Category: Stock Market

The Insurance Australia Group Ltd (ASX: IAG) share price tumbled on Friday on news of the company’s annual general meeting (AGM) and the impact of ongoing floods.

IAG CEO and managing director Nick Hawkins told the AGM the insurance company had experienced inflationary pressures and natural disasters as it anticipates higher reinsurance costs. To counter such impacts, it’s increasing some of its premiums.

The IAG share price was 2.16% lower, trading at $4.75 on Friday’s market close.

For context, the S&P/ASX 200 Index (ASX: XJO) was down 0.80% at the close. The S&P/ASX 200 Financials Index (ASX: XFJ) also underperformed on Friday, dumping 1.22%.

Let’s take a closer look at what might be weighing on the IAG share price today.

Inflation and reinsurance costs pressure IAG

The IAG share price is in the red after the company’s management outlined the new financial year 2023 guidance and flagged ongoing weights impacting its bottom line.

As previously announced, IAG expects to post mid-to-high single-digit growth in gross written premium this fiscal year. Its reported insurance margin is tipped to come in at between 14% and 16%.

Today, Hawkins said the company’s upcoming results would benefit from the pre-tax $360 million reduction in the COVID-19 business interruption provision. He also noted its retention rates remained strong.

However, the insurer is once again helping Australians through natural disasters. It comes after IAG’s extreme weather claims doubled in the 2022 financial year.  

Major floods have also hit New South Wales, Victoria, and Tasmania more recently and have yet to ease in some parts.

Meanwhile, the Bureau of Meteorology warns a low-pressure system could bring more heavy rainfall to parts of Victoria, New South Wales, and Tasmania from this afternoon. That has the potential to cause further flooding.

Under the weather

Hawkins said the insurer had received around 2,000 claims from the weather event so far, adding:

Like all businesses and our customers, we continue to experience the inflation which is a key feature of the Australian and New Zealand economies. And we have seen further natural disasters.

In response to these pressures, and in anticipation of higher reinsurance costs, we have been increasing our premiums across home, motor, and our commercial insurance classes.

You will see greater earn-through of that in the second half as policies are renewed.

Hawkins concluded by addressing issues previously facing the company. He said:

Some of the issues we’ve been forced to confront have been challenging for us. We’ve had to re-evaluate how we run and manage our company.

We’re confident those issues are behind us. We’ve fundamentally improved how we manage risk and I’ve set up my leadership team to ensure there is clear accountability going forward.

IAG share price snapshot

Fortunately, today’s tumble hasn’t been enough to send the IAG share price into the longer-term red.

The stock has gained 6% through 2022 so far. Though, it is 6% lower than it was this time last year.

Meanwhile, the ASX 200 has fallen 12% year to date and 10% over the last 12 months.

The post Why did the IAG share price get smashed today? appeared first on The Motley Fool Australia.

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More reading

• Here are the 3 most heavily traded ASX 200 shares on Friday
• Why have Medibank shares just been suspended from trading on the ASX?
• Buffett: Why a market crash can be an investor’s best friend
• Yes, buy ASX shares now. Don’t wait like everyone else: expert
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Insurance Australia Group Limited. 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’s proving to be a bit of a sad end to the trading week for ASX shares and the S&P/ASX 200 Index (ASX: XJO) this Friday. Backing up yesterday’s losses, the ASX 200 has lost another 0.82% so far this session, dragging the index back down to around 6,675 points.

But let’s not let that cast a shadow over the upcoming weekend. So instead, it’s time to take a look at the shares currently topping the ASX 200’s share trading volume charts, according to investing.com.

The 3 most traded ASX 200 shares by volume this Friday

Pilbara Minrals Ltd (ASX: PLS)

Our first share to take stock of today is ASX 200 lithium star Pilbara Minerals. Pilbara has had a noteworthy 12.1 million shares traded so far this Friday. There’s been no news from the company itself that might explain this volume.

However, the Pilbara share price is bucking the mood of the broader markets and has added a healthy 1.6% this session to $5.05 a share. Perhaps some love from ASX brokers is helping here. Either way, this market defiance has probably sparked these kinds of volumes.

