Author: openjargon

Most people assume building real wealth needs a big lump sum, perfect timing, or a knack for picking the next winner.

It rarely does.

More often, it comes down to something far less glamorous: investing a manageable amount, on a schedule, and then leaving it alone.

That is exactly where a simple, low-cost ETF portfolio earns its keep.

The two-fund foundation

A sensible starting point for many Australian investors is a two-pronged core.

The first piece covers home. The Vanguard Australian Shares Index ETF (ASX: VAS) holds the 300 largest companies on the Australian share market in a single position – the big banks, miners, and blue chips most of us already own indirectly.

The second piece covers the world. The iShares S&P 500 ETF (ASX: IVV) tracks the 500 largest companies listed in the United States.

However, do not let the US tag mislead you.

Names like Apple, Microsoft, Alphabet, and Nvidia earn revenue across the planet. Buying the S&P 500 is really buying a slice of global commerce, not just America.

Together, VAS and IVV pair Australian income and franking on one side with global growth on the other. Two trades. Genuine diversification.

Why drip-feeding works

Investing $500 a month is a strategy in itself.

It is called dollar-cost averaging.

Instead of trying to guess the perfect entry point, you buy a little every month – through the highs, the lows, and everything in between. When prices fall, your $500 buys more units. When prices rise, it buys fewer.

Over time, that smooths out your average purchase price and strips away the pressure of timing the market.

Then compounding takes over.

Each distribution you reinvest buys more units, which earn their own distributions, which buy more units again. Returns start earning returns. That is the quiet engine behind long-term investing.

The 10-year maths

Here is roughly how the numbers stack up.

$500 a month is $6,000 a year, or $60,000 contributed over a decade.

Assume an average compounded annual return of 8% to 9% – broadly in line with the long-run history of Australian and global share markets, though never guaranteed in any single year.

At that rate, your starting $500 plus monthly contributions could grow to somewhere around $88,000 to $93,000. 

The gap between what you put in and what you walk away with is compounding at work.

And here is the part that surprises people.

Compounding is slow at first. For the early years, your balance looks a lot like your contributions plus a little extra. Then it accelerates.

Stretch the same $500 a month out to 20 years at 8%, and the balance climbs toward $280,000. Double the time (or patience!), but far more than double the result.

Gradually, then suddenly.

Let it run

One rule matters even more than the maths: do not interrupt it.

As the late Charlie Munger put it, “The first rule of compounding is to never interrupt it unnecessarily.”

Every sale resets the clock on the most valuable part – the back end, where the curve turns steep.

And you do not need to sell to be rewarded. The distributions VAS and IVV pay arrive along the way, and as your unit count grows, so does that income. Years of discipline can pay you an income stream without ever cashing out the engine that built it.

Foolish takeaway

None of this requires brilliance. It requires patience, a low-cost core, and the discipline to keep going when the headlines turn ugly.

Markets will fall along the way – sometimes sharply – and a 10-year plan only works if you stay invested through those dips.

But for investors willing to start small and think long, a simple ETF portfolio can turn an ordinary $500 a month into something that quietly, then suddenly, reshapes the picture.

The hardest part is not the maths. It is starting and not stopping.

The post What $500 a month in ASX ETFs looks like in 10 years appeared first on The Motley Fool Australia.

More reading

• Buying the Vanguard Australian Shares ETF (VAS)? There’s a big change you should know about
• 3 world-class ETFs for Australian investors
• How to use the iShares S&P 500 ETF (IVV) to become a millionaire
• 3 ASX stocks I’d buy during a sharemarket crash
• How to invest in ASX shares when you don’t know what to buy

Motley Fool contributor Leigh Gant 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 iShares S&P 500 ETF. The Motley Fool Australia has recommended 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.

Starting from zero can feel like the hardest part of investing.

There is no large lump sum to put to work and no portfolio quietly compounding in the background.

But that also means the plan can be built properly from day one.

The goal is not to get rich quickly. It is to buy quality ASX shares consistently, give them enough time to compound, and avoid the mistakes that can break the process.

Buy quality businesses

The first step is deciding what kind of ASX shares deserve a place in the portfolio.

