Author: therawinformant

Are you looking to invest in some dividend shares this week? If you are, you’re in luck because there are a good number of quality options to choose from on the Australian share market.

Two that I think would be great options for income this week are listed below:

Aventus Group (ASX: AVN)

Aventus is the owner and operator of 20 large format retail parks across Australia. Among its 593 tenancies, it counts major retailers such as ALDI, Bunnings, Officeworks, and The Good Guys as tenants. These tenancies give the company’s centres a high weighting towards everyday needs, which has been a real blessing during the pandemic. Aventus was able to collect the majority of its rent as normal in FY 2020.

In light of this, the company delivered a 4.2% increase in funds from operations (FFO) to $100 million during the 12 months and rewarded shareholders with distributions. I’m expecting a similarly solid year in FY 2021. And based on the current Aventus share price, I estimate that it offers a forward ~5.5% to 6% yield.

Vitalharvest Freehold Trust (ASX: VTH)

Vitalharvest is an agricultural property company with a focus on the nutritious and healthy food trend. The company’s assets comprise one of the largest aggregations of berry and citrus farms in Australia and are leased to Costa Group Holdings Ltd (ASX: CGC) – Australia’s leading horticulture company and largest fresh produce supplier.

I believe the company’s exposure to these healthy eating trends has put it in a position to achieve solid rental growth over the 2020s. This should be good news for shareholders, given the company’s dividend policy of paying out 85% to 100% of its funds from operations. Based on this and the current Vitalharvest share price, I estimate that it offers investors a forward ~5.5% to ~6% distribution yield.

More reading

• Invest your Suncorp dividends in these ASX shares today
• I would buy Fortescue (ASX:FMG) and this high yield ASX dividend share
• There’s good news and bad for these ASX commodity shares
• Countries are panic buying food and this isn’t reflected in ASX agriculture stocks
• Why I would buy Telstra (ASX:TLS) and this ASX dividend share right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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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On Friday the S&P/ASX 200 Index (ASX: XJO) was out of form and dropped slightly lower. The benchmark index fell 0.2% to 6,167 points.

Will the market be able to bounce back from this on Monday? Here are five things to watch:

ASX 200 expected to rise.

It looks set to be a positive start to the week for the Australian share market. According to the latest SPI futures, the ASX 200 is expected to open 0.3% or 18 points higher this morning. This follows a reasonably positive end to the week on Wall Street, which saw the Dow Jones fall 0.1%, but the S&P 500 rise 0.35% and the Nasdaq push 0.4% higher. 

Coca-Cola Amatil takeover?

The Coca-Cola Amatil Ltd (ASX: CCL) share price is in a trading halt ahead of a major announcement this week, possibly as early as today. There was speculation the beverage company was looking to buy some of Asahi’s assets. However, it could be Coca-Cola Amatil that is the one being acquired. According to Bloomberg, Coca-Cola European Partners, the world’s largest independent bottler of soft drinks, is in talks to acquire Coca-Cola Amatil. It is wanting to expand into the Asia Pacific region.

Gold price flat.

Gold miners including Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) will be on watch on Monday after a subdued finish to the week for the gold price. According to CNBC, the spot gold price was mostly flat at US$1,903.40 an ounce on Friday night.

Oil prices drop lower.

It could be a tough start to the week for energy shares such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) following a weak night of trade for oil prices on Friday. According to Bloomberg, the WTI crude oil price fell 1.9% to US$39.85 a barrel and the Brent crude oil price dropped 1.6% to US$41.77 a barrel. Demand concerns weighed on prices.

Premier Investments shares downgraded.

The Premier Investments Limited (ASX: PMV) share price could come under pressure today after being downgraded by analysts at Goldman Sachs on valuation grounds. According to the note, the broker has downgraded the retailer’s shares to a sell rating with an improved price target of $19.20. It commented: “Adjusted for the market value of the investments in Breville Group and Myer, we estimate that PMV is currently trading at c. 14x our FY21 EBIT, significantly higher than that over the past decade and also at the higher end on a growth vs. valuation spectrum against global apparel peers.”

