Category: Stock Market

The Reserve Bank interest rate decision might be behind us, but there are still plenty of developments coming this week that are worth watching for the sake of your ASX shares.

eToro market analyst Josh Gilbert has picked out the three most important ones for our convenience:

1. Australia monthly inflation

Wednesday will see the latest monthly consumer price index numbers released, which will be crucial in helping the RBA decide what to do with interest rates.

According to Gilbert, it’s a given now that a rate cut will be coming this year.

“The market now sees an 80% chance the RBA will cut rates in August. However, the higher-for-longer take from the board can’t be ignored by investors.”

Inflation is the most important metric for all central banks around the world now, not just the Reserve Bank.

“Investors are looking at the rotation to come as we get nearer rate cuts, moving away from the US dollar and tech into cheaper and more cyclical assets.”

2. Australia consumer confidence

Last month the consumer confidence index headed upwards to 86, according to Gilbert, which is the highest seen in two years.

“It’s reasonable to anticipate a similar trend in March, considering the monthly CPI for January saw consumer prices rise 3.4%, going against economists’ expectations of a slight increase from December.”

The resilience and confidence shown by Australian consumers could be working against them though.

“The market is pushing back on the number of rate cuts this year,” said Gilbert.

“In early February, the market was expecting more than two cuts, which has since been pushed to under two cuts.”

3. BYD financial report

The world’s biggest selling electric car maker, BYD (SHE: 002594), is reporting its latest results on Tuesday.

“Investors are eagerly anticipating the automotive company’s earnings, which BYD expects to have risen by up to 85.6% year-on-year for 2023,” said Gilbert.

“However, the company’s preliminary income figures fell short of market expectations, which could create an interesting dynamic around the earnings announcement this week.”

Gilbert pointed out that Australians may have noticed many more BYD cars driving around this year.

“BYD is set to deliver more than 3 million cars to Australia for the full year 2023.

“Whether BYD can leverage its growth potential to carve out a larger market share remains to be seen. The upcoming earnings report will likely shed more light on this subject, providing key insights into BYD’s strategic direction and financial health.”

The post 3 things ASX investors should watch this week appeared first on The Motley Fool Australia.

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More reading

• Invest $500 in these outstanding ASX ETFs
• 3 of the best ASX growth shares to buy now
• Buy Westpac and this ASX dividend giant
• Top brokers name 3 ASX shares to buy next week
• Here’s how the ASX 200 market sectors stacked up last week

Motley Fool contributor Tony Yoo 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.

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If you’re just starting your investment journey and have $500 to invest, but aren’t sure which shares to buy, then you could consider exchange-traded funds (ETFs).

ETFs allow you to own a portion of a large and diverse number of shares through a single investment.

This means that instead of dedicating time to researching which shares to buy, you can just buy a collection of them with a single click of a button.

Then you can sit back and let compounding work its magic with your money.

But which ASX ETFs could be top options for a $500 investment? Two that are worth considering are listed below:

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

Warren Buffett is one of the world’s most well-known investors.

The Oracle of Omaha has earned his reputation by delivering market beating returns over many decades.

The key to his success has been his preference of making long-term investments in companies with attractive valuations, strong business models, and competitive advantages.

With that in mind, if you would like to replicate this you could look at the VanEck Vectors Morningstar Wide Moat ETF. This ASX ETF is focused on buying the type of companies that you would expect to find in Buffett’s portfolio.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

Another ASX ETF for investors to look at for a $500 investment is the Vanguard MSCI Index International Shares ETF.

This ETF is very popular with Aussie investors and it isn’t hard to see why.

Not only does it provide unparalleled diversification for a portfolio, but it gives investors access to 1,000+ of the world’s biggest and best companies. Among the household names that you will be investing in with the ETF are global behemoths such as Amazon, Apple, Nestle, and Visa.

The post Invest $500 in these outstanding ASX ETFs appeared first on The Motley Fool Australia.

