Author: openjargon

Coles Group Ltd (ASX: COL) and Wesfarmers Ltd (ASX: WES) are both high-quality ASX shares with strong positions in Australian retail.

They also share one challenge right now: neither looks especially cheap after strong share price performance.

Coles shares are trading around $23.67, close to the upper end of their yearly range of $20.10 to $24.59. Wesfarmers shares are trading around $90.87, compared with a yearly range of $70.80 to $95.18.

Buying either share near its 52-week low would have been a much easier call. At current prices, I think the comparison becomes more about valuation, income, and how much investors are being asked to pay for future growth.

The numbers favour Coles shares

According to CommSec consensus estimates, Coles is expected to generate earnings per share of 90 cents in FY26 and 96.6 cents in FY27.

Based on the current share price, that puts Coles on a price-to-earnings ratio of around 26.3 times FY26 earnings and 24.5 times FY27 earnings.

Wesfarmers is forecast to generate earnings per share of $2.55 in FY26 and $2.74 in FY27.

That puts Wesfarmers on a much higher price-to-earnings ratio of around 35.6 times FY26 earnings and 33.2 times FY27 earnings.

That is a meaningful gap.

I believe Wesfarmers deserves a premium for its track record, culture, and capital allocation. But when forecast earnings growth appears broadly similar over the next couple of years, I think Coles looks more attractive on a valuation basis.

The dividend yield also points to Coles

The income comparison also favours Coles.

CommSec estimates dividends per share of 75.5 cents in FY26 and 82 cents in FY27. That implies forward dividend yields of around 3.2% and 3.5%.

Wesfarmers is forecast to pay dividends per share of $2.16 in FY26 and $2.33 in FY27. That implies forward yields of around 2.4% and 2.6%.

That difference is useful for investors who want income as well as long-term defensive exposure.

Coles also has a fairly simple appeal. Groceries are a repeat purchase. Customers may change habits, trade down, or shop around more carefully, but food and household essentials remain part of everyday spending.

That gives Coles a defensive quality I value in the current environment.

I still like Wesfarmers shares

I would still be happy to buy Wesfarmers shares for the long term.

The company has an excellent record of building strong retail businesses, managing capital carefully, and reinvesting in areas where it sees attractive returns.

I also like the breadth of the group. Wesfarmers gives investors exposure to more than one consumer category, and that flexibility has helped it create value over many years.

The issue today is price.

At more than 33 times FY27 estimated earnings, the share price already reflects a lot of confidence. I can see the case for buying a small amount now and adding more if the valuation becomes more reasonable.

Foolish takeaway

I think Coles shares are the better buy today.

Wesfarmers remains a wonderful long-term business, and I would be happy to own it. But Coles offers the cleaner case right now because it trades on a lower forecast earnings multiple and provides a higher forecast dividend yield.

When two high-quality defensive ASX shares both sit near the top of their yearly ranges, I think valuation has to carry more weight.

At current prices, I would buy Coles first and keep Wesfarmers on my long-term buy list.

The post Which is the best buy, Coles shares or Wesfarmers shares? appeared first on The Motley Fool Australia.

More reading

• How to go from zero to $50,000 with ASX shares
• How much do I need in my superannuation to get $52,000 per year in passive income?
• Wesfarmers shares are closing in on record highs. Buy, hold or sell?
• These ASX shares could generate $10,000 per year in passive income
• 2 ASX blue-chip shares offering big dividend yields

Motley Fool contributor Grace Alvino has positions in Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Zip Co Ltd (ASX: ZIP) shares have enjoyed an impressive rebound recently, climbing 31% over the past month as investor confidence has returned to the buy now, pay later (BNPL) provider.

Despite that strong run, the stock remains down around 6% year to date. Over the past 12 months, however, Zip shares have gained approximately 2%.

Looking at the bigger picture shows why many investors still see plenty of recovery potential. Zip shares remain about 64% lower than they were five years ago, while the S&P/ASX 200 Index (ASX: XJO) has risen roughly 20% over the same period.

With analysts becoming increasingly optimistic about the company’s earnings outlook heading into FY27, could the recovery still have plenty of room to run?

Strong financial momentum

One of the biggest reasons for the improving sentiment is Zip’s strengthening financial performance.

