Building long-term wealth through an ASX growth portfolio and inclusions like Afterpay Ltd (ASX: APT) shares is a lucrative path tempting many investors. Sure, you don’t get the certainty and income that more mature, dividend-paying companies can offer. But hitching your wagon to a real winner can be a life-changing experience.

So, with that in mind, here’s how I would build a $100,000 ASX portfolio with ASX growth shares.

Spend $25,000 on Xero Limited (ASX: XRO) shares

Xero has been one of the biggest growth stars of the ASX for a few years now – and for good reason. This cloud-based software as a service (SaaS) company has baked up a storm with stellar subscriber growth numbers and a scalable business model. Last year alone, this company grew its subscribers by double digits in the target markets of the United Kingdom, the United States and Australia.

It grew revenue by 30% – giving an indication of the company’s potential. Perhaps, unfortunately, the market has long known about its potential and shares are, therefore, priced accordingly. But that doesn’t stop a real winner in the end.

Spend $25,000 on BetaShares Global Cybersecurity ETF (ASX: HACK) shares

Aside from having my favourite ticker symbol on the ASX, I think this exchange-traded fund is a worthy investment for a growth portfolio. As the name implies, this ETF invests in companies operating in the digital security sector.

I think the demand for cybersecurity services will continue to rise with the flood of commerce moving online every year (clearly accelerated in 2020). And these are exactly the kinds of companies HACK invests in. Some of its current holdings include Crowdstrike, Splunk, Cisco, and Palo Alto.

Spend $25,000 on Pushpay Holdings Ltd (ASX: PPH) shares 

Pushpay is another payments company. But unlike Afterpay’s buy now, pay later offering, this business targets the very niche area of donation management. It provides a model for any organisation that might still rely on the old ‘pass the hat around’ funding model – think churches and charities.

The signs of the trend toward a cashless society are now becoming incontrovertible. This stems heavily from the coronavirus pandemic. As such, I think this company is worth having some faith in.

Lastly, spend $25,000 on Afterpay shares 

Finally, you can’t have a real ASX growth portfolio without at least considering this wunderkind. And after consideration, I think Afterpay shares more than deserves a role in our growth portfolio. This company has a remarkable track record of proving its detractors wrong over its short life. It has been able to easily crack the US and UK markets and appears to be growing strongly throughout this recent coronavirus crisis, despite fears over credit risk.

I think Afterpay has a decent chance at one day rivalling the US-listed payment giants like Mastercard (NYSE: MA), Visa (NYSE: V) and American Express (NYSE: AXP). Thus, I think it’s a deserving company to have in our ASX growth shares portfolio.

More reading

• What ASX shares should you invest in during a bull market?
• What the 10 largest companies in the world have in common
• 2 ASX growth shares I’d buy before Afterpay shares
• 3 of the best ASX 200 tech shares for your watchlist
• The Xero share price just hit a record high: Is it too late to invest?

Sebastian Bowen 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, PUSHPAY FPO NZX, and Xero. The Motley Fool Australia owns shares of BETA CYBER ETF UNITS. The Motley Fool Australia has recommended PUSHPAY FPO NZX. 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 Building a $100,000 portfolio with Afterpay shares and 3 other ASX companies appeared first on Motley Fool Australia.

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The 2020 stock market crash could cause investors to become increasingly concerned about their portfolio’s capacity to survive an uncertain economic outlook. After all, with many industries likely to suffer from reduced demand for their goods and services, it could prove to be an uncertain period for the stock market.

Through buying a diverse range of financially sound companies with defensive characteristics, you could protect your portfolio from a future market crash.

Diversification

Perhaps the simplest and most effective means of reducing your portfolio’s risks is diversification. Holding a larger number of companies reduces your reliance on a small number of businesses to generate capital growth or income, which is likely to make your portfolio returns more stable and consistent.

Furthermore, investing in multiple geographies and industries could reduce your overall risks. For example, the coronavirus pandemic is likely to affect some regions and sectors more than others. By having exposure to a wide range of countries and industries, you may be better able to protect your portfolio’s returns in the long run.

Fortunately, the cost of buying stocks has fallen significantly over recent years through the growth in online sharedealing. Therefore, diversification is cheaper and more accessible to a larger number of investors than it used to be.

Defensive stocks

Buying defensive stocks could limit your losses during a market crash. Defensive stocks are generally less impacted by an economic downturn than their cyclical peers. They may, for example, have business models that are relatively unreliant on the performance of the economy. This may allow them to deliver solid financial performances even during a recession or depression.

Examples of sectors where defensive stocks may be found include utilities, tobacco and healthcare. Although they may not necessarily offer capital growth during bull markets that can match that of cyclical businesses, they may continue to be relatively popular among investors during challenging market conditions. As such, their total returns in the long run could prove to be relatively impressive.