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More reading

• Here’s how the ASX 200 market sectors stacked up last week
• 12 ASX ETFs breaking the mould to hit 52-week highs today
• Here are the next distribution dates for your Vanguard ETFs
• How I’d invest my first $1,000 in ASX shares in 2024
• 4 top ASX exchange-traded funds smashing record highs on Wednesday

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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 Amazon, Apple, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nestlé. The Motley Fool Australia has recommended Amazon, Apple, VanEck Morningstar Wide Moat ETF, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The great news for Aussie growth investors is that there are plenty of quality options to choose from on the local share market.

But which ASX growth shares could be best buys next week?

Let’s take a look at three growth shares that brokers rate very highly:

IDP Education Ltd (ASX: IEL)

This language testing and student placement company’s shares could be an ASX growth share to buy now.

That’s the view of analysts at Goldman Sachs, which believe the company is well-placed for long-term growth thanks to structural tailwinds and its dominant market position.

The broker recently responded to its half-year results by retaining its buy rating with a $26.60 price target. This would mean upside of almost 44% for investors if Goldman is on the money with its recommendation.

Megaport Ltd (ASX: MP1)

Analysts at Macquarie think this leading global provider of elastic interconnection services could be an ASX growth share to buy.

The broker appears to believe the stars are now aligning for the company and that it is destined to deliver explosive earnings growth over the coming years.

In response to its half-year results last month, Macquarie retained its outperform rating on Megaport’s shares with an improved price target of $18.00. This suggests potential upside of 25% for investors.

Xero Limited (ASX: XRO)

A final ASX growth share that has been named as a buy is Xero. It is a cloud-based accounting and business services platform provider to small businesses.

Although its shares have been on fire so far this year, the team at Citi doesn’t believe it is too late to invest.

In fact, the broker sees potential for market-beating returns from its shares from current levels. It has a buy rating and $159.00 price target on them. This implies potential upside of 17% for investors from current levels.

The post 3 of the best ASX growth shares to buy now appeared first on The Motley Fool Australia.

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More reading

• New to investing? I’d invest my first $1,000 in ASX shares today!
• These are the 10 most shorted ASX shares
• 5 oversold ASX shares to buy in March 2024
• Got $3,000? 3 ASX tech shares to buy and hold for the long term
• Here are the top 10 ASX 200 shares today

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group, Idp Education, Macquarie Group, Megaport, and Xero. The Motley Fool Australia has positions in and has recommended Macquarie Group and Xero. The Motley Fool Australia has recommended Idp Education and Megaport. 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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Investors that are on the lookout for big dividends might want to take a look at the ASX dividend giants listed below.

Both are among the biggest names on the Australian share market and have been labelled as buys and tipped to offer attractive dividend yields.

Here’s what income investors can expect to receive from them:

Westpac Banking Corp (ASX: WBC)

While almost all brokers think the big four banks are overvalued now following a strong run, there’s still one analyst that sees room for Westpac’s shares to climb higher.

A recent note out of Ord Minnett reveals that its analysts have an accumulate rating and $28.00 price target on the banking giant’s shares. This suggests potential upside of 6.5% for investors from current levels.

In addition, the broker is forecasting fully franked dividends of $1.45 per share in FY 2024 and $1.50 per share in FY 2025. Based on the current Westpac share price of $26.47, this will mean yields of 5.5% and 5.65%, respectively.

Woodside Energy Group Ltd (ASX: WDS)

Another ASX dividend giant that could be a buy right now is energy producer Woodside.

A recent note out of Morgans reveals that its analysts have an add rating and $34.20 price target on its shares. If they were to rise to this level, it would mean a very attractive gain of 15% for investors that buy in at current levels.

Another positive is that the broker is forecasting some attractive dividend yields in the near term. It is expecting the energy producer to be in a position to pay fully franked dividends of $1.36 per share in FY 2024 and $1.12 per share in FY 2025. Based on the current Woodside share price of $29.73, this equates to 4.6% and 3.8% dividend yields, respectively.

The post Buy Westpac and this ASX dividend giant appeared first on The Motley Fool Australia.