The fintech company’s results have consistently improved over the past several quarters as management has focused on profitability, disciplined lending, and tighter cost controls.

Its third-quarter FY26 update in April highlighted accelerating momentum across the business. Importantly, management upgraded its FY26 group cash EBITDA guidance to at least $260 million, up from previous guidance of around $248.6 million.

The earnings upgrade demonstrated that Zip is successfully balancing growth with profitability. That’s a key milestone for Zip shares after several challenging years for the BNPL sector.

The US is becoming increasingly important

Another major attraction is Zip’s expanding opportunity in the United States.

The company has been investing heavily in growing both its customer base and product offering in what is now its largest market. The US BNPL market remains significantly underpenetrated compared with Australia and continues to benefit from increasing consumer adoption and merchant demand.

Late last year, Zip expanded its partnership with programmable financial services company Stripe, allowing more merchants to offer Zip’s payment solutions through Stripe’s platform. The partnership provides access to a large network of businesses and could accelerate merchant acquisition over time.

Adding to the opportunity, Zip is pursuing a dual listing on the Nasdaq. A US listing of Zip shares could improve the company’s visibility among American investors, increase liquidity, and potentially support future expansion initiatives in its largest growth market.

Fierce competition, increased volatility

Of course, investors should remember that Zip operates in a highly competitive industry.

The company faces competition from Klarna, PayPal, Block’s Afterpay business, traditional banks, and credit card providers. Intense competition could weigh on margins or slow customer growth.

As a growth stock, Zip is also sensitive to changes in investor sentiment, interest rates, consumer spending, and employment conditions. That means Zip shares are likely to remain more volatile than many defensive businesses.

What are the experts saying?

According to TradingView data, analysts remain overwhelmingly positive on Zip’s outlook.

Of the 12 analysts covering the company, 11 have either a buy or strong buy recommendation. Their average price target of $4.17 suggests around 36% upside from current levels.

Some analysts are even more bullish, with the highest price target sitting at $5.59 per share, implying potential upside of roughly 82%.

United Capital Partners (UCPS) is also constructive on Zip shares, arguing that the market is underestimating the company’s disciplined cost management and long-term US growth opportunity.

The broker has a 12-month price target of $4.85, which implies potential upside of around 58%. If Zip continues delivering stronger earnings while successfully expanding in the US, that target may not be out of reach.

The post Why brokers think Zip shares could soar 50% or more in FY27 appeared first on The Motley Fool Australia.

More reading

• Mesoblast shares: Q4 earnings top projections
• Ingenia Communities Group shares paused pending announcement
• NEXTDC boosts funding with $2.3 billion senior debt facility upsize
• ASX 200 shares vs. US stocks in FY26
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. 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 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.

The NEXTDC Ltd (ASX: NXT) share price is in focus after the company announced a major boost to its senior debt facilities, increasing available funding to $8.7 billion to support ongoing data centre expansion and growth.

What did NEXTDC report?

• New senior debt facilities of $2.3 billion secured, upsized from the $1.8 billion announced in May 2026
• Total available senior debt facilities increase from $6.4 billion to $8.7 billion
• Margins on new facilities broadly consistent with existing debt of similar tenor
• Proceeds to support data centre development, recent customer contract wins, and general corporate purposes

What else do investors need to know?

NEXTDC’s upsized debt reflects ongoing strong demand for its services and continued support from a broad syndicate of local and international banks. The funding builds upon recent capital raising initiatives, including a $1.5 billion Entitlement Offer, $1.7 billion Hybrid Securities Offer, and a $750 million Wholesale Notes Offer, further diversifying NEXTDC’s funding sources.

Financial close of the new facilities is expected in mid-July 2026, pending satisfaction of standard conditions. The company’s growing capital base positions it to accelerate growth following a record increase in contracted utilisation earlier this year.

What’s next for NEXTDC?

With expanded funding in place, NEXTDC is well positioned to support capital expenditure linked to recent contract wins and continued rollout of state-of-the-art data centres. The company maintains a strong focus on operational sustainability, leveraging renewable energy and efficiency, supporting further growth in Australia’s digital infrastructure market.