South32 Ltd (ASX: S32)

Next up we have ASX 200 mining company South32. So far today, a decent 14.13 million South32 shares have been dug up and sold to a new home. Here we have another ASX share that is enjoying some rare gains this Friday.

At present, the South32 share price has inched up by 0.54% to $3.69 a share. We haven’t had any news out from the company either, save for a routine share buyback notice. This, along with the gains we see, is the likely explanation for this elevated trading volume.

Core Lithium Ltd (ASX: CXO)

Last but certainly not least in terms of volume, we have another ASX 200 lithium stock in Core Lithium. Today’s session has seen a large 22.01 million Core Lithium shares swap hands as it currently stands. Core has posted a notice today of its 2022 annual general meeting.

Perhaps this has gotten investors excited (although it might also be rising on Pilbara’s coattails). Nevertheless, Core Lithium shares have bounced a healthy 2.26% to $1.36 each at the time of writing after a shaky start this morning. That might be the explanation we are looking for in terms of the high volume of shares flying around.

The post Here are the 3 most heavily traded ASX 200 shares on Friday appeared first on The Motley Fool Australia.

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More reading

• Brokers name 5 ASX lithium shares to buy now
• Why have Medibank shares just been suspended from trading on the ASX?
• Is the Core Lithium share price at risk following Tesla’s disappointing earnings?
• If I’d bought $5,000 of Pilbara Minerals shares at the end of June, here’s how much I could bank right now
• Buffett: Why a market crash can be an investor’s best friend

Motley Fool contributor Sebastian Bowen 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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It has been another busy week for Australia’s top brokers. This has led to the release of a large 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:

BHP Group Ltd (ASX: BHP)

According to a note out of Morgans, its analysts have retained their add rating on this mining giant’s shares with a trimmed price target of $47.00. This follows the release of a mixed quarterly update from the Big Australian. One positive, though, was that BHP has reaffirmed its production and cost guidance for the full year despite the tough operating environment. Overall, the broker remains positive and continues to rate BHP as one of the best options in the sector. The BHP share price is trading at $38.11 today.

Santos Ltd (ASX: STO)

A note out of Citi reveals that its analysts have retained their buy rating and $10.70 price target on this energy producer’s shares. Citi was pleased with Santos’ performance during the third quarter and notes its strong realised prices. Overall, the record result was ahead of expectations and its strong free cash flow was a major highlight. The Santos share price is fetching $7.61 on Friday.

Transurban Group (ASX: TCL)

Analysts at JP Morgan have upgraded this toll road operator’s shares to an overweight rating with a $15.00 price target. According to the note, the broker has been pleased to see that traffic continues to increase on the company’s roads. This bodes well for its earnings and distributions, particularly given how toll prices are increasing. The Transurban share price is trading at $12.40 this afternoon.

The post Brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

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More reading

• Broker names the ASX dividend shares to buy now
• Here are the top 10 ASX 200 shares today
• Here’s what Goldman Sachs is saying about the BHP share price after the miner’s update
• ASX dividend shares ‘likely to remain attractive’ despite rising bank deposit rates: expert
• Santos share price lifts following US$1 billion quarter

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.

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The Bitcoin (CRYPTO: BTC) price is trading right about where it was this time yesterday, at US$19,112 (AU$30,463).

The world’s first and top-valued crypto remains down 60% in 2022, and down some 72% from the all-time highs BTC reached on 10 November last year.

With the Bitcoin price down so dramatically so quickly, it’s little wonder that many retail investors have lost their appetite for the digital token and its fellow altcoins.

But, as Justin Arzadon, head of digital assets at Betashares, pointed out to Livewire, institutional investor interest remains relatively robust. And that could bode well for Bitcoin and the wider world of cryptos in the year ahead.

Why institutional investors could spur the Bitcoin price into a new bull run

Citing data from Cointree, Arzadon noted that retail investor sentiment in crypto assets, based largely on the Bitcoin price and “other large cryptocurrencies”, is in the “extreme fear” part of Cointree’s Fear and Greed Index.

But he said the smart money, or institutional funds, aren’t nearly as timid.

“Looking at the price and action of Bitcoin and the rest of the crypto market over the last year, it looks like the institutional money is following Warren Buffett’s advice, ‘Be fearful when others are greedy, and greedy when others are fearful,’” he said.

