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  • Why do I own this ASX 200 share?

    man on beach looking at laptop screen with question mark, why invest, asx 200 shares

    It’s important to properly review your investment portfolio on a regular basis and ask: why do I own this ASX 200 share? Personally, I like to do this just before the end of the financial year as it helps me with my tax planning. I would also recommend doing something similar annually, bi-annually or every quarter, when results are announced.

    Doing this year’s review, I found myself asking the question, why do I own this S&P/ASX 200 Index (ASX: XJO) share? I discuss this share below, but first I feel it’s important for me to define myself as an investor and outline my investment strategy.

    My ASX 200 investor profile

    • Demographic: Generation Y
    • Investment time horizon: 50 years +
    • Investing experience: high
    • Risk tolerance: very high
    • End goals: Join the FIRE (Financial Independence Retire Early) movement and go travelling. Pass on a financial legacy to my kids.

    My ASX 200 investment strategy

    Because I have such a long time horizon in which to invest, as well as minimal financial commitments, I’m able to be an ultra long-term, aggressive growth investor. My strategy is to build a highly diversified portfolio of quality growth companies with a lot of risk, but massive multi-bagger potential. I try to invest funds into the market on a monthly basis (or as close to this as possible).

    I have been implementing this strategy for over half a decade now, which has seen my portfolio grow to nearly 60 active positions. But importantly, part of my strategy is to let my winners run and to concentrate the portfolio into about 30 meaningful positions. This is already starting to happen naturally. Currently, including roughly a 10% cash position, over 50% of my portfolio is in 18 stocks. Take it out to 32 stocks and that’s 70% of my portfolio.

    So, why do I own this ASX 200 share?

    Challenger Ltd (ASX: CGF) is a financial services company known for being Australia’s largest annuity provider. With so much money in superannuation, my thesis was that our aging population would have growing demand for these types of products. As a result, Challenger could provide market beating total returns by investing funds under management. I also thought the company paid a decent dividend.

    Challenger is one of the first shares I bought, back when I didn’t have a proper strategy. Because of this, it isn’t fully aligned with my current strategy of targeting growth. With interest rates at historic lows, it’s also harder for Challenger to earn high returns on its funds.

    I still think that the investment theme is true and Challenger is a leader in the space. The company also possesses some quality characteristics, but with interest rates so low it probably isn’t the right fit for my portfolio right now. But, it may be for yours.

    Foolish takeaway

    I wrote this article to highlight the fact we are all constantly learning. I learn the most from my ASX 200 investment mistakes, not my winners. My advice is to invest based on your own personal circumstances and goals.

    If Challenger isn’t up your alley, one of these high quality stocks may suit you!

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

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    Motley Fool contributor Lloyd Prout owns shares in Challenger Limited and expresses his own opinions. The Motley Fool Australia owns shares of and has recommended Challenger 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 Why do I own this ASX 200 share? appeared first on Motley Fool Australia.

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  • 3 ASX 200 shares to add to your watchlist in 2020

    assortment of office stationery and folders with label saying game changer, investment opportunity

    ASX 200 shares had yet another day of gains on Wednesday as the S&P/ASX 200 Index (ASX: XJO) closed 0.06% higher at 6,148.40 points.

    There was a mix of winners and losers on the share market yesterday from tech shares to gold miners and Aussie retailers. 

    Despite the market noise, there are still a couple of ASX 200 shares that I’m keeping my eye on right now. Check out why these top picks are on my watchlist below.

    3 ASX 200 shares I’m watching in 2020

    The first Aussie share that I’m watching is JB Hi-Fi Limited (ASX: JBH). JB Hi-Fi shares are up 11.49% this year and have delivered strongly for shareholders.

    That’s despite the February and March bear market that sent ASX 200 shares plummeting lower.

    JB Hi-Fi has really benefitted from a strong online presence and its extensive electronics range. More Aussies have been stocking up on laptops, monitors and other accessories in the move towards a work from home model.

    It’s not just JB Hi-Fi shares that have been climbing in 2020. The NextDC Ltd (ASX: NXT) share price has rocketed 34.95% this year as demand for its services has surged.

    NextDC owns and operates data centres around Australia and recently expanded its balance sheet with a $672 million equity raising.

    While a 34.95% gain doesn’t scream a buy to most investors, I believe NextDC still has some strong growth potential with a good strategy and clear expansion steps.

    One ASX 200 share to watch that hasn’t climbed higher this year is BHP Group Ltd (ASX: BHP). Shares in the Aussie miner are down 3.65% but have some strong momentum behind them.

    With iron ore prices rebounding strongly at the moment, I think the BHP share price is worth watching in 2020.

    Foolish takeaway

    These are just a few of the ASX 200 shares I’ve got my eye on right now. The share market volatility seems to have partially subsided since March and April.

    This means right now could present a good opportunity to assess the real value of some of these companies without market noise.

    5 stocks under $5

    We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

    And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

    Learn More

    *  Extreme Opportunities returns as of June 5th 2020

    More reading

    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 3 ASX 200 shares to add to your watchlist in 2020 appeared first on Motley Fool Australia.

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