Investors can expect NEXTDC to continue innovating and scaling its platform to meet rising demand for secure, sustainable, and connected cloud and IT infrastructure solutions.

NEXTDC share price snapshot

Over the past 12 months, NEXTDC shares have risen 21%, outperforming the S&P/ASX 200 Index (ASX: XJO), which has risen 2% over the same period.

View Original Announcement

The post NEXTDC boosts funding with $2.3 billion senior debt facility upsize appeared first on The Motley Fool Australia.

More reading

• ASX 200 shares vs. US stocks in FY26
• 5 things to watch on the ASX 200 on Friday
• Here are the top 10 ASX 200 shares today
• Is the ASX 200 heading for a third straight fall as oil prices jump?
• Steadfast Group extends exclusivity on $6.00 per share takeover offer

Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. 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 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

ASX tech shares had a rough FY26.

WiseTech Global Ltd (ASX: WTC) was the worst performer in the entire ASX 200 in FY26, dropping 70% in value.

In May, it handed over its status as the ASX’s largest technology company by market capitalisation to Xero Ltd (ASX: XRO). Xero has itself fallen significantly from its all-time high of $196.52.

Both need a turnaround.

But the path back for these ASX tech shares looks very different for each.

WiseTech: The turnaround is a governance story more than a business story

The crucial thing to understand about WiseTech’s collapse is what did not cause it.

The CargoWise platform remains used by 23 of the world’s top 25 global freight forwarders. Switching costs are so high that customer retention has remained strong throughout the governance turmoil.

Importantly, WiseTech has maintained its FY26 guidance, expecting revenue of US$1.39 billion to US$1.44 billion with EBITDA margins of 40% to 41%.

The business has not broken. What has broken is investor trust in the governance around the business. This has been driven by a series of allegations against founder Richard White, including an AFP investigation into alleged trafficking matters.

Since then, a new Chair has been appointed, which is the first concrete governance action since the Richard White allegations escalated.

For a sustained WiseTech turnaround, the market needs three things: resolution of the legal matters, clear separation between founder influence and board independence, and an FY26 full-year result in August that confirms guidance has been met.

Bell Potter carries a buy rating with a $71.75 price target, noting that, depending on the August result, FY27 forecasts could prove conservative.

JP Morgan, however, downgraded WiseTech to hold with a $40 target following the governance concerns. This serves to illustrate how divided the broker community is on the timing of the recovery.

The business case for WiseTech is not in dispute. The governance case is.

Xero: The turnaround is about valuation and execution for this ASX tech share

Xero’s challenge is different.

There are no governance concerns, no AFP investigations, and no allegations against management.

The FY 2026 result delivered 31% revenue growth to $2.75 billion, with the US business surging 240% on the back of the Melio acquisition.

The reason Xero shares have fallen from their peak is almost entirely about valuation.

At its high, Xero traded at well over 100 times earnings, a multiple that assumed many years of rapid, uninterrupted growth.

As interest rates rose and growth investors rotated into value and resources, the multiple compressed dramatically, even as the underlying business kept delivering.

The turnaround for Xero is therefore simpler but not necessarily faster in practice.

It requires the market to reaccept a premium valuation for a high-growth SaaS business, which in turn requires interest rates to fall, earnings growth to accelerate, and the US expansion to keep demonstrating that FY26’s 240% revenue growth was not a one-off.

On the broker level, Goldman Sachs carries a buy rating on Xero with a $205 price target, implying significant upside at current levels.

Perhaps encouragingly, the company has authorised a NZ$550 million buyback for FY27, a direct signal of management’s confidence in the share price at current levels.

The common thread for these ASX tech shares

Despite their different problems, both stocks share one thing: the market has sold them down in a way that disconnects the share price from the operational reality of each business.

Another article on the Motley Fool AU noted recently that

WiseTech is grappling with rebuilding investor confidence after governance-related uncertainty, while Xero is navigating a broader reassessment of software valuations. In both cases, the recent rally may reflect a shift in sentiment rather than a full reversal of trend.

A turnaround for WiseTech requires governance resolution. A turnaround for Xero requires the market to re-price a business that has kept growing, even as the share price has not.

Both are possible in FY27, but neither is guaranteed.

Foolish Takeaway

WiseTech and Xero are two very different ASX tech shares wearing the same label.