More reading

• 5 things to watch on the ASX 200 next week
• These were the best performing ASX 200 shares last week
• These were the worst performing ASX 200 shares last week
• The ASX 200 was mixed today, it finished down 0.1%
• CleanSpace (ASX:CSX) share price rockets 62% higher following IPO

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments 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.

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When it comes to growth shares, I continue to believe that Australian investors are spoilt for choice.

This is because right now there are a large number of high quality and fast-growing shares to consider buying on the Australian share market.

Three that I think are amongst the best on the market are listed below. Here’s why I would buy these ASX growth shares in November:

Aristocrat Leisure Limited (ASX: ALL)

Aristocrat Leisure is a gaming technology company which I think could be destined for strong growth over the 2020s. This is due to the quality of its core business and the potential of its digital business. In the first half, the latter business had a massive 7.3 million daily active users. While this was a decrease on the prior corresponding period, this was driven by management’s focus on monetisation. This change paid off for the company, with its average revenue per user per day growing 31% to 50 U.S. cents. Due to new releases, the growing popularity of social and mobile gaming, and reopening casinos, I expect Aristocrat Leisure to bounce back from the pandemic with a strong result in FY 2021.

Audinate Group Limited (ASX: AD8)

Another growth share to look at is Audinate. It is a provider of hardware and software solutions to the audio/visual (AV) market. The key product in its portfolio is the award-winning Dante media networking solution. This product is the global leader (by a significant distance) in AV connectivity and eliminates the need for traditional analogue connections. Prior to the pandemic, it was experiencing very strong demand for Dante, which led to explosive revenue growth. Pleasingly, after a couple of slow quarters because of COVID, sales are now accelerating again. I expect this to be maintained over the course of FY 2021 and, given its sizeable addressable market, in the years that follow.

Xero Limited (ASX: XRO)

A final growth share to consider buying is Xero. It is one of the world’s leading business and accounting software providers for small to medium-sized businesses. Its platform allows businesses to streamline processes, including importing bank transactions and sending invoice reminders. Its ecosystem also includes over 800 apps for businesses to leverage to run their operations more efficiently. It’s no wonder then that its subscriber numbers continue to rise, even during the pandemic. Looking ahead, I believe it still has a long runway for growth over the 2020s thanks to its massive global market opportunity and the continuing shift to cloud-based platforms.

More reading

• The 10 ASX stocks worst hit by a Biden US presidential election win
• The best ASX shares to buy during a market crash
• Are these shares the next Afterpay (ASX:APT) and Appen (ASX:APX)?
• 2 ASX growth shares I would buy with $2,000 today
• Brainchip (ASX:BRN) share price jumps on quarterly update

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AUDINATEGL FPO and Xero. The Motley Fool Australia has recommended AUDINATEGL FPO. 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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History shows that the next stock market crash is never too far away. Investor sentiment may have improved in recent months, but risks such as the US election and coronavirus could prompt a more challenging period for the stock market.

While this may cause some investors to worry, a market downturn can be an excellent buying opportunity. High-quality shares can trade at bargain prices. Buying them could boost your returns – just as it has done for Warren Buffett over recent decades. It could even improve your chances of making a million.

The next market crash

The next market crash could occur at any time. Risks such as further lockdown measures caused by coronavirus or political uncertainty in North America and Europe may or may not prompt the next bear market. However, since bull markets have never lasted in perpetuity, investors should expect the next bear market to never be too far away.

History also shows that buying cheap shares during bear markets can be a very profitable strategy for long-term investors. A market downturn generally causes a wide range of businesses to trade on valuations that are below their historic averages.

In some cases this is merited, such as where a company has a weak balance sheet or lacks a solid competitive position through which to generate improving financial performance. However, in other cases, a market crash causes weak investor sentiment towards the wider stock market that prompts low valuations among high-quality businesses. Over the long run, they are likely to recover. As such, buying them at low prices can produce high returns.

Following Warren Buffett’s lead

Warren Buffett has often sought to capitalise on low prices when a market crash occurs. He has purchased a wide range of undervalued businesses that have economic moats when investor sentiment towards the stock market is relatively weak. Although this strategy has not always led to quick returns for Buffett, his long-term time horizon means that it has provided a significantly higher return than that available from indexes such as the S&P 500 Index (SP: .INX).