Stressing there are no assurances in life, let alone when it comes to crypto investors hoping the Bitcoin price will soar to new heights, Arzadon added:

Some of the largest institutional managers in the world are getting involved in, or deeper into, the crypto economy. This makes me believe that they are not only going to be major beneficiaries of the next bull run, but they are also laying down the infrastructure that could help make it happen.

Institutional adoption has arrived

Global asset manager BlackRock is just one of the major firms to enter the crypto space in 2022.

Blackrock announced the launch of its Bitcoin private trust for its institutional clients in early August. That gives ‘the smart money’ direct exposure to the movements in the Bitcoin price.

According to Blackrock:

Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities.

Bitcoin is the oldest, largest, and most liquid cryptoasset, and is currently the primary subject of interest from our clients.

So, when might investors expect the next bull run in the Bitcoin price?

“For the next bull run to occur, I have been adamant that three things are needed. Adoption from both institutional and retail segments, regulatory clarity, and real-world use cases,” Arzadon said.

“The use-cases continue to develop, regulations are slowly being put into place and are expected to become clearer in 2023-24, but it is evident that institutional adoption has arrived,” he added.

The post Could the next bull run be coming for the Bitcoin price? appeared first on The Motley Fool Australia.

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More reading

• How has the Bitcoin price responded to the network’s latest hiccup?
• Crypto surges: Is now the time to buy Bitcoin and Ethereum?
• I’ve already made 158% on Bitcoin. Here’s why I keep holding
• Is Google now joining the crypto party following its latest move?
• Why is the Bitcoin price outperforming for Australian crypto investors?

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 positions in and has recommended Bitcoin. The Motley Fool Australia has positions in and has recommended Bitcoin. 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 Wesfarmers Ltd (ASX: WES) share price is trading in the red today, currently swapping hands at $43.71 apiece.

Zooming out, and Westfamers shares have been on a downward trajectory across the past 12 months.

After testing 52-week highs of approximately $60 per share roughly five to six times in late FY21, the share broke away to the downside, as seen on the chart below.

It has continued on this path since and continues to drift towards the company’s 52-week low of $41.16 on 17 June.

Wesfarmers ready for a comeback?

In order for a reversal in the Wesfarmers share price from the long-term downtrend, there needs to be support from both fundamental factors and valuation.

Wesfarmers currently trades at a price-to-earnings (P/E) ratio of 21.2 times, or 20.5 times on a forward P/E basis.

Both of these are in front of the GICS Consumer Cyclical median scores of 20.7 times and 16.5 times, respectively.

In addition, it is priced at almost 17.5 times cash from operations, and this looks to reduce to 12.2 times by the next 12 months based on consensus data from Refinitiv Eikon.

What this means for the Wesfarmers share price we won’t know for some time. However, there look to be some challenges ahead at the valuation level.

Brokers are constructive on the Wesfarmers share price too, with six analysts rating the share a buy, per Refinitiv. This is coupled with a consensus price target of $49.07, suggesting a small amount of upside from its current market price.

In particular, those at investment house Morgans reckon Wesfarmers is set to deliver strong upside growth over the next year or so.

“Wesfarmers possesses the highest quality retail portfolios in Australia with strong brands including Bunnings, Kmart and Officeworks,” it said in a recent note.

“The company is run by a highly regarded management team and the balance sheet is healthy.”

Those at Morgans also reckon there is good reason to enter or size up a position on this volatility.

“We see the pullback in the share price as a good entry point for longer-term investors,” it added.

Alas, whether the company is a buy or not remains to be seen. However, time will certainly tell.

In the meantime, the Wesfarmers share price is down 21% in the past year and 26% this year to date.

The post Is the Wesfarmers share price due to make a comeback in FY23? appeared first on The Motley Fool Australia.

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More reading

• Wesfarmers shares could be one of the best options on the ASX 200: Morgans
• These ASX 200 dividend shares have been named as buys by analysts
• Top ASX dividend shares to buy in October 2022
• Is the Wesfarmers share price in the buy zone ahead of this month’s AGM?
• Down 9% in a month, is the Wesfarmers share price a bargain buy for dividends?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. 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 AMP Ltd (ASX: AMP) share price might be giving the company’s latest update a lukewarm reception, but it’s still better than what it could be.