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More reading

• How much dividend income would I get from a $20k investment in Westpac shares?
• ASX energy shares losing charge amid fresh warnings of gas supply shortfalls
• I’d spend $5k on these ASX 200 shares today to target a $13,080 passive income
• $2.1 million! Who are the highest paid ASX 200 directors?
• 4 ‘overheated’ ASX 200 shares to stay away from

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation and Woodside Energy Group. 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.

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It has been another busy week for Australia’s top brokers. This has led to the release of a number of broker notes.

Three broker buy ratings that you might want to know more about are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Boss Energy Ltd (ASX: BOE)

According to a note out of Macquarie, its analysts have retained their outperform rating and $6.00 price target on this uranium miner’s shares. The broker has been running the rule over the company’s first half update and drilling results from the Alta Mesa Project. It was pleased with both, noting that its results smashed expectations and that its drilling update potentially points to better than expected resource estimates. The Boss Energy share price ended the week at $4.92.

Webjet Ltd (ASX: WEB)

A note out of Citi reveals that its analysts have retained their buy rating on this online travel agent’s shares with an improved price target of $9.90. Citi was pleased with the company’s investor update presentation relating to its WebBeds business. It highlights that management plans to grow its total transaction value for the business to $10 billion by 2030. This will be double its FY 2025 target of $5 billion. The Webjet share price was fetching $8.74 on Friday.

Woolworths Group Ltd (ASX: WOW)

Analysts at Goldman Sachs have retained their conviction buy rating and $40.40 price target on this supermarket giant’s shares. According to the note, the broker believes that recent weakness due to inquiries into price gouging and anti-competitive behaviour claims has been an overreaction. It highlights that a similar inquiry in 2008 by the ACCC concluded that the supermarkets industry was “workably competitive.” In addition, it recalls that the recommended industry changes did not result in a material impact to its earnings. The Woolworths share price ended last week at $32.32.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

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More reading

• Top ASX shares to buy instead of a term deposit in March 2024
• Brokers name 3 ASX shares to buy now
• ASX energy shares losing charge amid fresh warnings of gas supply shortfalls
• ‘We have reached a bottom’: 5 ASX uranium shares leaping higher this week
• Why Arafura, Pentanet, Sigma, and Webjet shares are falling today

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 Goldman Sachs Group and Macquarie Group. The Motley Fool Australia has positions in and 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.

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ASX materials shares led the ASX 200 market sectors last week, with a 2.35% gain over the five trading days.

The S&P/ASX 200 Index (ASX: XJO) rose 1.6% over the week to finish at 7,770.6 points on Friday.

Most of the week’s gains for the benchmark index came on Thursday after the United States Federal Reserve meeting and the decision to leave interest rates on hold.

But what got ASX investors really excited was Fed chair Jerome Powell saying it was likely the bank would cut rates “at some point this year”.

Eight of the 11 market sectors finished the week in the green.

Let’s review.

Materials shares led the ASX sectors last week

The biggest materials stocks by market capitalisation are, of course, the big three ASX 200 miners.

Last week, Fortescue Ltd (ASX: FMG) shares led the pack, rising 4.5% to $24.64 over the five trading days. Mineral Resources Ltd (ASX: MIN) shares matched it, also up 4.5% to $69.15 apiece.

Rio Tinto Ltd (ASX: RIO) shares rose 2.82% over the week to finish at $120.56 per share on Friday.

And the ‘Big Australian’, BHP Group Ltd (ASX: BHP) rose 2.77% to $43.79 per share.

The big miners were helped by a sharply rebounding iron ore price this week. The price leapt from a nine-month low of US$102.5 per tonne on 15 March to US$111.50 per tonne on Friday.

The bump followed stronger-than-expected industrial production data out of China, which eased investors’ broader economic concerns.

Also last week, gold traded at record highs above $US$2,200 per ounce due to investors’ confidence that major central banks will cut interest rates soon.

