Interest rates at record lows are fantastic for borrowers and not-so-good for first home buyers saving for a home.

Where can you turn to save for a home deposit?

According to Fidelity, a $10,000 investment in Australian shares over the past 10 years to 31 December 2019 has returned 11.2% pa which resulted in dollar value of $26,881. This crushes the savings rates offered by the banks.

With a long-term viewpoint to acquire a home, you could achieve a return well in excess of current interest rates on savings accounts and term deposits offered by the big banks by investing in Australian shares.

While investing in shares carries risk in the short term, you could achieve market returns of the S&P/ASX200 Index (ASX: XJO) by investing in an exchange-traded fund (ETF) such as the BetaShares Australia 200 ETF (ASX: A200).

I see 2 big benefits of investing in an ETF that tracks the performance of the ASX 200:

1. Low management cost (0.07% pa for BetaShares Australia 200 ETF)
2. Diversification to reduce company-specific risk

Benefit 1: low management costs

Paying high management costs significantly impacts on the long-term return investors receive on their investments.

The more you pay in management fees, the more you could lose out on meeting market performance.

The real impact of fees over the long term can mean losing out on thousands of dollars!

Benefit 2: diversification

The point of diversification is to eliminate risk that can result from putting all your eggs in one basket. An ETF tracking the ASX 200 like BetaShares Australia 200 can provide protection to an investor portfolio. 

The top 10 ASX shares in the BetaShares fund are:

1. CSL Ltd (ASX: CSL)
2. Commonwealth Bank of Australia (ASX:CBA)
3. BHP Group Ltd (ASX: BHP)
4. Westpac Banking Corp (ASX: WBC)
5. Australia & New Zealand Banking GrpLtd (ASX: ANZ)
6. National Australia Bank Ltd (ASX: NAB)
7. Wesfarmers Ltd (ASX: WES)
8. Woolworths Group Ltd (ASX: WOW)
9. Transurban Group (ASX: TCL)
10. Macquarie Group Ltd (ASX: MQG)

The top 10 is composed of companies in the healthcare, banking, mining, retail, and industrial sectors.

Foolish takeaway

Investing in an ETF may be an excellent way for investors to gain exposure to the share market. As company-specific risk is reduced, you can receive a return similar to the ASX 200. This return can help want-to-be first homeowners save for a home.

In my view, investing in the share market can help first home buyers who are saving for a deposit with a medium to long term horizon. In the short term, it can be very volatile and result in losing a substantial amount of capital.

More reading

• Can these 5 FY20 dogs of ASX 200 bounce back in the new financial year?
• Millennials be warned! Signs of dangerous ASX share trading grow
• Top brokers name 3 ASX 200 shares to sell today
• Australian unemployment jumps to 7.1%
• ASX 200 down 1.3%: Big four banks tumble, Afterpay tipped to go higher

Matthew Donald owns shares of National Australia Bank Limited and Wesfarmers Limited. 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 Transurban Group, Wesfarmers Limited, and Woolworths 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 How the ASX 200 can help first home buyers save for a deposit appeared first on Motley Fool Australia.

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The Pushpay Holdings Ltd (ASX: PPH) share price is up 9.90% today after the payment system provider released upgraded guidance at its annual meeting. Pushpay reported solid revenue growth and expanded operating margins, with the company meeting or exceeding all guidance provided to the market over the year. 

What does Pushpay do? 

Pushpay sells a cloud-based online payment solution that centralises donation data and manages payment operations. The company has some 10,896 customers, most of which are US-based churches. 

In December, Pushpay acquired Community Church Builder (CCB), a church management system that provides a platform to connect and communicate with community members. The acquisition strengthens Pushpay‘s value proposition, with a joint product offering launched in April.

How did Pushpay perform in FY20?

Pushpay reported a 32% increase in revenue for FY20, which grew to US$129.8 million in the year to 31 March 2020. This increase pushed Pushpay into profitability, with the company reporting a US$21.7 million profit before tax, up from a loss of US$1.4 million. Operating expenses increased by only 5% thanks to disciplined cost management. 

Customer numbers grew 42% to 10,896, up from 7,649. This drove a 39% increase in total processing volume which reached US$5 billion. Gross profit margin also climbed 5 percentage points to 65%. Over the year, Pushpay processed 25.9 million transactions with an average transaction value of US$195. 

What is the outlook for Pushpay?

Pushpay stands to benefit from the shift to digital as a result of the coronavirus pandemic. This has resulted in increased demand for Pushpay’s services. While digital donations to churches were once uncommon, they are now becoming increasingly prevalent in the US. 

Pushpay has a strategic goal of becoming the preferred provider of mission-critical software in the US faith sector. Its solutions allow churches to create their own apps, manage service schedules, and facilitate digital giving. Despite Pushpay’s strong growth to date, it has still only captured a very small percentage of the market, meaning there is scope for further growth. 

Today, Pushpay updated its guidance for the year ending 31 March 2021. The company now expects earnings before interest, tax, depreciation, amortisation, and fair value adjustments to be between US$50 million and US$54 million, up from US$48 million to US$53 million. 

More reading

• 3 stellar ASX mid cap growth shares to buy right now
• Start your investment journey with a $2,500 investment in these ASX shares
• 2 fast-growing ASX tech shares to buy right now
• 3 ASX shares to buy and hold for the next decade
• Why Nearmap and this ASX mid cap share could be strong buys

Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and 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.

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The market may have taken a tumble today, but that hasn’t stopped the A2 Milk Company Ltd (ASX: A2M) share price from charging higher.

This morning the infant formula and fresh milk company’s shares jumped 5% to a record high of $20.05.

When its shares hit that level, it meant they were up an impressive 43% since the start of the year. This compares favourably to an 11% decline by the S&P/ASX 200 Index (ASX: XJO) over the same period.

Why is the a2 Milk share price at a record high?

Investors have been buying the company’s shares this year due to its strong performance during the third quarter.

Strong demand for its infant formula during the pandemic led to a2 Milk upgrading its FY 2020 guidance in April.

It now expects revenue to be in the range of NZ$1,700 million to NZ$1,750 million this year. It is also forecasting a stronger than expected earnings before interest, tax, depreciation, and amortisation (EBITDA) margin of 31% to 32%. This compares to its previous EBITDA margin guidance of 29% to 30%.

Based on the top end of its ranges, this guidance implies EBITDA of NZ$560 million in FY 2020. This will be a 35.4% increase on the prior corresponding period.

What else is driving its shares higher?

In addition to the above, investors may have been buying a2 Milk’s shares this week following the release of a positive broker note out of UBS.

According to the note, the broker has retained its buy rating and NZ$22.00 (A$20.64) price target on the company’s shares.

UBS appears to believe there is a chance that a2 Milk will actually outperform its guidance in FY 2020.

Outside this, it has suggested that there could be a new product launch in the medium term. Depending on the market opportunity for this potential product, it seems to think it could be a catalyst to taking its shares up a level again.

Should you invest?

While I think a2 Milk Company’s shares are coming close to being fully valued, I would still buy them if you plan to invest for the long term.

I believe the company has a long runway for growth over the next decade thanks to its expanding footprint and lucrative opportunity in the China market.

More reading

• ASX 200 down 1.3%: Big four banks tumble, Afterpay tipped to go higher
• Why A2 Milk, Afterpay, Mesoblast, and Temple & Webster are pushing higher
• ASX 200 finishes higher by 0.8%, Carsales share price driven up by FY20 guidance
• Top brokers name 3 ASX 200 shares to buy today
• ASX 200 down 0.1%: Carsales update impresses, a2 Milk surges higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of A2 Milk. 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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