In afternoon trade, shares in the wealth management business are swapping hands for $1.165 — roughly flat with yesterday’s closing price. However, the AMP share price did sneak a little higher, reaching $1.175, earlier in the day.

The paltry performance possibly isn’t worth writing home about. Though, it’s a darn sight better than the 0.48% fall put on by the S&P/ASX 200 Index (ASX: XJO) today.

Let’s unpack the announcement helping AMP shares outperform on Friday.

What’s helping the AMP share price today?

While most ASX financial shares are getting the boot today, the AMP share price is catching a bid from investors.

It appears the market is content with the figures posted by AMP in its third-quarter assets under management (AUM) and cash flows update.

According to the release, AMP experienced positive inflows and growth across much of its operations. For example, the company’s banking division — AMP Bank — recorded growth of 1.4 times above system. In turn, the bank’s loan book increased by $0.6 billion to $23.3 billion despite market headwinds.

Furthermore, the company’s financial platform offerings — categorised under the ‘Platforms’ division — witnessed net cash inflows of $363 million during the quarter. Notably, the ‘North’ platform captured $483 million in inflows from independent financial advisers — increasing by 45% from the prior corresponding period.

Another improvement was the reduction in net cash outflows from the Australian Wealth Management (AWM) segment. Specifically, net outflows were reduced to $0.8 billion from $1.9 billion in the prior corresponding period.

However, not all third-quarter numbers were as rosy. For example, assets under management through AWM tumbled to $121.4 billion, down from $125.1 billion. Nonetheless, it looks like investors aren’t too worried about the decrease considering the AMP share price gain.

What did management say?

AMP chief executive, Alexis George, provided her commentary on the Q3 numbers, stating:

We have made strong progress in the third quarter, which is reflected in the cashflows we’ve announced today. While challenging investment markets continued to have an impact on assets under management, we have seen a significant improvement in our cashflows as more customers choose to join or stay with AMP.

Additionally, George dished out some points on what AMP is up to so far in the fourth quarter:

In the fourth quarter, we have already launched our digital mortgage and unique-to -market retirement offer. These are important strategic deliverables that will support AMP’s longer-term growth and deliver on our purpose to help people create their tomorrow

The AMP share price is up 16.5% so far in 2022. For reference, this exceeds the performance of all of the big four banks.

The post Why is the AMP share price beating the ASX 200 today? appeared first on The Motley Fool Australia.

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More reading

• This is what will get ASX shares rising again early 2023: economist
• Is the company’s buyback helping boost the AMP share price?
• ASX investors, STOP reading economic forecasts: economist
• Under pressure: 3 reasons to be bullish on ASX shares
• Why is AMP doing a share buyback but not paying dividends?

Motley Fool contributor Mitchell Lawler 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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The Whitehaven Coal Ltd (ASX: WHC) share price is well in the green today.

Whitehaven shares are rising 6.33% and are currently trading at $10.67. For context, the S&P/ASX 200 Index (ASX: XJO) is down 0.48%

Let’s take a look at why this ASX coal share is having such a good day.

What’s going on

Whitehaven is not the only ASX coal share lifting today. The New Hope Corporation Limited (ASX: NHC) share price is up 7.4%, while Yancoal Australia Ltd (ASX: YAL) shares are 5.52% ahead.

The coal price is up 0.24% to US$391.95 a tonne, Trading Economics data shows. Coal prices are high amid tight supplies and increased global demand amid the European energy crisis.

News on the coal price from Yancoal last night may also be providing ASX coal shares, including Whitehaven, with a boost. “Record high coal price” was a key driver in Yancoal’s financial performance. Yancoal’s average realised price of coal surged 211% to $364 a tonne.

On Wednesday, Whitehaven delivered quarterly results. Production in the September quarter fell 37% compared to the June quarter. However, coal prices hit another record during the quarter.

Whitehaven achieved a record average coal price of $581 a tonne.

Commenting on the coal price, CEO Paul Flynn said:

With demand for high-quality coal continuing to outstrip global supply, coal prices set another record in the September quarter and continue to be well supported.

Whitehaven is predicting it will produce 20Mt to 22Mt in FY23 and achieve 17.5Mt to 18.5Mt of managed coal sales.