Even if you earn a similar return to that of the wider market, investing in a diverse range of shares can lead to a portfolio valued at over a million. For example, the stock market has produced an annual total return of around 8% over the long run. Assuming the same return on a $100,000 investment made today, or a monthly $750 investment, could lead to a seven-figure portfolio over a 30-year timeframe.

However, by waiting for buying opportunities in the next market crash, you could follow in Warren Buffett’s footsteps and outperform the market. This may improve your financial outlook as the stock market recovers, and could reduce the amount of time it takes to make a million.

More reading

• Buy these blue chip ASX shares for generous dividends in 2021
• I’d buy these 2 ETFs for dividends and growth
• Top brokers name 3 ASX shares to sell next week
• Top brokers name 3 ASX shares to buy next week
• 3 important rules to help you build wealth

Motley Fool contributor Peter Stephens 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.

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Unfortunately for income investors, interest rates are currently at ultra-low levels and look unlikely to improve for some time to come.

The good news is that there are still plenty of ASX dividend shares that offer generous yields.

But which dividend shares should you buy? Here are two blue chip ASX dividend shares I would buy:

BHP Group Ltd (ASX: BHP)

If you’re wanting to invest in the resources sector, then you might as well go for what is arguably the highest quality miner in the world – BHP. The Big Australian has a collection of world class, low cost assets which are generating significant free cash flows. This is particularly the case at the moment thanks to high iron ore and copper prices. Positively, the mining giant also has plenty of growth opportunities which could generate strong returns in the coming years.

This year I believe BHP is well-placed to deliver another strong full year result and, thanks to the strength of its balance sheet, pay more generous dividends to shareholders. Based on the current BHP share price, I estimate a fully franked 6.5% dividend yield.

Telstra Corporation Ltd (ASX: TLS)

Another blue chip ASX dividend share to buy is Telstra. Last week the telco giant dropped to a multi-year low of $2.72. I believe this has left the company’s shares trading at an incredibly attractive level for income investors. Especially given its recent annual general meeting. At the event, the Telstra board revealed that it would be willing to amend its dividend policy to maintain its 16 cents per share fully franked dividend. The board will do this if they believe this dividend is sustainable over the medium term.

I’m confident this will be possible based on the early success of its T22 strategy, the arrival of 5G internet, and the easing NBN headwind. In light of this and based on the current Telstra share price, I expect Telstra’s shares to provide a yield of 5.9% in FY 2021.

More reading

• Top brokers name 3 ASX shares to buy next week
• Why the Iluka (ASX:ILU) share price nearly halved today
• Telstra (ASX:TLS) share price hits a multi-year low: Is it a bargain buy?
• 2 of the best ASX 50 shares you could buy right now
• 3 super reasons to buy ASX 200 shares today

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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.

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I think there are some great exchange-traded funds (ETFs) worth buying for both dividends and growth.

ASX shares are great but the ASX only represents 2% of the world’s total market capitalisation. I think investors would do well to diversify their portfolios by looking at other businesses and ETFs like these two:

Betashares Ftse 100 ETF (ASX: F100)

This ETF represents the biggest 100 businesses on the London Stock Exchange. It has an annual management fee of 0.45% per annum.

The UK share market is going through a tough time at the moment with both Brexit and tougher COVID-19 impacts (higher health impacts and the return to tighter restrictions).

But many of the biggest businesses in this ETF aren’t just UK shares, they are global companies with solid long-term potential. To me, it just seems like investors are feeling bearish because they are listed in the UK.

Some of the biggest holdings include: AstraZeneca, GlaxoSmithKline, HSBC, Diageo, British American Tobacco, Unilever, Rio Tinto, Reckitt Benckiser, BP and Royal Dutch Shell.

There are also a number of other interesting businesses in the holdings that could generate good long-term returns including National Grid, Vodafone, London Stock Exchange, Flutter Entertainment, BAE Systems, Scottish Mortgage Investment Trust and so on.

Before COVID-19 came along, it was a high-paying dividend ETF with attractive valuations and generous dividend payout ratios. I think the dividends will return, as early as 2021, which could mean this ETF delivers good dividend income in the future.

According to BetaShares, this ETF (which is down 26% from the pre-COVID-19 price) has a price/earnings ratio of just 14. That looks pretty cheap to me with how low interest rates are.