This buoyed local ASX 200 gold stocks including Newmont Corporation CDI (ASX: NEM) shares, up 2.95% over the week to $52.83 on Friday, and Evolution Mining Ltd (ASX: EVN) shares, up 2.56% to $3.40.

A bunch of ASX ETFs predominantly representing international shares hit new 52-week highs last week.

They included VanEck Morningstar Wide Moat ETF (ASX: MOAT) shares, which reached $129.78, and Global X Robo Global Robotics & Automation ETF (ASX: ROBO), which hit $78.60 apiece.

ASX 200 market sector snapshot

Here’s how the 11 market sectors stacked up last week, according to CommSec data.

Over the five days:

S&P/ASX 200 market sector	Change last week
Materials (ASX: XMJ)	2.35%
A-REIT (ASX: XPJ)	1.88%
Financials (ASX: XFJ)	1.44%
Industrials (ASX: XNJ)	1.36%
Energy (ASX: XEJ)	1.35%
Healthcare (ASX: XHJ)	0.57%
Information Technology (ASX: XIJ)	0.54%
Consumer Discretionary (ASX: XDJ)	0.41%
Consumer Staples (ASX: XSJ)	(0.51%)
Utilities (ASX: XUJ)	(0.33%)
Communication (ASX: XTJ)	(0.12%)

The post Here’s how the ASX 200 market sectors stacked up last week appeared first on The Motley Fool Australia.

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More reading

• Why the BHP share price crushed the benchmark this week
• Here is the profit forecast to 2026 for BHP shares
• 12 ASX ETFs breaking the mould to hit 52-week highs today
• Are dividends your thing? Then you’ll love these 2 high-yield ASX shares
• Brokers name 3 ASX shares to buy now

Motley Fool contributor Bronwyn Allen has positions in BHP Group. 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 VanEck Morningstar Wide Moat ETF. 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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ANZ Group Holdings Ltd (ASX: ANZ) shares and the rest of the big four banks are popular with income investors.

And it isn’t hard to see why.

The big four banks are among the biggest dividend payers on the Australian share market.

In fact, in FY 2023, ANZ paid out a total of $4,559 million in dividends to its 531,000 shareholders.

Will this trend continue in the future? Let’s take a look at what analysts are forecasting for the ANZ dividend through to FY 2026.

ANZ dividend forecast

According to a note out of Goldman Sachs, its analysts are expecting the bank to pay a 75% franked $1.62 per share dividend this year.

While this is down from $1.75 per share in FY 2023, that’s because the bank declared an additional one-off unfranked dividend of 13 cents per share with its result to make up for a lack of franking credits.

At the time, the ANZ board explained:

The proposed 2023 Final Dividend is 94cps, partially franked at 56%. This comprises an 81cps dividend partially franked at 65%, and an additional one-off unfranked dividend of 13cps. The level of franking reflects the geographically diverse nature of our business, as well as the timing of the proposed Suncorp Bank transaction. The Board recognised that lower franking may not have been anticipated by some shareholders. In recognition of this, and given our strong performance, the Board agreed that the one-off unfranked dividend was appropriate.

So, that’s a $1.62 per share dividend in FY 2024. Based on the current ANZ share price of $29.04, this will mean a very attractive 5.6% dividend yield.

What about FY 2025 and FY 2026?

If you like consistency, then you may like ANZ shares.

That’s because Goldman Sachs is expecting another 75% franked $1.62 per share dividend in FY 2025, which will mean another 5.6% dividend yield.

And then once again in FY 2026, the broker is forecasting a third 75% franked $1.62 per share dividend in a row. This will mean yet another 5.6% dividend yield for income investors.

The post Here’s the ANZ dividend forecast through to 2026 appeared first on The Motley Fool Australia.

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More reading

• 3 fantastic high-yield ASX dividend shares to buy next week
• 4 ‘overheated’ ASX 200 shares to stay away from
• If I’d put $5,000 in ANZ shares at the start of 2024, here’s what I’d have now
• How I’d invest $20k to target $1,400 a year from ASX dividend shares
• How about buying these ASX dividend shares?