WiseTech needs to fix its governance before the share price can sustainably recover, regardless of how good the CargoWise business actually is. Xero needs the macro environment and its own US execution to align before the market will restore the premium valuation the business arguably deserves.

Patient investors in both stocks are betting that FY27 delivers on those conditions.

It is a reasonable bet, but not a certain one.

The post Two ASX tech shares hinge on rebuilding trust and growth. Here’s how they can turn around appeared first on The Motley Fool Australia.

More reading

• 3 ASX 200 shares I’d buy and hold for life
• How low could WiseTech shares go?
• Why the WiseTech share price is sinking 7% today
• 2 ASX shares tipped to grow 50% or more in the next 12 months
• These ASX tech shares crashed hard. Could they double from here?

Motley Fool contributor Mark Verhoeven 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 WiseTech Global and Xero. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX blue-chip shares can be among the best investments due to their economic strength and growth prospects. Some fund managers have outlined why a couple of these businesses have such compelling futures.

There are a number of quality businesses on the ASX that have a record of delivering compounding earnings over time, which is a powerful support for sending the share price higher over the coming years.

Experts from Wilson Asset Management (WAM) have explained why they own two stocks in the WAM Leaders Ltd (ASX: WLE) portfolio, which is a listed investment company (LIC) that generally invests in large caps.

Let’s dive into those two ideas.

Aristocrat Leisure Ltd (ASX: ALL)

The first ASX share WAM highlighted is Aristocrat Leisure, a global casino-machine manufacturer.

The fund manager noted that the share price has performed strongly since releasing its FY26 half-year result in May 2026, which highlighted sustained momentum in gaming operations and a sharpened focus on driving operating leverage.

WAM also highlighted that the company recently held an investor day recently, reiterating its longer-term targets and providing a segment-level pathway to US$1 billion in ‘interactive’ revenue by FY29.

The company’s management outlined plans to leverage artificial intelligence (AI) to drive creativity and efficiency in new product launches.

The WAM investment team revealed that this ASX blue-chip share remains a core holding in the investment portfolio and they see “further upside as management executes its strategy”.

Amcor (ASX: AMC)

Amcor, one of the world’s leading packaging companies in both soft and rigid packaging, was the other large business that was highlighted.

WAM noted that Amcor has faced one of its most difficult input cost environments in recent months, following the rise in oil prices driven by the conflict in the Middle East earlier in the year.

Resin, which is a key input derived from oil, has seen prices fall. WAM believes this should provide working capital relief going into the second half of the calendar year.

The investment team also noted that volumes are recovering from ‘trough’ levels and synergies from the Berry Global acquisition continue to build.

WAM expects these initiatives to drive earnings and free cash flow and help reduce leverage on the company’s balance sheet.

Wilson Asset Management thinks there is a “clear path” to valuation upside from the current Amcor share price, with earnings growth underpinned by the synergy program.

The post 2 leading ASX blue-chip shares experts think are buys appeared first on The Motley Fool Australia.

More reading

• How to build $60,000 in annual passive income from ASX dividend shares
• These ASX shares could generate $10,000 per year in passive income
• Three ASX 200 companies Macquarie says are a buy right now
• With dividends surging, are Amcor shares a good passive income buy today?
• These ASX shares could generate $5,000 per year in passive income

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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 Amcor Plc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

When it comes to looking for outsized gains among ASX shares, it pays to ask the experts.

I’ve had a look through the broker notes published this week and selected three companies that they believe could deliver serious share price gains.

Let’s see who they like.

ResMed Inc (ASX: RMD)

Macquarie this week issued a new research note on ResMed after the company told shareholders it was going to sell its MatrixCare business for $490 million, with the funds to be used, in part, for an accelerated buyback program.

The company said the sale fit with its 2030 strategy, “by focusing on high-growth, scalable opportunities in sleep health, breathing health and connected home-based healthcare”.

Chair Mick Farrell said regarding the sale:

Today’s announcement is about our disciplined approach to portfolio management and our commitment to driving long-term growth. By focusing on areas where we see the greatest opportunity for sleep health innovation and impact, we are strengthening our ability to deliver life-changing health technologies, improve patient outcomes, and create value for our stakeholders.