BetaShares Global Quality Leaders ETF (ASX: QLTY)

This ETF doesn’t have the income potential of the UK share market, but it has more long-term compounding growth potential in my opinion.

BetaShares Global Quality Leaders ETF gives investors exposure to some of the best businesses in the world. To make it into this portfolio, a company has to rank well on several metrics: return on equity (ROE), debt to capital, cash flow generation ability and earnings stability.

Whilst it may not include some of the world’s most exciting early stage businesses, profitable quality businesses have the ability to consistently keep performing – including through downturns.

The investment performance of the ETF certainly demonstrates strong performance. Over the past year, including the COVID-19 crash period, the ETF’s net return has been 17.8%. Since inception in November 2018, it has delivered average returns per annum of 19.6%.

Returns won’t always be as good, but I think it can outperform the overall global share market with its high-quality holdings with names like Nike, Nvidia, Texas Instruments, Keyence, UnitedHealth, Novo Nordisk, Alphabet, Facebook, Intuit and Intuitive Surgical.

How much income does it pay? Not a huge amount, but it’s decent. Its trailing distribution yield currently amounts to a 2.4% yield, which is not bad at all in this environment. In July, at the time of the latest distribution, it had an annual distribution yield of 2.8%.

For what the ETF provides, I think the management fee is very reasonable at just 0.35% per annum. With an active Australian fund manager, you’d probably be paying at least 1% per annum in fees. Plus the performance fee if it managed to outperform.

Foolish takeaway

I think each of these ETFs are very compelling in my opinion. The UK share market could be an opportunistic buying opportunity, while the quality ETF could keep producing solid total returns whatever happens next with COVID-19 or any other event.

More reading

• 3 important rules to help you build wealth
• 2 high-quality ETFs to buy for any portfolio
• 2 ASX shares looking dirt-cheap today
• I don’t normally buy ETFs, but I would buy these 2
• How to replace your entire wage with ASX dividend shares

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Once again, a large number of broker notes hit the wires last week. Some of these notes were positive and some were bearish.

Three sell ratings that caught my eye are summarised below. Here’s why top brokers think investors ought to sell these shares next week:

AMP Limited (ASX: AMP)

A note out of the Macquarie equities desk reveals that its analysts have retained their underperform rating and cut the price target on this financial services company’s shares to $1.25. This follows the release of a third quarter update which revealed further outflows across its wealth management business. Macquarie believes that AMP’s medium term outlook is subdued and suspects that most divisions could struggle. The AMP share price ended the week at $1.35.

OZ Minerals Limited (ASX: OZL)

Analysts at Credit Suisse have retained their underperform rating but lifted their price target on this copper producer’s shares to $12.55. The broker notes that OZ Minerals delivered a solid quarterly update last week and is forecasting lower costs for FY 2020. However, it still feels that its shares are expensive and could come under pressure if copper and gold prices soften. The OZ Minerals share price last traded at $15.81.

Zip Co Ltd (ASX: Z1P)

A note out of UBS reveals that its analysts have retained their sell rating and $5.50 price target on this payments company’s shares. The broker notes that Zip has announced the launch of its Tap & Zip product which allows users to make payments anywhere Visa is accepted. While it sees positives in this launch and notes that it opens up the company to a vastly greater number of retailers, it fears it could cannibalise higher margin transactions and weigh on new merchant additions. The Zip share price ended the week at $6.74.

More reading

• 3 important rules to help you build wealth
• 5 top ASX shares to buy with $5,000
• Are these 2 ASX commodity shares ready to ride 2 booming trends?
• ASX 200 recovered throughout today, but finished 0.3% lower
• Why Domino’s, Oil Search, Resolute, & Zip shares are dropping lower

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Last week saw a large number of broker notes hitting the wires once again. Three buy ratings that caught my eye are summarised below.

Here’s why brokers think investors ought to buy them next week:

Afterpay Ltd (ASX: APT)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and lifted their price target on this payments company’s shares to $115.00. This follows the announcement of a partnership with Westpac Banking Corp (ASX: WBC) which will see Afterpay offer savings accounts and cash flow tools in 2021. The broker believes that this could generate valuable data that gives the company opportunities to develop innovative products. Outside this, based on recent app downloads, Morgan Stanley has upgraded its estimates to reflect strong uptake in the United States. It estimates that Afterpay had 11.3 million total active customers at the end of September. I agree with the broker on this one and feel Afterpay would be a great long term option.