Macquarie has recently placed a $12 price target on Whitehaven shares. Analysts are also tipping Whitehaven to deliver dividends of $1.07 per share in FY 2023 and $1.25 a share in FY 2024.

Whitehaven Coal share price snapshot

The Whitehaven Coal share price has soared 310% in the year to date and 260% in the past 12 months.

For perspective, the ASX 200 has fallen nearly 10% in the past year.

Whitehaven has a market capitalisation of $9.3 billion based on the current share price.

The post Why is the Whitehaven Coal share price smashing it on Friday? appeared first on The Motley Fool Australia.

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More reading

• Why Adairs, Life360, Siteminder, and Whitehaven Coal shares are racing higher
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• These 2 ASX 200 shares have turned a $10,000 investment into $35,000 in 2022
• Whitehaven Coal share price sinks 7% on Q1 disappointment
• Why Adbri, Rio Tinto, St Barbara, and Whitehaven Coal shares are dropping today

Motley Fool contributor Monica O’Shea 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 Macquarie Group Limited. 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 S&P/ASX 200 Index (ASX: XJO) is on track to end the week with a decline. In afternoon trade, the benchmark index is down 0.5% to 6,697.1 points.

Four ASX shares that are not letting that hold them back today are listed below. Here’s why they are racing higher:

Adairs Ltd (ASX: ADH)

The Adairs share price is up 4% to $2.00. The catalyst for this has been the release of the homewares retailer’s trading update at its annual general meeting. Management advised: “Trading in the first 16 weeks of FY23 remains in line with our plan and is consistent with the guidance we provided to the market in August.”

Life360 Inc (ASX: 360)

The Life360 share price is up 5% to $6.19. This morning this location technology company announced increases to the price of its subscriptions. The good news is that test price increases delivered positive results and thus management has decided to make those changes permanent. And while Life360 suspects that some level of customer churn will be inevitable from the change, testing to date has pointed to this being within management’s target of a 10% reduction in retention.

Siteminder Ltd (ASX: SDR)

The Siteminder share price is up almost 3% to $3.00. Investors have been buying this hotel technology company’s shares after it released its quarterly update and revealed a 31.8% increase in annualised recurring revenue to $144.95 million. Management notes that transaction revenue growth continues to significantly outperform the travel recovery, reflecting increasing customer uptake and usage rates across all products.

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven Coal share price is up over 6% to $10.67. This morning this coal miner announced the completion of its on-market share buyback. Whitehaven Coal bought back a total of 103.3 million shares at an average price of $5.69 per share for a total cost of $587.9 million. Combined with the dividends paid in FY 2022, this brings the company’s total capital return to over $1 billion.

The post Why Adairs, Life360, Siteminder, and Whitehaven Coal shares are racing higher appeared first on The Motley Fool Australia.

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More reading

• Why is the Whitehaven Coal share price smashing it on Friday?
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• 2 beaten down ASX shares with plenty of upside potential: analysts
• These 2 ASX 200 shares have turned a $10,000 investment into $35,000 in 2022
• Whitehaven Coal share price sinks 7% on Q1 disappointment

Motley Fool contributor James Mickleboro has positions in Life360, Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ADAIRS FPO, Life360, Inc., and SiteMinder Limited. The Motley Fool Australia has positions in and has recommended ADAIRS FPO. 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 Pro Medicus Limited (ASX: PME) share price is up 1% to $51.83 at the time of writing.

The ASX healthcare share got a bit of a plug from two analysts today. Let’s see what Hayborough Investment Partners’ Ben Rundle and Medallion Financial’s Michael Wayne had to say.

Pro Medicus share price a buy: experts

In a Livewire interview, Rundle said the ASX 200 darling is a buy despite its eye-watering valuation.

Westpac data shows the Pro Medicus share price is trading on a price-to-earnings (P/E) ratio of 105.18.

That’s almost five times the healthcare sector of 21.83 and seven times the broader market P/E of 14.79.

In its FY22 full-year results released in August, Pro Medicus reported a net profit of $44.4 million, up 44.1% on FY21, and no debt.

Rundle said:

Look, I recognise that it’s on an eye-watering valuation, but it’s just such a high-quality business. The quality of its earnings is fantastic, it has a fantastic management team, and a great product.