Macquarie said the sale “offloads a structurally challenged business, improving the group’s growth profile”.

The broker has a 12-month price target of $46.60 on ResMed shares, which would represent a 53.7% gain if achieved.

Bhagwan Marine Ltd (ASX: BWN)

This marine services company hosted brokers at an investor day recently, showing them around two of its divisions on the Brisbane River, Bhagwan Marine Services, and Riverside Industrial Sands.

Analysts from Shaw and Partners attended and said the business looks to be in good shape.

They said:

BWN operates Australia’s largest and most diverse marine fleet, employing more than 1,000 personnel nationwide. BWN’s Queensland Marine Solutions business is … strategically located on the Brisbane River and generates revenue from both contract and spot work. Core activity provides a solid EBITDA base, with fleet utilisation currently around 75%. Higher-margin contract work can lift EBITDA margins to approximately 30%. The business is positioned to benefit from demand associated with the Brisbane Olympics, and management has recently secured several new contracts. Longer term, growth is supported by population expansion and Queensland’s substantial infrastructure pipeline.

Shaw and Partners said competition was relatively limited, with only 3 to 4 meaningful participants in the market.

The broker has a price target of 60 cents on Bhagwan shares, which would represent a 90.5% gain if achieved.

Metro Mining Ltd (ASX: MMI)

Shaw and Partners said this bauxite miner remains on track to hit its full-year guidance of 6.6 to 7.1 million tonnes of bauxite for the year.

The analysts said bauxite prices had firmed from lows earlier this year, and the market remained well supported by strong demand growth from China.

They said:

Metro Mining’s Bauxite Hills project is well placed to supply the growing Chinese market due to the proximity to markets. As a low value product, freight costs make up almost half the cost of delivering bauxite to China.

Shaw and Partners has a $3 target price on Metro Mining shares, which would be an 89.8% gain if achieved.

The company also pays a 5.8% dividend yield.

The post 3 ASX shares which could deliver 53% to 90% gains appeared first on The Motley Fool Australia.

More reading

• Why I’d buy and hold ResMed and TechnologyOne shares with $5,000
• Buy, hold, sell: Goodman Group, Endeavour, Resmed shares
• ResMed’s $490m MatrixCare sale: What it means
• Why these ASX shares could rise 20% to 30%
• Why I want to own these ASX shares brokers rate as buys

Motley Fool contributor Cameron England 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 Macquarie Group and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The superannuation system just became a little more generous.

From 1 July 2026, the concessional contributions cap rose to $32,500, up from $30,000 in FY26. This has given Australian investors more room to make tax-effective contributions into superannuation.

Concessional contributions include employer super guarantee payments, salary sacrifice contributions, and personal deductible contributions.

All three count toward the cap.

What the extra $2,500 is actually worth

An extra $2,500 in concessional contributions per year might not sound significant.

However, over a long investment horizon, the maths adds up.

According to Pitcher Partners, an additional $2,500 per year contributed to super on a concessional basis, invested at a long-term return of around 7% per annum, could grow to approximately $37,000 over 10 years.

The tax benefit compounds that further: every dollar of salary sacrificed into super at 15% rather than at a marginal tax rate of 32.5% or higher is a permanent tax saving.

For a worker on a salary of $90,000 contributing the full extra $2,500 via salary sacrifice, the income tax saving is approximately $437 per year.

The non-concessional cap and bring-forward rule also increased

The cap increase does not stop at concessional contributions.

The non-concessional contributions cap also rose to $130,000 from 1 July 2026, up from $120,000.

For investors under 75 with a total super balance below $2.1 million, the three-year bring-forward rule now allows up to $390,000 in non-concessional contributions in a single financial year.

The transfer balance cap also rose to $2.1 million. This lifts the maximum amount that can be moved into a tax-free retirement income stream and gives retirees more room to shelter earnings from tax.

An important catch-up deadline that just passed

One critical change that came into effect this month deserves separate attention.

From 1 July 2026, any unused concessional contribution cap amounts from FY21 and earlier are permanently forfeited.

Investors who were eligible to carry forward unused amounts from 2020-21 and chose not to use them by 30 June 2026 have now lost that opportunity permanently.