BHP Group Ltd (ASX: BHP)

Analysts at Ord Minnett have retained their buy rating but trimmed their price target on this mining giant’s shares slightly to $43.00. This follows the release of a quarterly update which revealed better than expected iron ore production and shipments. Ord Minnett appears confident that BHP is well-placed to deliver a strong profit result in FY 2021, with more generous dividend payments for shareholders. It estimates this equates to a fully franked yield of ~6.5% over the next 12 months. I think Ord Minnett is spot on and BHP would be a top option for investors looking for income or exposure to the resources sector.

Healius Ltd (ASX: HLS)

A note out of the Macquarie equities desk reveals that its analysts have retained their outperform rating and lifted the price target on this healthcare company’s shares to $4.10. Macquarie was impressed with Healius’ first quarter update, which was boosted by strong demand for COVID-19 testing. The broker notes that this was supported by other parts of the business, which performed positively. Looking ahead, Macquarie believes Healius has plenty of growth opportunities and remains positive on its outlook. While not my top pick in the sector, I do think it could be a good option for investors.

More reading

• The best time to invest may feel uncomfortable
• Why the Iluka (ASX:ILU) share price nearly halved today
• PayPal to offer bitcoin, cryptocurrency payments
• Top brokers name 3 ASX shares to sell today
• Why you should pay attention when management buy (or sell) ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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I believe there are a number of important rules that Aussies should follow to help their wealth grow over time.

Some of wealth-building is down to luck. But a lot of it is down to the process you use for your money and the systems you put in place.

I think these important rules are worth following to help you build wealth:

Spend less than you earn

I think one of the most important rules for building wealth is making sure that you spend less than you earn, that you live within your means.

It’s easy to spend a lot of money. It’s harder to earn more. The trick is to make sure that your spending isn’t consistently more than your income. If you earn $100 a month more than you spend then you can build your wealth over time. If you always spend $100 a month more than you earn then your net worth is going to head downwards until interest and debt overwhelm you.

How are you supposed to know if you’re spending less than you earn? By tracking of course! I’m sure whichever bank you’re with would offer some personal finance tools whether it’s Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) or another one.

Plenty of people use another tool to track their finances like Excel, Google Sheets or even Zip Co Ltd’s (ASX: Z1P) Pocketbook. I use Excel. 

Budgeting can be a really powerful tool to help you save money.

Be intentional with your savings

Spending less than you earn is a good outcome of your hard work and financial choices. But I think it’s important to come up with an intentional system for your money.

Some people like the idea of saving money first and spending what’s left after that. If you’re aiming for a long-term savings goal, such as a house deposit, you need to make sure you’re actually putting that money aside into a savings account rather spending it.

Even if you just save $100 or $200 a month, it’s important to classify money not spent that month as savings. Keeping it physically separate in a savings account is a good idea. Otherwise you could just end up spending it a month or two later.

You can really start building good savings habits if you just make it into a routine to save money (like a fitness routine). As Warren Buffett said: “Chains of habit are too light to be felt until they are too heavy to be broken.”

Have an investment plan

No-one has a crystal ball to be able to tell you when share prices are going to fall or rise. It’s impossible to predict. A year ago I don’t think anyone would have seriously predicted that a global pandemic was about to happen.

I think it’s important to regularly invest into your portfolio. It doesn’t matter whether the market is up or down. It doesn’t matter which side of politics is in power. Don’t worry much about the latest GDP or house price statistics. Investing regularly will make sure your wealth-building plan stays on track. It could be once a month, once every two months or even once a quarter. Just commit to regularly investing.

What shares would make good regular investments? I think some exchange-traded funds (ETFs) would be good ideas like Betashares Global Quality Leaders ETF (ASX: QLTY), BetaShares Global Sustainability Leaders ETF (ASX: ETHI) or Vanguard Msci Index International Shares Etf (ASX: VGS).