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 Goldman Sachs Group. 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.

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After closing flat on Monday, the BHP Group Ltd (ASX: BHP) share price charged higher over the following three trading days, before giving back some of those gains on Friday.

All told this saw shares in the S&P/ASX 200 Index (ASX: XJO) iron ore miner finish the week up 2.8%, smashing the 1.6% gains posted by the benchmark index.

Rival iron ore miners Rio Tinto Ltd (ASX: RIO) and Fortescue Metals Group Ltd (ASX: FMG) also handily outpaced the ASX 200.

Rio Tinto shares closed the week up 2.8%. Fortescue shares led the pack, gaining 4.5% since the opening bell on Monday.

Here’s what sent the BHP share price charging higher.

What boosted the BHP share price?

The biggest tailwind helping the ASX 200 miners outperform over the week was the rebounding iron ore price.

On Friday 15 March, the industrial metal dipped below US$100 per tonne. At market open on Friday 22 March, that same tonne was trading for US$109.15.

The steel-making metal, along with the BHP share price, surged over the week following some promising economic data out of China, Australia’s top export market.

While China’s steel-hungry property markets remain weak, industrial production in January and February increased 7% year on year. That far exceeded consensus estimates of a 5% increase.

On the back of that data, Australia and New Zealand Banking Group Ltd (ASX: ANZ) analysts Daniel Hynes and Soni Kumari forecast that iron ore prices have bottomed for 2024.

“Iron ore prices may be near a floor amid a reset in expectations around [China’s] demand,” they said. “Weak consumption from the property sector is being countered by robust demand from other sectors.”

Those other steel-hungry sectors include infrastructure and renewables investments, social housing, and the nation’s massive car manufacturing industry.

Then there’s copper, BHP’s second biggest revenue earner after iron ore.

The red metal gained 1% over the week gone by, trading for US$8,950.50 at market open on Friday.

Now what?

Despite the strong weekly performance sending BHP back to $43.79 a share, a number of analysts remain bullish on the outlook for the ASX 200 iron ore miner.

Earlier in March, Citi upgraded its rating for BHP stock to a buy with a $46 target for the BHP share price.

That represents a potential 5% upside from Friday’s closing price.

The post Why the BHP share price crushed the benchmark this week appeared first on The Motley Fool Australia.

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More reading

• Here is the profit forecast to 2026 for BHP shares
• Is the worst of the selling now over for ASX iron ore shares?
• How much could $10,000 invested in BHP shares be worth next year?
• How I’d invest $20k to target $1,400 a year from ASX dividend shares
• Why are ASX 200 mining shares smashing the benchmark on Wednesday?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bernd Struben 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.

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Superannuation may be the key asset for funding the life expenses of someone in retirement. Therefore, the superannuation balance can make a big impact.

We have looked at the average superannuation balance, the average for a 40-year-old and a number of other ages. In this article, we’re going to look at the financial picture of an 80-year-old.

It’s interesting to look at how much an 80-year-old may have in their superannuation balance because superannuation was only introduced in Australia in July 1992. Hence, people in their 80s haven’t had a full lifetime of working whilst it has been applicable.

The 80s are an important time of life, and it may be very useful to have a larger superannuation balance for necessary (or desired) costs such as healthcare expenditures, bills and holidays.

What’s the average superannuation balance at age 80?

Based on the Australian Taxation Office (ATO) Taxation Statistics report for FY21, the average balance for someone aged 80 was $475,422. This figure actually includes everyone aged 75 or more, which is the oldest age group of the ATO statistics.

The median superannuation balance for someone aged 80 (or at least 75) was $171,716.

Why is there such a big difference? The median number is what we can describe as the middle number. If all the people aged at least 75 were in a line based on their superannuation balance, the median number tells us what the person in the middle of the line has.

The average balance includes people with large balances, such as high earners and those who have contributed a large amount to their superannuation.