For a $1 million target, I would not build around speculative small caps or companies that need everything to go right. I would focus on businesses with sustainable earnings, strong management teams, and the ability to reinvest for growth over many years.

That could include names such as Goodman Group (ASX: GMG), which has exposure to logistics, industrial property, and data centres. Or Macquarie Group Ltd (ASX: MQG), which has a long record of finding opportunities across global markets.

TechnologyOne Ltd (ASX: TNE) is another example of the type of business that can compound over time, thanks to recurring software revenue and a strong position in enterprise software.

The common thread is quality. A long-term portfolio needs companies that can survive difficult markets and still be stronger years later.

Make the monthly investment non-negotiable

The next step is consistency. Investing $1,000 a month works best when it becomes part of the household budget, rather than a decision that has to be made from scratch each time.

That removes a lot of emotion from the process. The market will never feel perfectly safe. There will always be headlines about interest rates, recessions, valuations, elections, or global risks.

But regular investing helps cut through that noise. Some months, the money will buy ASX shares at higher prices. Other months, it will buy them after a pullback. Over time, that steady approach can help investors build positions in quality companies without trying to predict every market move.

This is where dependable compounders can help. A business such as Wesfarmers Ltd (ASX: WES) has shown how a strong retail and industrial portfolio can create long-term value. Woolworths Group Ltd (ASX: WOW) offers a different type of strength, with defensive demand from supermarkets and everyday household spending.

Not every holding needs to be exciting. Some just need to keep producing earnings, paying dividends, and growing steadily.

Time and compounding

Let’s assume that an investor starts with nothing, invests $1,000 a month, and achieves an average annual return of 10%.

That return is not guaranteed, but is roughly in line with long-term averages, so is achievable.

At that rate, the portfolio would grow to approximately $1 million in around 23 years.

That is the part many people underestimate. The early years can feel slow because most of the portfolio is built from savings. Later, the balance can start moving more from investment returns than fresh contributions.

That is when compounding becomes obvious.

Foolish takeaway

Building a $1 million ASX share portfolio from zero is not about one perfect stock pick. It is about repeated monthly investing, quality businesses, reinvested returns, and enough patience to let the maths work.

Done well, small beginnings can become serious wealth.

The post How to build a $1 million ASX share portfolio from zero appeared first on The Motley Fool Australia.

More reading

• 5 ASX shares for a winning retirement portfolio
• How I would use Warren Buffett’s golden rules to build wealth with ASX shares
• Brokers name 3 ASX shares to buy right now
• 2 incredible ASX 200 shares to buy and hold for 10 years
• Buy, hold, sell: Nick Scali, Nyrada, Wesfarmers shares

Motley Fool contributor James Mickleboro has positions in Goodman Group, Technology One, and Woolworths Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group, Macquarie Group, Technology One, and Wesfarmers. The Motley Fool Australia has recommended Goodman Group, Macquarie Group, Technology One, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Australians aged 67 years or older may be entitled to receive the Age Pension to help them fund basic living costs in retirement.

The Age Pension is paid on a fortnightly basis up to a maximum total payment of $1,200.90 per fortnight for singles and $1,810.40 for couples combined. 

These sums include the maximum basic rate, the maximum pension supplement, and the energy supplement.

The catch is, not everyone is eligible.

It is heavily dependent on your income level and the assets that you own.

The problem is that many Australians miss out on payments because they don’t really understand how the income test works.

Overlooking income limits could quickly reduce your Age Pension payment, or you could lose it altogether.

Here are the most important things Australians at age 56 need to know about the Age Pension income test before they retire.

1. Income applies to all incoming money, not just wages

The income test assesses all of your income pooled from all sources. That includes anything from superannuation contributions, investment income, part-time wages, bonuses or commission payments. It’s applicable regardless of your age. 

2. Income thresholds for the maximum Age Pension

In order to receive the full Age Pension, singles can’t earn more than $218 per fortnight, while couples can’t earn more than $380 per fortnight.

But it’s still possible to receive a part pension if you earn over those thresholds.

