Category: Stock Market

With so many shares to choose from on the ASX, it can be hard to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

CSL Limited (ASX: CSL)

According to a note out Macquarie, its analysts have retained their outperform rating but trimmed their price target on this biotherapeutics company’s shares to $325.00. While Macquarie suspects that near-term plasma collections will be softer than hoped, it isn’t enough to change its positive stance. The broker also reminds investors that CSL is working on a new technology that aims to improve plasma yields. This could be a big boost to earnings if everything goes to plan. The CSL share price is trading at $254.67 today.

Domino’s Pizza Enterprises Ltd (ASX: DMP)

A note out of UBS reveals that its analysts have upgraded this pizza chain operator’s shares to a buy rating but slashed the price target on them to $120.00. Although UBS has downgraded its earnings estimates to reflect a softer than expected performance during the first half, it remains positive on its long term outlook. In addition, the broker sees enough value in its shares even after cutting its price target to support its buy rating. The Domino’s share price is fetching $103.24 this afternoon.

REA Group Limited (ASX: REA)

Analysts at Citi have retained their buy rating but cut their price target on this property listings company’s shares to $166.00 following its first half update. Citi was pleased with its first half performance and is expecting more of the same in the second half thanks to listing volume growth. And while there are concerns that rate increases could cool the housing market in FY 2023, Citi still expects growth from the core business. The REA share price is trading at $138.54 on Monday.

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

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. The Motley Fool Australia has recommended Dominos Pizza Enterprises Limited and REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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It has certainly been a rough day so far for the Magellan Financial Group Ltd (ASX: MFG) share price this Monday. At the time of writing, Magellan shares are down a nasty 11.37% at $16.41. Although they dipped as low as $16.14 earlier this morning. Magellan hasn’t seen these kinds of share prices since late 2014.

The fund manager is now down a depressing 78% from its all-time high of over $73 a share that we saw back in early 2020.

As we covered this morning, this dramatic slide seems to be the result of the announcement earlier today that Magellan’s co-founder, chair and chief investment officer (CIO), Hamish Douglass, has “requested a period of medical leave to prioritise his health”.

Mr Douglass has been under a lot of scrutiny over the past year or so as Magellan’s flagship Magellan Global Fund (ASX: MGF) has struggled with chronic underperformance. The loss of the company’s largest funds management mandate late last year, as well as news of Mr Douglass’ divorce, hasn’t helped matters.

But Magellan has brought in the big guns to account for the absence of Mr Douglass. Douglass’ replacement, the company announced this morning, will be none other than Chris Mackay.

So who is Chris Mackay, and can he be the white knight that Magellan might need?

Magellan brings in Chris Mackay to fill Hamish Douglass’ boots

Remember how we described Hamish Douglass as Magellan’s co-founder? Well, Chris Mackay is his fellow Magellan co-founder. He also chaired Magellan, and acted as CIO, from its inception in 2006 until 2012.

Since then, he has chosen to concentrate his efforts towards managing MFF Capital Investments Ltd (ASX: MFF). MFF was the old Magellan Flagship Fund that has carved out its own path in recent years, despite the remaining links with Magellan. MFF Capital is a listed investment company (LIC) that invests in a similar fashion to some of Magellan’s other funds. It also focuses primarily on the United States markets, and has companies like Amazon.com Inc (NASDAQ: AMZN) and Visa Inc (NYSE: V) among its largest holdings.

As my Fool colleague reported this morning, this won’t be too difficult a transition considering Mackay’s longstanding relationship with Magellan and since MFF and Magellan share office space.

Still, no doubt Magellan’s shareholders will be hoping for an arguably much-needed fresh start.

At the current Magellan share price, the company has a market capitalisation of $3.43 billion, with a price-to-earnings (P/E) ratio of 12.7.

The post Who is Chris Mackay, Magellan’s (ASX:MFG) new CIO? appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: ANZ disappoints, Magellan shares crushed
• Magellan (ASX:MFG) share price sinks 11% as Douglass steps down for ‘medical leave’
• Why Boral, Magellan, REA, and SEEK shares are falling today
• Are the worst-performing ASX 200 shares turnaround opportunities?
• Turning point? Magellan (ASX:MFG) posts market-beating fund returns for December

Motley Fool contributor Sebastian Bowen owns MFF Capital Investments Limited. 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 Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) is struggling today.

After posting losses of 1% earlier in the morning, the ASX 200 is currently down 0.29%.

That leaves the index down around 5% in 2022, in what’s shaping up to be a volatile year for global share markets.

Investing is getting harder

That volatility hasn’t been lost on Vimal Gor, head of alternative duration strategies at Pendal Group.

Gor, quoted by the Australian Financial Review, says that he’s been investing for almost 30 years. And “it gets harder every year“.

While bond markets have been difficult for some time, Gor said that equities’ golden run looks to be changing. “This month, the pressure was too much to bear, and higher interest rate moves finally knocked equity markets off their record highs.”

He attributes the increased volatility on the ASX 200 and global indexes to the rise of computer algorithms on the trading floor, alongside a higher percentage of retail investors dominating markets and a marked increase in passive investing.