It’s really hard to bet against this company. It has all the qualities of a compounder, and therefore I think it keeps compounding.

Wayne added his buy endorsement, too:

It’s one that we’ve held for some time and continue to like it. You look at the balance sheet, all those key metrics are trending in the right direction — revenue, earnings, margins, and return on equity (ROE).

They developed a very good product, and have been able to go out and market it very well and win very high-quality contracts. A lot of their contracts are six to eight years. A lot of those have been renewed and rolled over.

They’ve also got a good backlog of inquiries for different tenders.

What’s next for Pro Medicus?

Wayne said he was keeping an eye on the expansion of Pro Medicus and the take-up of its product.

He explained:

One concern that we might have just to be careful of long term is they’ve targeted the academic hospitals in the US (private academic hospitals). They’ve been very successful there. A lot of those hospitals aren’t as cost-conscious as some of the others, so they might struggle to have as much of an impact on the broader hospital network in the US.

However, it’s a proven product. It’s very, very technologically advanced and can save a lot of time within those hospital operations.

Pro Medicus announced yesterday that it will hold its annual general meeting on 21 November.

The post This ASX 200 share has ‘all the qualities of a compounder’: experts appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Pro Medicus Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Pro Medicus Ltd. The Motley Fool Australia has positions in and has recommended Pro Medicus Ltd. 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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Actively investing in ASX shares can be quite the rollercoaster. 

There are good days, bad days, and many days where you’re better off not checking your brokerage account. But that’s all part of the ride.

In no particular order, here are five reasons why I love investing in ASX shares.

Being a part-owner of everyday businesses

For me, one of the best parts of investing in ASX shares is being able to own stakes in companies that we regularly interact with in our daily lives.

Walking down the street or browsing the internet and being greeted with brands that belong to publicly-traded companies we can own a slice of.

Think Wesfarmers Ltd (ASX: WOW), Telstra Corporation Ltd (ASX: TLS), and REA Group Limited (ASX: REA).

As someone who’s constantly Googling the parent company of brands I come across and wondering if they’re public, I love that I’m able to easily invest in a vast range of well-known companies around the globe.

Wealth-building potential

For many, investing is often seen as a means to an end. Personally, I love the process and journey itself. But there’s no denying that my overarching goal is, of course, to build wealth.

And history has shown that the ASX share market is one of the best places to do just that. 

Vanguard data shows that over the past 10 years, the S&P/ASX All Ordinaries Total Return Index (ASX: XAOA) has achieved an average return of 9.4% per annum. Compounded over decades, this can spin up a sizeable amount of money.

The magic of compound interest

Speaking of compounding, the magic of compound interest never ceases to amaze me. 

Albert Einstein famously called it the eighth wonder of the world. Play around with a compound interest calculator and you’ll start to see where he was coming from.

The basic premise is that you’re earning interest on interest (or returns on returns), which helps your money to grow at an accelerated rate.

Compounding investment returns can see your portfolio experience exponential growth. 

Take a $50,000 portfolio, for example, achieving average returns of 5% per year. In the first year, this portfolio generates $2,500, which is 5% of $50,000. But in year two, we’re now generating 5% returns on a larger balance of $52,500.

And so on and so forth, to the point where after 30 years, this hypothetical portfolio would have turned into $216,000. All without adding an extra cent.

Ongoing learning

It’s a bit nerdy, I know, but I love the aspect of learning that comes with investing in ASX shares. Learning about the ins and outs of individual businesses, business models, industries, you name it.

As someone who’s always been fascinated by businesses and brands, I enjoy getting into the weeds of a potential investment idea and discovering what makes a business tick.

With thousands of public companies operating in dynamic industries that are constantly evolving, the learning never stops. 

It’s always interesting

Investing is always interesting, and no day is ever the same. Whether it be a takeover offer, a big contract win, a poor trading update, or a management reshuffle, there’s never a dull moment.

Plus, given that there are two sides to every transaction – a buyer and a seller – there are always bound to be people camping on either side of the bullish and bearish fences.

With this comes the opportunity to make money, but so too the opportunity to be humbled.

The post 5 things I love about investing in ASX shares appeared first on The Motley Fool Australia.

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More reading

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Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended REA Group Limited. 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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