividend yield that’s in the 6.3% or so range, I’d look at names like Medibank Private Ltd (ASX: MPL), PM Capital Global Opportunities Fund Ltd (ASX: PGF), Dexus Industria REIT (ASX: DXI) and MFF Capital Investments Ltd (ASX: MFF).

Some of the names I’d consider thinking of that yield at least 7% or better include Future Generation Australia Ltd (ASX: FGX), Future Generation Global Ltd (ASX: FGG), Hearts and Minds Investments Ltd (ASX: HM1), WCM Global Growth Ltd (ASX: WQG) and Charter Hall Long WALE REIT (ASX: CLW).

I believe investors seeking to retire with $75,000 in annual passive income would be well served by the above stocks, as well as other ASX shares that could deliver strong growth.

The post How much do I need to retire on $75,000 a year at 45? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Future Generation Australia, Future Generation Global, Hearts And Minds Investments, Mff Capital Investments, and Wcm Global Growth. 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 positions in and has recommended Mff Capital Investments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) ended the trading week on a somewhat sour note this Friday. After what has been a mostly positive week for ASX shares, investors couldn’t quite stick the landing today. Despite a strong open this morning, the ASX 200 ended up losing 0.014% by the time the markets wrapped up trading. That leaves the index at 8,731.2 points as we head into the weekend.

This middling end to the Australian trading week followed a far more optimistic night up on the American markets.

The Dow Jones Industrial Average Index (DJX: .DJI) staged a decisive bounce-back, rising 0.61%.

The tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) did even better, gaining a healthy 1.69%.

But let’s get back to the local markets now and examine how the different ASX sectors fared amid today’s indecisive trading conditions.

Winners and losers

There were a few winners to balance out the red sectors this Friday.

But first, to the losers.

Leading the pessimistic sectors this session were real estate investment trusts (REITs). The S&P/ASX 200 A-REIT Index (ASX: XPJ) copped some displeasure, tanking 1.31%.

Energy shares were also on the nose, with the S&P/ASX 200 Energy Index (ASX: XEJ) plunging 1.1%.

Consumer staples stocks were no safe haven. The S&P/ASX 200 Consumer Staples Index (ASX: XSJ) cratered by 1.04% this session.

We could say the same for communications shares, illustrated by the S&P/ASX 200 Communication Services Index (ASX: XTJ)’s 0.77% retreat.

Financial stocks weren’t finding many buyers. The S&P/ASX 200 Financials Index (ASX: XFJ) gave back 0.59%.

Consumer discretionary shares were just ahead of that, with the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) diving 0.54%.

Healthcare stocks weren’t feeling the love. The S&P/ASX 200 Healthcare Index (ASX: XHJ) ended up sliding 0.36% lower.

Our last losers this Friday were industrial shares, as you can see from the S&P/ASX 200 Industrials Index (ASX: XNJ)’s 0.16% slip.

Turning to the winners now, it was gold stocks that shone the brightest. The All Ordinaries Gold Index (ASX: XGD) soared 3.9% higher this session.

Broader mining shares ran hot too, with the S&P/ASX 200 Materials Index (ASX: XMJ) roaring 1.6% higher.

Tech stocks got some love as well. The S&P/ASX 200 Information Technology Index (ASX: XIJ) added 0.73% to its total today.

Finally, utilities shares got over the line, evident from the S&P/ASX 200 Utilities Index (ASX: XUJ)’s 0.14% bump.

Top 10 ASX 200 shares countdown

Healthcare stock 4DMedical Ltd (ASX: 4DX) was our best performer this Friday. 4DMedical shares rocketed 13.42% this session to close the week at $4.31 each.

We dove into what might have caused this rally this afternoon.

Here’s the rest of today’s best:

ASX-listed company	Share price	Price change
4DMedical Ltd (ASX: 4DX)	$4.31	13.42%
Develop Global Ltd (ASX: DVP)	$5.29	11.84%
IperionX Ltd (ASX: IPX)	$3.00	10.29%
Megaport Ltd (ASX: MP1)	$18.54	7.60%
PDI Gold Ltd (ASX: PDI)	$4.91	7.51%
Ora Banda Mining Ltd (ASX: OBM)	$1.53	7.37%
Greatland Resources Ltd (ASX: GGP)	$11.05	5.54%
Vault Minerals Ltd (ASX: VAU)	$6.34	5.49%
Genesis Minerals Ltd (ASX: GMD)	$7.60	5.26%
Monadelphous Group Ltd (ASX: MND)	$30.62	5.22%

Enjoy the weekend!

Our top 10 shares countdown is a recurring end-of-day summary that shows which companies made big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport. 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.

Investing in managed funds isn’t as popular on the ASX as it used to be. However, despite the rise of rival products, mainly exchange-traded funds (ETFs), managed funds are still a popular avenue for Australian passive investors.

If you weren’t aware, a managed fund is an unlisted investment. Unlike a share, ETF, or listed investment company (LIC), an investor doesn’t typically buy shares or units of a managed fund on the ASX. Instead, they buy and sell units directly from the fund manager itself. The assets themselves are held in a trust and are managed on behalf of the owners by the fund manager. Because of this structure, managed funds tend to charge higher fees than other passive investment vehicles.

One can find managed funds to invest in almost anything one can think of. In Australia, there are managed funds that cover international shares, bonds, infrastructure, cryptocurrencies, precious metals, real estate, and, of course, ASX shares themselves.

I’ve observed the performance of the top managed funds in Australia for many years and have even invested in a few of them. I wish I knew a very important thing when I did make that first investment.

The events of last week involving Bennelong Funds Management brought this back to the front of my attention. Bennelong was one of the ASX’s most successful fund managers for many years, attracting large sums of funds under management. However, its performance has had a couple of rough years. When this happens, it often results in an exodus of funds, placing even more pressure on its managers. You can ask the folks over at Magellan Financial Group Ltd (ASX: MFG) all about that. This week, it was revealed that Bennelong has been sold to Antipodes Partners.

Managed funds and ETFs on the ASX

Over my years of observing funds like Bennelong, I have noticed a pattern. The ASX always has a fund manager of the moment. A manager that hits impressive performance figures for a few years, drawing plenty of attention and extra dollars. Investors wonder how they did it, and whether they should invest. Years ago, it was Magellan and Bennelong. Today, it could be the high-flyers at L1 Group Ltd (ASX: L1G).

This can last for one, three, or even five years. However, what I have observed over a long period of time is that very few fund managers enjoy more than a year or two in the sun. Most simply cannot match or beat the index over long periods of time, especially enough to offset the fees that they charge.

I wish I knew this when I first started investing in ASX shares. If I did, I would have put more money in ultra-cheap index funds, like the Vanguard Australian Shares Index ETF (ASX: VAS) or the iShares S&P 500 ETF (ASX: IVV). These funds charge minuscule management fees, and yet tend to beat out the managed funds that play in the same space that they do. There are exceptions. But finding those is a hard business. And there’s never a guarantee that past performance continues into the future.

As such, I think the vast majority of ASX investors would be better off sticking to these kinds of funds than experimenting with managed funds, LICs, or actively managed ETFs.

The post Do you invest in ASX managed funds? Here’s something I wish I knew 10 years ago appeared first on The Motley Fool Australia.

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• Vanguard ETFs vs. Betashares ETFs: Who’s coming out on top?
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Motley Fool contributor Sebastian Bowen has positions in Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended iShares S&P 500 ETF. The Motley Fool Australia has recommended 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.