3. The sliding scale

Singles can earn up to $2,619.80 per fortnight, and couples (living together) can earn up to $4,000.80 per fortnight and still qualify for at least a part-Age Pension. 

Couples living apart due to ill health can earn a little more, at up to $5,183.60.

But, it’s important to note that your income is assessed on a sliding scale.

For a single person, your Age Pension will reduce by 50 cents for each dollar over $218 and for couples it will reduce by 25 cents for each dollar over $380.

In other words, the more you earn, the lower your Age Pension payment will be, until it reaches zero when your income hits the maximum allowed figure.

4. Age Pension deeming rules apply

Deeming is a calculation centrelink uses to determine how much income you make from your financial assets. 

Deeming assumes your financial assets (like bank accounts, superannuation, and shares) earn a fixed, set rate of income, regardless of what they actually earn.

This assumed income is then added to your other income to determine your Age Pension rate.

For single Australians, the first $64,200 of your financial assets has the deemed rate of 1.25% applied. Everything over that is deemed to earn 3.25% interest.

Couples have a 1.25% deeming rate on their first $106,200 of combined financial assets (this includes superannuation). Anything over $106,200 is deemed to earn 3.25%.

5. The ‘lower of two’ rule

The Age Pension eligibility depends on your income and the assets that you own. But to ensure the system is fair, unfortunately the Australian Government assesses you under both tests and will apply whichever test the lowest rate of payment for your individual circumstances.

The post 5 things Aussies at age 56 need to know about the Age Pension income test before they retire appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies 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.

Next week is looking like it could be a big one for Aussie mortgage holders, with the Reserve Bank of Australia (RBA) making its latest interest rate decision.

In May, the central bank raised the official cash rate by 25 basis points to 4.35%. This marked the third consecutive rate hike of the year in an effort to combat stubbornly high inflation.

Will the RBA make it four meetings in a row? Let’s see what Westpac Banking Corp (ASX: WBC) is expecting on Tuesday.

Will the RBA increase interest rates next week?

The good news is that despite inflation being above target, Westpac believes the RBA will keep the cash rate steady at 4.35% next week.

According to the latest Westpac Weekly economic report, the banking giant’s economics team believes the RBA Monetary Policy Board (MPB) will be wanting to see what impact its three hikes have on inflation before making any further moves.

Westpac’s chief economist, Luci Ellis, said:

We affirm our existing expectation that the RBA Monetary Policy Board (MPB) will hold the cash rate steady at its June meeting next week. Although inflation remains above target, the previous three rate increases have given the MPB time to assess cross-cutting trends of weak consumers and housing markets versus high inflation pressures and a secular boom in data centres and related investment. The recent run of inflation and labour market data has been a bit mixed, supporting the case for a pause.

However, the bad news for borrowers is that Ellis doesn’t necessarily believe that there won’t be more interest rate hikes later this year.

In fact, Westpac has pencilled in two rate hikes before the end of 2026, lifting the cash rate to 4.85%. Ellis adds:

It is notable that RBA Governor Bullock has characterised the three rate hikes delivered earlier this year as necessary to deal with the domestic inflation risks present before the Middle East conflict began, and that this “gives space” for the RBA to see how the conflict plays out.

Markets are increasingly adopting a sanguine view on the conflict despite a run of military strikes, seeing Brent oil generally trade between US$90 and US$95 per barrel over the past week, with the lower limit of that range tested overnight after President Trump announced a deal would be signed in coming days. While the RBA is set to pause in June, input cost inflation and the threat of broad-based passthrough still makes the case for further rate hikes in August and September.

When will rates come back down?

As things stand, Westpac expects the cash rate to peak at 4.85% and remain there until the end of 2027.

After which, it believes that rates will reduce to 3.85% by the end of 2028.

However, a lot could change between now and then, so time will tell if that is the case.

The post Here’s what Westpac says the RBA will do with interest rates next week appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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 analyst team at Shaw and Partners have come up with an interesting thesis as to why changes to negative gearing and capital gains tax in the Federal Budget could be a tailwind for Pioneer Credit Ltd (ASX: PNC).