The only free lunch in investing

So what’s an ASX 200 investor to do?

Gor said, “The answer, as always, lies in the only free lunch in investing: diversification. The more asset classes you hold, the better your outcome.”

He points to 2 emerging “key megatrends” investors should consider homing in on. Namely digitisation and decarbonisation.

Why decarbonisation?

According to Gor (quoted by the AFR):

The interest in and price of carbon have exploded. For example, CBL Markets’ GEO – the world’s first voluntary carbon offset benchmark contract – has rallied more than 900% over the past year. Although investing in carbon as an asset isn’t easy to do, it is well worth the time and effort.

Then there’s the digitisation megatrend.

Chief among that trend are cryptocurrencies and the blockchain technology that supports them.

“Yes, there is a lot of hype and risk around the crypto markets,” Gor said. “But filtering the universe is relatively straightforward and means you can invest in the coins, blockchains and protocols that are adding real value.

“Holding a diversified exposure to the largest digital assets means you can participate in the ‘digitisation of everything’ as a megatrend.”

He noted that the digitisation trend is backed by central banks and governments, with some launching digital wallets and others looking into their own central bank digital currencies (CBDCs).

Looking ahead, Gor summed it up saying, “As some asset classes die or reprice, new ones arrive to help you diversify and manage your portfolio.”

How has the ASX 200 been tracking?

ASX 200 investors likely did well last year, with the benchmark index gaining 13.0% in 2021.

Things have been tougher this year, bringing the 12 month gains for the ASX 200 down to 3.8%.

The post This is ‘the only free lunch in investing’: expert appeared first on The Motley Fool Australia.

More reading

• 3 ways to stake your claim to the $30 trillion Metaverse
• ANZ (ASX:ANZ) share price sinks as top analysts respond to its Q1 update
• CBA (ASX:CBA) share price stutters despite new fintech partnership
• Why are ASX travel shares Flight Centre (ASX:FLT), Qantas and Webjet lifting off today?
• Are ASX IPOs in for a struggle in 2022 following the boom?

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 Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

There is no shortage of high-growth trends for investors to be enamored with at the moment. Cloud computing, cybersecurity, telehealth, and even cannabis, represent sustainable double-digit growth opportunities.

Yet, some argue none of these opportunities offer the market potential of the metaverse.

An up to $30 trillion opportunity is on investors’ doorstep

Put simply, the metaverse is the next iteration of the internet. It’s a 3D virtual environment that will allow people to interact with their surroundings, as well as each other. This means an entirely new digital ecosystem will be built within the metaverse.

According to Matthew Ball, the CEO of venture capital company Epyllion, the metaverse is an opportunity with many zeroes to back it up. In speaking with Bloomberg News in November, Ball had this to say:

“Even if you have more modest expectations, precedent from the digital economy, the internet, the mobile internet, suggests that this is a $10 [trillion] to $30 trillion opportunity that will manifest in a decade or decade and a half.”

By comparison, cloud computing has been one of the top-growing industries for years, and it’s “only” expected to top $1 trillion in market size by the turn of the decade. That’s a far cry from Ball’s projection of up to $30 trillion for the metaverse by 2031 to 2036. With forecasts like this, it’s no wonder investors have been willing to pile into this hypergrowth virtual ecosystem.

But there’s no one-size-fits-all way to invest in the metaverse. Rather, there are three ways investors can stake their claim to this potential $30 trillion pie.

1. Diversify. Diversify. Diversify!

To begin with, investors can gain metaverse exposure by putting their money to work in metaverse-targeted exchange-traded funds (ETFs). The Roundhill Ball Metaverse ETF (NYSEMKT: METV), which Matthew Ball helped bring to market last year, is arguably the best example in the ETF space.

The idea behind a metaverse ETF is simple: Operating a virtual realm is going to require a lot — and I mean a lot — of working parts. There needs to be the computational power to support the metaverse, the networking and bandwidth to provide data, payments to handle virtual ecosystem transactions, hardware to allow users access to these virtual worlds, and identity security to ensure that digital assets and user identities remain protected. Mind you, this is just a small snippet of the physical and intangible needs of a massive virtual ecosystem. This means dozens of companies may play a role in supporting the metaverse.

The Roundhill Ball Metaverse ETF has 45 holdings, as of Feb. 3, with seven countries represented in the portfolio. Most importantly, the median market cap of these 45 holdings is $68 billion. In other words, the typical company being held by this ETF is going to be profitable and time-tested. While these stocks will have clear metaverse ties, there’s a really good chance these companies also have highly profitable core businesses that’ll fund metaverse research and development. Translation: You can sleep well if you choose to buy this ETF.

The one minor knock here is you’ll pay a 0.75% net expense ratio, which is a bit higher than the weighted average expense ratio for all ETFs.  But if the metaverse is everything it’s cracked up to be, a 0.75% expense ratio could be well worth it.

2. Buy individual stocks with metaverse exposure

If ETFs aren’t your cup of tea, a second way to gain metaverse exposure is to directly invest in companies with metaverse ties.