For example, if we had three people – one with a $100,000 balance, one with $200,000 and one with a $1 million balance, the average would be $433,333 and the median would be $200,000. That’s a big difference.

The numbers I’ve given you are for all Australians. However, there can sometimes be sizeable differences between the amounts for male and female balances.

The average female balance for an 80-year-old was $436,865, while the median superannuation balance was $168,973.

Turning to the male balances, the average balance was $507,556 and the median superannuation balance was $174,179.

What can we learn from these figures?

It seems that the average 80-year-old, or people aged at least 75, have a sizeable nest egg. But is it enough for a comfortable retirement?

According to the Association of Superannuation Funds of Australia, the superannuation balance required to achieve a comfortable retirement at 67 is $690,000 for a couple and $595,000 for a single.

An average couple are probably doing quite well, but the people with a median balance may only have enough for a reasonably modest retirement. A modest financial retirement can still be very fulfilling of course – there’s more to life than money and how much we spend on something.

I think it’s a good idea to periodically assess your superannuation balance to see the progress made toward a particular retirement goal.

But, keep in mind that the last few years of working will have the biggest effect. A 65-year-old with a $500,000 balance that benefits from a 10% rise of the portfolio would mean they would become a 66-year-old with a $550,000 balance.

There are a variety of things that we can do to ensure a healthy nest egg including adding more to superannuation each year and investing in growth-focused asset classes that can produce better returns over time.

We’ve seen (ASX) shares beat the return of defensive assets of cash and bonds over the long term.

The post Here’s the average Australian superannuation balance at age 80 in 2024 appeared first on The Motley Fool Australia.

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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 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.

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Everyone remembers their first time.

If you have never done it before, buying ASX shares can be a scary experience.

You don’t know whether you will lose money. You feel like you don’t have as much knowledge as the veterans. You’re concerned about being “fleeced”.

However, it’s a lot easier to get started now than it used to be.

Back in the days when you had to buy stocks through a human broker on the telephone, investors often needed to put in a decent whack of money to make the brokerage fees worthwhile.

These days, with the advent of online broking platforms, just $1,000 can get your portfolio started.

So if I were starting now, what would I buy?

An easy way to begin for a new investor

A great place to start is index exchange-traded funds (ETFs).

Buying an ETF stock provides the beginner with instant diversification and all the risk management benefits that comes with it.

And in modern times there are indices for every investment angle, so it’s not hard to find something that suits your tastes and judgments.

ETF shares also save a lot of time and effort for novices, as they don’t need to be constantly following the news on particular companies to decide whether to buy or sell. The index, and therefore the fund, will automatically do that on their behalf.

But — and you know it was coming — there is a catch.

What index ETFs can’t give you

The limitation of index funds is that it will never perform better than the market. That’s the trade-off one makes for the convenience it brings.

Actively picking ASX shares is the only way an investor has a chance to do better than the average.

And while that might be daunting to the first-timer, there are plenty of quality choices on the ASX to choose from.

They need not be speculative. If you are convinced that the business will be in better shape in five years’ time than how it is now, you have a buy candidate.

Take three of my current favourites at the moment — Xero Ltd (ASX: XRO), Johns Lyng Group Ltd (ASX: JLG) and Telix Pharmaceuticals Ltd (ASX: TLX).

They are in vastly different industries — software, construction and healthcare — but are all quality companies with an excellent track record of growing value for shareholders.

The past five years has seen their share prices return 171%, 386%, and 1,900% respectively.

No index fund could even come close to that sort of performance.

Of course, not every stock you pick will do that well. But if the portfolio is properly diversified, these types of winners can make up for the losers, plus more.

The post New to investing? I’d invest my first $1,000 in ASX shares today! appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
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• Here are the top 10 ASX 200 shares today
• 5 oversold ASX shares to buy in March 2024

Motley Fool contributor Tony Yoo has positions in Johns Lyng Group, Telix Pharmaceuticals, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Johns Lyng Group, Telix Pharmaceuticals, and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended Johns Lyng Group and Telix Pharmaceuticals. 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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