Looking ahead, the five-year carry-forward window now runs from FY22 to FY27, giving investors with super balances below $500,000 the ability to catch up on contributions they missed in those years.

Two ASX shares that benefit from a growing superannuation pool

More money flowing into superannuation benefits the wealth management platforms that administer and invest those assets.

Hub24 Ltd (ASX: HUB) and Netwealth Group Ltd (ASX: NWL) are the two most direct ASX beneficiaries of this dynamic.

Hub24 delivered record half-year net inflows of $10.7 billion in 1H FY26. The company also upgraded its FY27 platform funds under administration target to $160 billion to $170 billion. This was driven by the consistent growth in Australia’s super pool.

Netwealth reached a record $125.6 billion in platform Funds Under Administration (FUA) in 1H FY26. Platform revenue climbed 25% on the strength of consistent inflows and sticky adviser relationships.

As higher contribution caps, payday super, and expanded parental leave contributions combine to drive more money into the system in FY27, both platforms are positioned to capture a disproportionate share of that growth.

Foolish takeaway for your superannuation strategy

The concessional contributions cap increase to $32,500 is modest in isolation.

However, over a decade or more of investing, the compounding impact of higher contributions at a lower tax rate becomes material.

For investors who are not yet using their full concessional cap through employer contributions and salary sacrifice, the first step is checking where you stand against the new $32,500 limit.

The second step is arranging any additional salary sacrifice through your employer before the end of the next pay cycle.

The post The superannuation concessional contributions cap just rose to $32,500. Here’s how to make the most of it appeared first on The Motley Fool Australia.

More reading

• Buy, hold, sell: Netwealth, Silver Mines, and Qantas shares
• 5 things to watch on the ASX 200 on Friday
• 7 ASX shares catching broker upgrades this week
• Why these ASX shares could rise 20% to 30%
• Broker tips 20% and 23% upside for these 2 ASX stocks

Motley Fool contributor Mark Verhoeven 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 Hub24 and Netwealth Group. The Motley Fool Australia has positions in and has recommended Netwealth Group. The Motley Fool Australia has recommended Hub24. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The tax return you lodge for the next financial year will look different to every return you have filed before it.

Three meaningful changes took effect on 1 July 2026 and will appear in your FY27 return.

Understanding each of them before you lodge will help you maximise your refund and avoid common mistakes.

Change one: the 15% tax rate

The most important change is the reduction in the marginal tax rate on income between $18,201 and $45,000.

That rate dropped from 16% to 15% from 1 July 2026, delivering a tax cut worth up to $268 per year to every Australian taxpayer.

For most salary and wage earners, this adjustment was already applied to your take-home pay from 1 July through your employer’s PAYG withholding calculations.

When you lodge your FY27 return, the ATO will calculate your tax at the new 15% rate automatically.

You do not need to do anything specific to claim this benefit.

However, if you changed jobs during the year, started freelancing, or had irregular income, your employer may not have withheld at exactly the right rate.

Change two: the $1,000 instant work-related expense deduction

From FY27, every Australian who earns salary or wage income can claim up to $1,000 in work-related expenses without keeping a single receipt.

Previously, the receipt-free limit was $300.

The new $1,000 deduction applies automatically when you lodge your return.

For a worker on a 32.5% marginal tax rate, claiming the full $1,000 deduction is worth approximately $325 in tax savings.

The deduction cannot be combined with specific expense claims above $1,000. If your actual work-related expenses exceed $1,000 and you have receipts to prove it, you should claim the actual amount rather than the instant deduction.

Work-related expenses include items like home office costs, professional development, tools, uniforms, and technology used for work.

Change three: higher Medicare levy thresholds

Medicare levy low-income thresholds increased from 1 July 2025 and apply to the FY27 return.

The threshold for singles rose to $28,011, up from $27,222, meaning more low-income Australians will pay no Medicare levy on their FY27 return.

The family threshold rose to $47,238 and increases by $4,338 for each dependent child or student.

For single seniors and pensioners, the threshold rose to $44,268.

If you earn below these thresholds, you may be entitled to a Medicare levy reduction or exemption when you lodge.

What to do with any tax refund

A tax refund is not a windfall. Instead, it is the return of money you overpaid during the year.