Weaker housing market to have a knock-on effect

In a research note sent to clients recently, the analyst team posit the notion that there will be a slowing in credit growth and an increase in debt impairments driven by softer housing conditions.

This, in turn, will put pressure on bank earnings, which will trigger a renewed focus on profit levers.

They explain further:

One such lever is the sale of written-off, aged debt, where recoveries flow directly to profit and support return on equity. We consider a surge in aged debt supply as inevitable.

Shaw and Partners said it believes the net effect could be a material positive on Pioneer Credit’s valuation.

They add:

Historically, PNC generates c.2.5x its acquisition price on purchased debt portfolios (PDPs). Importantly, 50–60% of lifetime collections are typically realised within the first year. As a result, increased PDP investment should lift near-term free cash flow, as year-one collections are likely to exceed the initial purchase outlay (noting that timing differences can affect reported fiscal outcomes). In recent years, the debt recovery industry has experienced subdued supply, driven by low interest rates and regulatory constraints that limited bank asset sales. However, PNC is now observing a meaningful shift, with banks returning to the market in force. The final major bank is expected to fully re-enter the market shortly, having recently tested supply with PNC.

Shaw and Partners estimated that Westpac Banking Corp (ASX: WBC) alone could have about $2 billion in aged debt, which had been written off but which remains unresolved.

The analyst team said the market had thinned in recent years such that Pioneer effectively operates in a duopoly, and it is “benefitting from panel deselection of competitors and its status as preferred counterparty due to its compliance record”.

Shares looking cheap

Shaw and Partners has a 12-month price target of $1 on Pioneer shares, compared with 68 cents at the time of writing.

Pioneer in March upgraded its profit guidance for the full year to $23 million, which was a 28% increase on previous guidance.

The increase came about as a result of the repricing of a major debt facility and a strong operational performance.

Pioneer is valued at $107.7 million.

The post This debt collector could surge 47% on negative gearing changes, Shaw and Partners says appeared first on The Motley Fool Australia.

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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 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.

A strong retirement portfolio should be built for more than the next dividend payment.

I think it needs businesses that can provide durability, income potential, growth, and exposure to different parts of the economy.

The right mix will depend on an investor’s goals. But if I were choosing ASX shares for a retirement portfolio, these five would be high on my list.

Commonwealth Bank of Australia (ASX: CBA)

Commonwealth Bank of Australia is the first share I would consider.

CBA offers scale, brand strength, digital leadership, and fully-franked dividends. It is deeply connected to Australian households and businesses through home loans, deposits, transaction accounts, credit cards, business banking, and payments.

That gives it a broad role in the economy and a strong base for long-term earnings.

The valuation is often higher than that of the other major banks, so investors need to be comfortable paying for quality. Bad debts, margins, funding costs, and regulation also need watching.

Even so, I think CBA remains one of the highest-quality financial businesses on the ASX.

Woolworths Group Ltd (ASX: WOW)

Woolworths Group could add a defensive layer to the portfolio.

Groceries are part of everyday life, which gives the business a level of ongoing demand that many companies would love to have.

I also like the company’s scale across stores, supply chains, loyalty, online shopping, and customer data. Supermarket retailing is demanding, and shoppers are sensitive to price, service, range, and availability. Woolworths has to keep earning trust each week.

But for a retirement portfolio, I think the resilience of the category is appealing.

Goodman Group (ASX: GMG)

Goodman Group would bring long-term infrastructure-style growth.

Goodman owns, develops, and manages industrial property in important global locations. These sites are tied to logistics, e-commerce, supply chains, and data centre demand.

I think that mix is attractive. Modern economies need efficient warehouse space close to customers and transport links. Digital economies also need more physical infrastructure to support cloud computing, artificial intelligence, and data-heavy services.

Interest rates, development costs, and valuation can all affect the share price. But Goodman has the scale, relationships, and development skills to keep creating value over time.

Macquarie Group Ltd (ASX: MQG)

Macquarie Group is another ASX share I would include.

It gives a retirement portfolio exposure to a global financial business rather than a traditional domestic bank alone.

Macquarie operates across areas such as asset management, infrastructure, commodities, markets, and specialist finance.

