If I were starting my investment journey again with my first $500 to invest into ASX shares, I’d pick Future Generation Investment Company Ltd (ASX: FGX).

The problem with investing just $500 is that brokerage can take up a material amount of your starting money. So I’d want to go for an ASX share that I could stay invested in for the long-term.

If you were to begin with a single ASX share like Commonwealth Bank of Australia (ASX: CBA) then your entire investment portfolio would be allocated to just one business. That’s not very good diversification. I’d also want to pick something that can do well if there’s another coronavirus market sell off. 

What if you could pick an investment that could give you good diversification right from the start? I think Future Generation is a good answer.

Why is Future Generation a good ASX share?

It’s a special listed investment company (LIC). The job of a LIC is to invest in other shares on your behalf. Most LICs will charge a management fee (and perhaps a performance fee).

But Future Generation doesn’t charge a management fee. It donates 1% of its net assets each year to youth charities.

What does Future Generation actually invest in? Well, it doesn’t invest in normal ASX shares. It invests in the funds of around 20 fund managers who also work for free. They don’t charge management fees or performance fees.

Each fund is a separate portfolio. So Future Generation’s underlying diversification is very strong. The investments that Future Generation’s managers usually go for are those smaller growth shares, so in normal times it may be able to offer better growth than the ASX index.

One of the fun things with LICs is that sometimes you can buy them for cheaper than their asset value. You can buy the ASX share’s $1 of assets for less than $1. That seems like good value to me. Future Generation has been trading at an attractive discount to its net tangible assets (NTA) in recent times. 

As a bonus, Future Generation currently has a grossed-up dividend yield of 7.3%. I think Future Generation is a good ASX share to start with $500.

More reading

• Got $50,000 to invest for income? Pick these 5 ASX dividend shares
• How to make $1,000 a month in dividends
• How to build good wealth with small investments
• Why high yield dividend shares can be detrimental to your wealth
• 2 ASX shares to build a diversified dividend portfolio

Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN 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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The NextDC Ltd (ASX: NXT) share price has soared nearly 39% higher during 2020. This far exceeds the performance of the S&P/ASX 200 Index (ASX: XJO) which has fallen by 12% year to date.

Is this ASX 200 tech share overvalued right now? Or, is it a good long-term buy?

Fast growing cloud ecosystem

NextDC is Australia’s largest, locally-based data centre provider by quite a margin.

The ASX 200 company’s portfolio of data centres is home to one of Australia’s largest cloud centre partner ecosystems. This is highly advantageous because, in the data centre service market, ‘scale’ really matters. NextDC’s cloud centre community comprises more than 590 carriers, cloud providers and IT service providers.

Furthermore, the company is continuing to rapidly expand its portfolio of data centres, with a number currently under construction. NextDC recently completed a $672 million equity raising which will further assist with its expansion strategy.

The company is also looking at further data centre site acquisitions to expand its nationwide presence.

Continued strong growth during the pandemic

NextDC has benefitted from increased demand for cloud services during the coronavirus pandemic.

Under the government enforced lockdown measures, vast numbers of businesses have switched to a working-from-home model for their employees. Because of this, many consumers have increased their usage of bandwidth-hungry applications such as streaming video. This has been good news for the ASX 200 tech share.

Well positioned for long-term growth

NextDC has continued to grow strongly with the ongoing rise of cloud computing.  Over the last 4 years, the company’s customer base has grown at a compound annual growth rate (CAGR) of 21%.

This is very strong result for a data centre provider which typically grows at much slower rates than other IT companies such as Software-as-a-Service (SaaS) providers.

Interconnections have grown even more quickly for NextDC with a CAGR of 31% over the same period.

Customers are continuing to expand their ecosystems which is driving higher use of cloud services and connectivity with other data centres.

NextDC is also continuing to build newer and more energy-efficient Tier IV data centres. This is driving higher margins and higher recurring revenues for the business.

Is NextDC a solid, ASX 200 long-term buy?

The data centre game is highly capital intensive. There are high upfront costs to build new data centres. However, once in place, operators are well positioned to reap the benefits further down the track.

I believe that NextDC is well placed for strong revenue and profitability growth over the next 5 to 10 years. This will be driven by increased economies of scale and the rollout of more efficient tier IV data centres.

Despite the company’s recent share price rise, in my view, this still makes it a tech share worth buying and holding for the long term.

More reading

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• Is the BHP share price cheap right now?
• Afterpay and these top ASX tech shares are on fire in 2020

Motley Fool contributor Phil Harpur owns shares of NEXTDC Limited. 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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I think that the Vanguard Australian Shares Index ETF (ASX: VAS) share price is a buy.

At the moment the Vanguard Australian Shares Index ETF share price is down around 17.5% from the pre-coronavirus selloff high. That’s still a pretty large decline if you ignore where it was in March 2020. We don’t have a time machine to go back to that price.

All we can decide is whether today is a good time to buy or not to buy the exchange-traded fund (ETF).

Things are certainly looking up compared to a couple of months ago. The infection numbers are very low across the country and not as many people are on jobkeeper as feared.

Perhaps that means that the Australian economy won’t be as bad as expected? Let’s hope so.

In that context, I think it’s good to consider if the Australian share market is worth buying.

Is it time to buy Vanguard Australian Shares Index ETF?

At the moment the ASX banks like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ) are at low share prices. It’s a large reason why the Vanguard Australian Shares Index ETF share price is down as much as it is.

I’ve always said that I’m not a big fan of investing in banks. So being able to buy the ETF when the banks are a smaller allocation than before is attractive to me. I’d rather get more exposure to shares like CSL Limited (ASX: CSL), Macquarie Group Ltd (ASX: MQG) and Wesfarmers Ltd (ASX: WES).

As time goes on it’s growing shares like A2 Milk Company Ltd (ASX: A2M), Altium Limited (ASX: ALU), Aristocrat Leisure Limited (ASX: ALL), Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) and Amcor Plc (ASX: AMC) that become a bigger part of the ETF.

We can’t decide how much each share makes up of the Vanguard Australian Shares Index ETF, we can just buy the whole ETF at today’s price. In the future the ETF may have shares like CSL, Wesfarmers and Xero Limited (ASX: XRO) at the very top of the holdings.

So, I think it could be a good idea to buy the ETF at a lower price, particularly as the Australian dollar is so strong right now. It means we can buy the earnings of shares that make earnings in US dollars, such as CSL, at a lower price in Australian dollars. I’d happily buy the Vanguard Australian Shares Index ETF today for the long-term.

More reading

• How to become a millionaire by investing in ASX shares
• 3 investing secrets for success with ASX shares
• I don’t normally buy ETFs, but I would buy these 2
• How teenagers can beat the share pros at investing
• How I would build a $100,000 ASX portfolio with ETFs

Tristan Harrison owns shares of Altium. 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 Amcor Limited and Macquarie Group Limited. The Motley Fool Australia owns shares of A2 Milk, Altium, Wesfarmers Limited, and Xero. 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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