However, how you deploy a refund still matters.

Spending it immediately on discretionary items means the tax cut effectively disappears into everyday consumption.

Investing it, even a modest amount, is the start of a compounding habit.

Commonwealth Bank of Australia (ASX: CBA) is the most widely held ASX share among Australian retail investors. The company offers a fully franked dividend yield and long-term earnings track record that suits a regular, small-investment approach.

Alternatively, for investors who want instant diversification rather than individual stock selection, the Betashares Australia 200 ETF (ASX: A200) charges just 0.04% per annum and tracks the performance of 200 of Australia’s largest companies in a single trade.

For global technology and AI exposure, the Betashares Nasdaq 100 ETF (ASX: NDQ) gives investors access to the world’s largest non-financial technology companies. This will includes SpaceX following its Nasdaq-100 inclusion this week.

Foolish takeaway

Your FY27 tax return will be simpler in some ways and more lucrative in others.

The 15% rate and the $1,000 instant deduction both reduce your tax liability automatically.

The Medicare levy changes may eliminate the levy entirely for lower-income earners.

Understanding the changes before you lodge means you claim what you are entitled to, rather than leaving money on the table.

The post Your FY27 tax return will look different. Here’s what changed and how to prepare appeared first on The Motley Fool Australia.

More reading

• How to go from zero to $50,000 with ASX shares
• Forget CBA shares! I’d rather buy these ASX dividend shares
• 3 Betashares ETFs I’d buy with $10,000
• Expert warns: These ASX bank shares could disappoint in FY27
• The bull and bear case for CBA and BHP shares

Motley Fool contributor Mark Verhoeven 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 BetaShares Nasdaq 100 ETF. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If I had $5,000 to invest in ASX shares, I would want to own businesses that will still be important in 10 years.

That is why I like ResMed Inc. (ASX: RMD) and TechnologyOne Ltd (ASX: TNE).

They operate in different markets, but both solve problems that are not likely to fade. One is helping people manage sleep and breathing disorders. The other helps important organisations run essential systems more efficiently.

I think that gives both companies a strong starting point for long-term investors.

ResMed shares

ResMed is an ASX healthcare share I would happily buy with part of that $5,000.

The company is best known for sleep apnoea devices, masks, accessories, software, and connected health technology.

This is a great place to be. Sleep and breathing disorders remain a large, underpenetrated healthcare market. Many people are still undiagnosed or undertreated, which gives ResMed a long runway if awareness and access continue improving.

Its recent numbers also show that demand has not disappeared. In the third quarter of FY26, ResMed reported revenue growth of 11% to US$1.4 billion. It also delivered 18% growth in non-GAAP income from operations.

I would not buy ResMed just because one quarter looked solid. I would buy it because those numbers support the broader point: the company is still growing while investing in a market with significant long-term need.

There are risks, including competition, GLP-1 drugs, and healthcare sentiment. But I think the market may be underestimating the durability and size of the opportunity.

TechnologyOne shares

TechnologyOne is another ASX share I would buy for the long term.

The company provides enterprise software to customers such as councils, government departments, universities, and large organisations. These customers need dependable systems for finance, payroll, property, student management, compliance, and reporting.

That type of software may not sound exciting, but I think it can be extremely valuable.

Once these systems are embedded, replacing them can be disruptive. That gives TechnologyOne a strong customer relationship if it keeps delivering.

The shift to software-as-a-service has also strengthened the business model and supported strong annual recurring revenue growth. In the first half of FY26, TechnologyOne reported annual recurring revenue of $598 million, up 17%. SaaS and recurring revenue increased 13% to $299.2 million.

I also like the ambition. Management says the company is on track to surpass $1 billion in annual recurring revenue by FY30 and continues to talk about doubling the business every five years.

That is not guaranteed, but I like businesses that have clear targets, recurring revenue, and multiple ways to grow.

TechnologyOne is also investing heavily in artificial intelligence and its SaaS+ model. If those tools help customers simplify complex operations, the company could become even harder to replace.

Foolish takeaway

I think ResMed and TechnologyOne are two ASX shares worth buying with $5,000.