The company has shown an ability to shift capital toward areas where it sees better opportunities. That could be useful over a long retirement horizon as markets, infrastructure needs, energy systems, and private capital flows keep changing.

The share price can be volatile, but I think Macquarie brings a valuable growth angle to a long-term portfolio.

ResMed Inc (ASX: RMD)

ResMed could provide global healthcare exposure.

The company is a leader in sleep apnoea treatment and connected care. Its devices help patients start therapy, while masks, accessories, software, and data tools support ongoing use.

I like that combination because it gives ResMed both product sales and recurring demand.

Sleep health is also a large and underdiagnosed market. As awareness improves and healthcare systems place more focus on chronic conditions, I think ResMed has room to keep growing.

Overall, I believe this means it is the type of healthcare business that can remain highly relevant for decades.

Foolish Takeaway

A winning retirement portfolio should have more than one source of strength.

I would want exposure to businesses that can keep serving customers, reinvest, pay dividends, and adapt as the economy changes. The shares above are not risk-free, and they will not all perform well at the same time. But I think they offer a useful mix of quality, resilience, income potential, and long-term growth.

For investors building a portfolio to last well beyond the next market cycle, that is the kind of balance I would be looking for.

The post 5 ASX shares for a winning retirement portfolio appeared first on The Motley Fool Australia.

More reading

• How I would use Warren Buffett’s golden rules to build wealth with ASX shares
• Brokers name 3 ASX shares to buy right now
• 2 incredible ASX 200 shares to buy and hold for 10 years
• Why the RBA’s decision next week could be the most important event for ASX shares in 2026
• 3 safe ASX dividend shares to buy for income

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

A good passive income portfolio should do more than pay dividends today.

It should be built to keep paying through different market conditions, different interest rate cycles, and different stages of life.

That is the real goal. Not just finding a few high-yielding shares today, but creating an income stream that can last.

Think like a landlord

The first mindset shift is to treat ASX shares like income-producing assets.

A landlord does not usually sell a property because its market value falls one month. They focus on the rent, the quality of the tenant, and whether the asset can keep producing cash.

Dividend investing can be approached in a similar way.

A share price will move around. But what matters more over the long term is whether the business can keep generating profits and returning some of that cash to shareholders.

That could mean owning companies with essential services, strong brands, infrastructure assets, defensive demand, or long records of disciplined capital management. APA Group (ASX: APA) and Transurban Group (ASX: TCL) spring immediately to mind as great examples.

Build around reliability first

A lifetime passive income stream should never be built entirely around the biggest yields.

Very high dividend yields can sometimes be warning signs. They may reflect falling earnings, stretched payout ratios, high debt, or a market that expects the dividend to be cut.

A stronger starting point is reliability. That might include infrastructure businesses with long-life assets, supermarkets with recurring household demand, healthcare companies with defensive earnings, or property trusts with quality tenants and long leases.

These ASX shares may not always produce the highest income on day one. But they can provide a stronger foundation to build out from.

Add dividend growth

The next focus is growth. A dividend that never increases can lose value over time as inflation pushes living costs higher. That is why investors should look for companies that can grow earnings and gradually lift dividends.

Dividend growth can come from higher profits, expanding markets, better margins, or reinvestment in the business.

This part of the portfolio may include lower-yielding shares with stronger growth prospects. They may not produce as much income immediately, but they can help the income stream become larger over time.

Reinvest your dividends

The best time to strengthen a passive income stream is before it is needed.

While an investor is still working, reinvesting dividends can accelerate the process. Each dividend payment can buy more shares, which can then produce more dividends of their own.

This turns the portfolio into a compounding machine.

Only later, when the income is needed, does the investor need to switch from reinvesting dividends to spending them.

Foolish takeaway

Building a passive income stream for life is not about finding one perfect share. It is about owning a collection of businesses that can keep sending cash back to shareholders, while still having enough strength to grow.

Done patiently, ASX shares can become a lifelong income engine.

The post How to build a passive income stream for life with ASX shares appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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 Transurban Group. The Motley Fool Australia has positions in and has recommended Apa Group and Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Warren Buffett has built one of the greatest investing records in history.