I also think that listed investment companies (LICs) and trusts (LITs) can be good for regular investing. I like ideas such as MFF Capital Investments Ltd (ASX: MFF), Magellan Global Trust (ASX: MGG), WCM Global Growth Ltd (ASX: WQG) and Future Generation Global Invstmnt Co Ltd (ASX: FGG).

More reading

• The best time to invest may feel uncomfortable
• 5 things to watch on the ASX 200 next week
• 5 top ASX shares to buy with $5,000
• Got $1,000? You should buy one of these 8 ASX shares
• The ASX 200 was mixed today, it finished down 0.1%

Tristan Harrison owns shares of Future Generational Global Investment Company Limited, Magellan Flagship Fund Ltd, MAGLOBTRST UNITS, and WCM Global Growth Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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I think that the best time to invest may make you feel uncomfortable.

The best time to invest in a (good) share is when most other investors don’t want to invest in it.

It might feel easy to invest today in a business that is riding high like Redbubble Ltd (ASX: RBL) which is reporting good growth numbers each quarter despite COVID-19. I’d still be happy to buy shares at almost $5 today.

But imagine if you’d bought Redbubble shares earlier this year. It was around $1.10 at the start of the year. You’d be up around 350%.

What about if you’d bought at the market bottom on 23 March 2020? Your Redbubble shares would be up by 975%.

There are plenty of examples of businesses that have risen strongly since the March 2020 lows. Kogan.com Ltd (ASX: KGN), Temple & Webster Group Ltd (ASX: TPW), JB Hi-Fi Limited (ASX: JBH) and Afterpay Ltd (ASX: APT) are just a few names that have rebounded strongly.

But you would only get to take advantage of buying at those market lows if you were willing to put money into the share market when everyone else was losing their minds.

About eight months ago I thought the COVID-19 period of falls represented a once-in-a-generation opportunity to buy shares. I invested quite heavily during March and April and thankfully quite a few of my investments from that period are up between 50% to 100%. I wish I could have invested more!

This year the best time to invest was during the market crash because that’s when uncertainty was the highest.

Why March 2020 was so worrying..and such a good time to invest

Looking back seven months ago, things looked a lot different to today. There wasn’t the government and central bank support that came into force soon after.

There was an accelerating number of COVID-19 cases across the world, particularly in New York and Europe. The number of deaths in Italy had almost reached a daily peak. Restrictions were tightening across the world and international borders were shutting.

It seemed as though many businesses could go to the wall. Things were looking dire for many discretionary businesses – it’s why the Afterpay share price plunged to $8.90.

But it can be dangerous to extrapolate negativity for too long. Governments and central banks were likely to do something to support the economy like they did with the GFC. Though this level of support was unprecedented. The Australian government’s stimulus was (and is) particularly supportive with jobkeeper.

Warren Buffett has a great quote for investing during uncertain times. He said investors should be “fearful when others are greedy, and greedy when others are fearful.” It was an opportunistic time to be greedy. 

But now share markets have zoomed higher. Does that mean we should wait for the next crash?

Long-term returns are usually great whenever you invest

Who knows when the next crash is going to be? It could be a few weeks away with the US election. Or it could be over a decade away. There was an 11-year gap between March 2009 and March 2020.

I don’t think it makes much sense to wait that long to invest. There are a lot of dividends that can be paid and a lot of compounding that can occur in a decade.

The share market has returned an average of 10% per annum over the long-term. That average includes all the crashes and difficult times.

The only time your investment may not show good long-term returns is if you invest just before a big crash like the GFC, or dot com crash 20 years ago. But most people regularly contribute throughout their life to their portfolio, it’s unlikely that many people will have dumped $1 million from a lottery win in one go in October 2007.

The long-term returns of some investments over the past decade has been really good. You don’t have to invest at the bottom to make good returns in you invest in good businesses.

For example, iShares S&P 500 ETF (ASX: IVV) reports that it made average returns of per annum 17.05% over the last 10 years.

One ASX share I own, a listed investment company (LIC) called MFF Capital Investments Ltd (ASX: MFF) has made total shareholder returns (TSR) of an average of around 17.5% per annum over the past decade.

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Tristan Harrison owns shares of Magellan Flagship Fund Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Kogan.com ltd and Temple & Webster Group Ltd. 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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