Financially-sound businesses

Another means of preparing for a market crash is to buy stocks that have solid financial positions. This may include companies that have modest debt levels, access to multiple sources of finance, as well as large cash balances. They may be able to withstand a period of lower sales or even losses better than their sector peers. This could make them attractive to investors, which may help to support their stock prices.

Through analysing company annual reports and investor updates, it is possible to build a relatively accurate picture of the financial strength of a business before buying it. Taking the time to understand its balance sheet strength could help you to avoid severe declines during a market crash, which could lead to higher returns from your portfolio over the long term.

More reading

• These were the worst performers on the ASX 200 last week
• Building a $100,000 portfolio with Afterpay shares and 3 other ASX companies
• ETFs I’d pick to build a passive portfolio
• Coronavirus: why I’d buy shares during this market volatility
• What ASX shares should you invest in during a bull market?

Motley Fool contributor Peter Stephens 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 3 steps I’d take to protect my portfolio from a stock market crash appeared first on Motley Fool Australia.

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How to invest passively

ETFs are a great way to build your wealth passively in my opinion. Also known as exchange-traded funds, ETFs are a great investment tool.

The idea of an ETF is that you can invest in dozens (or hundreds) of businesses or assets in a single investment. I think it’s much easier than buying all those shares yourself. Many of the best ETFs also come with cheap management fees.

But which ETFs are you meant to buy? Some people like the idea of Vanguard Diversified High Growth Index ETF (ASX: VDHG) because of the diversification offered. But I don’t think investing in bonds at this price makes sense and low yield makes sense.

I’d put together an ETF portfolio with these weightings:

BetaShares Australia 200 ETF (ASX: A200) – 30%

If you’re going to invest in ASX shares you may as well go for the cheapest option. BetaShares offers this one for an annual fee of just 0.07% per annum.

You get decent diversification with shares like CSL Limited (ASX: CSL), Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), Macquarie Group Ltd (ASX: MQG) and Wesfarmers Ltd (ASX: WES).

One of the more attractive things about this ETF is the income benefits. Not only do ASX shares generally have generous dividend payout ratios, but those dividends also come with franking credits.

This option covers the Australian shares.

iShares S&P Global 100 ETF (ASX: IOO) – 40%

The biggest businesses in the world are steadily accumulating more market power and selling more services to the world.

Shares like Microsoft, Amazon, Apple, Facebook, Alphabet and so on are very compelling businesses today and their known projects like VR and automated cars are also exciting.

What I like most about this ETF is that it’s invested in the biggest global businesses, it doesn’t really matter which country they come from.

This ETF gives us the global blue chip exposure we need.

Betashares FTSE 100 ETF (ASX: F100) – 20%

The global share market doesn’t provide much income and I’m cautious about getting too much exposure to the US share market right now considering what might happen over the next months leading up to the election.

The UK share market could be one of the best ways to get international diversification whilst avoiding US shares.

Within this ETF are plenty of quality shares like Astrazeneca, GlaxoSmithKline, HSBC, Diageo, Unilever, Reckitt Benckiser, Vodafone, National Grid, the London Stock Exchange and so on.

As a bonus, at the end of April 2020, the underlying trailing dividend yield was almost 6%, although it’s obviously a bit lower now.

Vanguard FTSE Asia ex Japan Shares Index ETF (ASX: VAE) – 10%

Asia is a very interesting place to invest in shares. It’s home to some of the world’s biggest technology companies like Tencent, Alibaba, Taiwan Semiconductor Manufacturing and Samsung. But this ETF is actually invested in over 1,250 shares. I think that’s excellent diversification. 

The Asian middle class have been getting steadily richer over the years and this is giving them more spending power.

As the coronavirus pandemic subsides and/or an effective treatment is produced, the Asian region is likely to get back to the solid growth it was seeing before all of the restrictions.

The ETF has a decent dividend yield and attractive statistics like a return on equity (ROE) ratio of around 14.75%.

Foolish takeaway

All of these ETFs are quality options in my opinion. If I only had $1,000 to get started with today I’d go for the UK ETF because of its solid diversification, but with less exposure to the US than many other index options.

More reading

• What the 10 largest companies in the world have in common
• Ready to invest your first $2,000 in ASX shares? Do these 3 things first
• How to become a millionaire by investing in ASX shares
• I don’t normally buy ETFs, but I would buy these 2
• How to make $1,000 a month in dividends

Tristan Harrison has no position in any of the stocks mentioned. 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 Wesfarmers 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 ETFs I’d pick to build a passive portfolio appeared first on Motley Fool Australia.

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