But I do not think his approach needs to feel out of reach for everyday investors.

At its core, Buffett-style investing is about buying easy to understand businesses, paying sensible prices, staying patient, and letting compounding do the work. I think those ideas can be applied just as easily to ASX shares as they can to US stocks.

Here is how I would use some of Buffett’s golden rules to build wealth on the ASX.

Buy businesses, not share prices

One of Buffett’s best lessons is to think like a business owner.

That means I would not start by asking which ASX share might jump next week. I would ask whether I would be happy owning part of the business for many years.

This can change the way investors look at the market.

Take Woolworths Group Ltd (ASX: WOW). Its share price will move around, but the business is tied to weekly grocery shopping, loyalty, supply chains, online convenience, and household essentials.

Or consider Hub24 Ltd (ASX: HUB). Its value is not only in today’s share price. It comes from the role its platform plays for financial advisers, the growth in funds under administration, and the chance to keep benefiting as wealth management becomes more technology-driven.

That does not mean every quality business is worth buying at any price. But it does mean the starting point should be the business itself.

Stay inside the circle of competence

Warren Buffett often talks about staying within a circle of competence.

For me, that means buying ASX shares I can explain in plain English.

I do not need to understand every technical detail of a company. But I do need to understand how it makes money, why customers use it, what could go wrong, and what might make the business larger over time.

That is one reason I like Sigma Healthcare Ltd (ASX: SIG). The business is connected to everyday health, pharmacy retail, distribution, value-focused shopping, and repeat customer demand. There are still risks around execution, margins, regulation, and competition, but the basic customer need is easy to grasp.

Look for durable advantages

Another Buffett-style rule is to look for businesses with strong competitive positions.

On the ASX, I would search for companies that have scale, trusted brands, hard-to-replicate assets, network effects, or specialist expertise.

Goodman Group (ASX: GMG) is a good example. It is more than a property owner. It has global relationships, development capability, scarce locations, and exposure to logistics and data centre demand.

Cochlear Ltd (ASX: COH) is another. It has built a global position in implantable hearing solutions, supported by specialist technology, surgeon relationships, research, and a long-term healthcare need.

These types of advantages can help businesses keep earning attractive returns, even when conditions become tougher.

Be patient with compounding

Buffett’s approach is also built on patience.

I think this is where many investors struggle. They buy a quality ASX share, then become frustrated when the share price does little for six months. But wealth is rarely built in a straight line.

A company may spend years reinvesting, expanding, improving margins, strengthening customer relationships, and building scale before the full benefit becomes obvious.

That is why I would rather own a smaller group of high-quality ASX shares for a long time than constantly trade in and out of whatever is popular.

Patience does not mean ignoring problems. If the investment case breaks, I would reassess. But if the business is still improving, a flat or falling share price can sometimes be an opportunity rather than a reason to panic.

Foolish takeaway

Warren Buffett’s rules are simple, but they are not always easy to follow.

They require patience, discipline, and the willingness to think beyond the next market update.

For ASX investors, I think the lesson is clear. Focus on businesses that are understandable, well positioned, and capable of becoming more valuable over time. Pay attention to price, but do not let short-term share price moves dominate the decision.

That is how I would try to build wealth with ASX shares. Not by chasing every trend, but by owning quality businesses and giving compounding enough time to work.

The post How I would use Warren Buffett’s golden rules to build wealth with ASX shares appeared first on The Motley Fool Australia.

More reading

• Brokers name 3 ASX shares to buy right now
• Down 60%, are Cochlear shares now a bargain buy?
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• Interested in investing in AI? Check out this new $350 million trust

Motley Fool contributor Grace Alvino has positions in Hub24. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Cochlear, Goodman Group, and Hub24. The Motley Fool Australia has recommended Cochlear, Goodman Group, and Hub24. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

BHP Group Ltd (ASX: BHP) shares are a popular option for investors hunting for a reliable passive income.

The Australian mining giant isn’t a classic defensive stock or a major bank, but it does have a strong operational history and a reputation for paying a consistent dividend payout to investors.