What I like most is that both companies are building around real customer needs. ResMed is helping address a large healthcare problem that remains underpenetrated, while TechnologyOne is becoming more deeply embedded in organisations that need reliable software to function properly.

Neither share is risk-free. But I think both businesses have enough growth, relevance, and ambition to reward patient investors over time.

The post Why I’d buy and hold ResMed and TechnologyOne shares with $5,000 appeared first on The Motley Fool Australia.

More reading

• 3 ASX shares which could deliver 53% to 90% gains
• Buy, hold, sell: Goodman Group, Endeavour, Resmed shares
• ResMed’s $490m MatrixCare sale: What it means
• Why these ASX shares could rise 20% to 30%
• Why I want to own these ASX shares brokers rate as buys

Motley Fool contributor Grace Alvino 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 ResMed and Technology One. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Building a $50,000 ASX share portfolio from scratch is a goal for many investors.

I think it is achievable, especially when investors stop thinking about one big lump sum and start thinking about a repeatable monthly habit.

The share market rewards consistency over time, especially when investors use diversified exchange-traded funds (ETFs), quality ASX shares, and the power of compounding.

Here is how I think an investor could start from zero and work toward that first $50,000 milestone.

Start with simple building blocks

I think one of the easiest ways to begin is with diversified ASX-listed ETFs.

An ETF such as the Vanguard Australian Shares Index ETF (ASX: VAS) can give investors exposure to a broad basket of local companies. Another option, the Vanguard MSCI Index International Shares ETF (ASX: VGS), can provide access to global shares through one investment.

That kind of simplicity can be useful when starting from zero.

Investors do not need to know every company perfectly on day one. They can start by owning a broad slice of the market, then learn more as the portfolio grows.

For someone who wants exposure to the US market, the iShares S&P 500 ETF (ASX: IVV) could also be worth considering. It gives investors access to many of the largest companies in the United States.

Add quality ASX shares over time

ETFs can make a strong foundation, but some investors may also want to add individual ASX shares as they gain confidence.

That could mean looking for high-quality businesses with strong brands, lasting demand, and the ability to keep growing over time.

For example, Commonwealth Bank of Australia (ASX: CBA) has one of the strongest banking franchises in the country, Wesfarmers Ltd (ASX: WES) has a long history of managing different businesses and allocating capital carefully, and CSL Ltd (ASX: CSL) gives investors exposure to global healthcare demand.

Those are not automatic buys at any price. Valuation is always important.

But I think they show the type of businesses investors could consider as their knowledge improves: companies with real earnings, strong market positions, and long-term relevance.

How to get to $50,000

If an investor started with nothing and invested $500 a month into ASX shares, the portfolio could build faster than many people expect.

Assuming an average return of 9% per annum, it would take around six and a half years to reach $50,000.

I think that is a realistic example of how regular investing, time, and compounding can work together.

Keep going when markets move around

It is always best to remember that a 9% annual return is only an assumption. The share market will not deliver that return neatly each year. Some years will be strong. Others will be flat, frustrating, or negative.

That is why I think the monthly habit is so important.

Investing $500 a month removes some of the pressure of trying to pick the perfect moment. If prices fall, investors buy at lower levels. If markets rise, the portfolio keeps participating.

The real advantage comes from staying consistent.

Foolish takeaway

Going from zero to $50,000 with ASX shares requires a plan that can be repeated through different market conditions.

With $500 a month, a sensible mix of ETFs and quality ASX shares, and enough time for compounding to work, I think investors can turn a blank starting point into a meaningful portfolio.

The post How to go from zero to $50,000 with ASX shares appeared first on The Motley Fool Australia.

More reading

• Your FY27 tax return will look different. Here’s what changed and how to prepare
• Forget CBA shares! I’d rather buy these ASX dividend shares
• 3 ASX blue-chip shares that could be strong long-term value plays
• Expert warns: These ASX bank shares could disappoint in FY27
• The bull and bear case for CBA and BHP shares

Motley Fool contributor Grace Alvino has positions in CSL, Commonwealth Bank Of Australia, Vanguard Australian Shares Index ETF, and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Wesfarmers, and iShares S&P 500 ETF. The Motley Fool Australia has recommended CSL, Vanguard Msci Index International Shares ETF, Wesfarmers, and 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.