At the time of writing, BHP shares are around 32% higher for the year-to-date and roughly 57% higher than 12 months ago.

But it looks like many analysts think the shares are now trading around fair value after the latest rally. TradingView data shows that 13 out of 18 analysts rate the mining giant’s shares as a hold, another four rate the stock as a strong buy and one rates BHP shares as a strong sell.

The average $59.57 implies a small 1% downside at the time of writing. However, some expect the shares to fall 33% to $40.10, while others think BHP shares have the potential to climb 16% higher to $69.79.

As far as analyst data goes, BHP shares aren’t a compelling buy for investors chasing a quick return. But the mining stock is still a strong passive income play.

Why are BHP shares a good buy for passive income?

BHP is a premier blue-chip ASX 200 stock with a market capitalisation of around $306 billion and a strong operational history. At the time of writing, BHP is the largest company trading on the Australia share market.

BHP is a cyclical stock, primarily exposed to iron ore, copper, and other key commodities.

Unlike classic defensive stocks, cyclical stocks are closely tied to the broad economic cycle and commodity fluctuations.

This means BHP is at risk from value fluctuations and can experience a share price fall or spike in times when the market booms and contracts.

But the benefit of cyclical stocks is that they usually outperform during periods of economic recovery.

The large-scale but low-cost miner has a long history of regular dividend payments, dating back to around 2006. And its commodity exposure is diversified, too. This means it is able to maintain its dividend payouts even when commodity prices fluctuate.

What does the miner pay its shareholders?

BHP pays two fully franked dividends to shareholders per year. One in March and another in September. 

The miner’s most recent $1.0385 per share fully franked interim dividend was paid to shareholders in March. This translates to a dividend yield of around 3.5% at the time of writing.

Analysts forecast BHP to pay an annual dividend of $1.91 per share in FY26, and a slightly lower $1.80 per share in FY27. That translates to a forward dividend yield of around 3.2% and 3% respectively, at the time of writing.

The post Are BHP shares a good buy for passive income? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies 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 recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The end of the financial year presents an opportune time to get your financial house in order, and that goes for superannuation as much as other matters such as tax.

Before-tax payments strategy

If you’re looking to maximise your superannuation contributions for the year, and potentially reduce your tax bill, it’s worth having a look at the amount of concessional contributions you have made, and whether you can top that up.

Concessional contributions are contributions made to superannuation from your before-tax salary, and include the super guarantee contributions made by your employer, which are 12% of your salary.

Each year you are allowed to make concessional contributions of up to $30,000. Extra contributions made beyond what your employer contributes can serve to reduce your tax load, as contributions are taxed at 15%.

In terms of figuring out how much extra you can put into your super in this way, it is possible to keep track of your concessional contributions by using the Australian Taxation Office’s online services.

Your superannuation fund might also be able to show you where you stand with regards to concessional contributions.

If you do put extra into your super and want it to be a concessional contribution, you need to also lodge a notice of intent to claim, which alerts your super fund that it is a concessional contribution and they will take the 15% tax out as necessary.

This is necessary as it is also possible to make non-concessional contributions of up to $130,000 per year.

How to safely go over the one-year cap

If you do have extra money you’d like to put into super which would put you over the $30,000 yearly concessional cap, it’s worth checking whether you have any unused concessional cap amounts from previous years.

If you have less than $500,000 in super at 30 June of the previous financial year, and unused concessional contributions cap amounts for up to the past five years, these can also be claimed.

As the ATO website explains:

If you have unused concessional cap amounts from previous years, you may be able to carry them forward to increase your contribution caps in later years. The oldest available unused cap amounts are carried forward first. For example, unused cap amounts from 2019–20 would be used to increase your cap first before unused cap amounts from 2020–21. Unused concessional cap amounts are applied automatically once you exceed the cap in any year.

It is important not to go over the caps otherwise extra tax can be payable, the ATO says.

While this strategy might be useful, it might not be for everyone, and this article does not constitute financial advice. It’s always prudent to consult a financial adviser when setting up a new investment strategy.

The post Don’t forget to consider this key superannuation strategy before 30 June appeared first on The Motley Fool Australia.

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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 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.