The advantage of this method is it allows you to place greater weighting on the companies you feel will outperform. Plus, with most online brokerages eliminating commission fees and minimum deposit requirements, there are no fees or commissions to purchase stocks on the major U.S. exchanges. Thus, this method can save a little money, relative to purchasing an ETF.

On the flipside, buying individual stocks will require more initial and ongoing research. Thankfully, as noted, most of the companies involved in the metaverse are already well-established.

For example, Microsoft (NASDAQ: MSFT) has a variety of ways that it can benefit from the metaverse. The company’s cloud infrastructure segment, Azure, is already No. 2 in global cloud spending. Cloud computing and storage will be necessary to handle the mountains of data and information generated within the metaverse.

Microsoft also made waves with its announced all-cash deal to buy gaming giant Activision Blizzard (NASDAQ: ATVI) for $68.7 billion last month. At the end of September, Activision had 390 million monthly active users, some of which are already playing games within virtual platforms. The Activision deal is another way Microsoft can bring people into its vision of a digital/virtual ecosystem.

3. YOLO with metaverse cryptocurrencies

For those of you with a high tolerance for risk (and reward), the third way to stake your claim in the $30 trillion metaverse is by purchasing relevant cryptocurrencies.

Whereas many of the companies associated with the metaverse are profitable and time-tested, most metaverse cryptocurrencies have only been around for a couple of years. It’s not yet clear if they’ll have the financial support or gaming interest to last for a significant length of time.

On the other hand, the two biggest players, The Sandbox (CRYPTO: SAND) and Decentraland (CRYPTO: MANA), have respective market values of $3.4 billion and $4.9 billion, respectively. If these two projects can consistently gobble up a significant portion of the capital being invested in virtual worlds, these market values could be an absolute steal.

Both The Sandbox and Decentraland have similar operating models. They’re both play-to-earn-styled games built atop the Ethereum blockchain. They allow users to purchase digital plots of land that can be upgraded or built upon to attract other users. These plots of land are stored as non-fungible tokens (NFTs), which provide immutable proof of ownership of a digital asset stored on blockchain. Whereas the ownership of in-game creations stays with the developer in traditional PC and console gaming, Sandbox and Decentraland allow users to own and monetize their own creations via NFTs.

Going the “you only live once” (YOLO) route with cryptocurrencies is effectively a bet on the metaverse being decentralized. This may well be the case. But with many established companies throwing tens of billions at the metaverse, like Microsoft, a centralized future is also a very real potential outcome. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 ways to stake your claim to the $30 trillion Metaverse appeared first on The Motley Fool Australia.

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Sean Williams has no position in any of the stocks mentioned. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Microsoft, Ethereum and Activision Blizzard. The Motley Fool Australia has recommended Activision Blizzard and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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It has been a disappointing start to the week for the Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price.

In morning trade, the banking giant’s shares were down as much as 5.5% to $25.64.

Since then, the ANZ share price has pared some of these declines but remains down 2.5% to $26.43.

What is going on with the ANZ share price today?

Investors have been selling down the ANZ share price on Monday in response to the release of its first quarter update.

Although ANZ didn’t provide the market with financials, it provided enough colour on its performance to spook investors. This includes an 8-basis points reduction in its net interest margin (NIM) and a poor performance for its Markets business in October. The latter is expected to impact its first half results.

What are analysts saying?

A number of analysts have given their opinion on the bank’s update and, as you might have guessed from the ANZ share price, they weren’t particularly positive.

Over at UBS, courtesy of The Australian, its analysts note that “the revenue picture is softer than the market has pencilled in.”

And unlike rival Westpac Banking Corp (ASX: WBC), which is aiming to cut its cost base materially in the coming years, ANZ doesn’t have the cost release opportunities to offset these softer revenues.

The team at Goldman Sachs has also responded to the result. Its analysts appear disappointed with the update but were cautiously optimistic that the remainder of FY 2022 will be stronger.

Goldman commented: “Overall the update appears softer than what is implied by our current 1H22E forecasts but a number of the areas of softness (i.e. NIMs, expenses and Markets income) appear, at this stage, largely contained to the 1Q, with performance for the remainder of FY22 likely more consistent with our expectations.”

Both brokers currently have buy ratings on the ANZ share price. Though, that could change tomorrow when they’ve had enough time to update their financial models.

The post ANZ (ASX:ANZ) share price sinks as top analysts respond to its Q1 update appeared first on The Motley Fool Australia.

More reading

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• 5 things to watch on the ASX 200 on Monday
• Hunting for ASX shares? Experts say to avoid this sector in 2022
• 2 buy-rated ASX dividend shares with attractive fully franked yields

Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. 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 Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Commonwealth Bank of Australia (ASX: CBA) share price is heading south today despite the company’s latest investment.

At the time of writing, CBA shares are treading 0.38% lower to $93.74 apiece. It’s worth noting that the bank’s shares have lost around 7% in the past month.

CBA teams up with fintech Paypa Plane

In an announcement today, Australia’s largest bank advised that it has acquired a 20% stake in Brisbane-based fintech Paypa Plane.

Founded in 2018, Paypa Plane is a digital payments provider that helps businesses request and receive digital payments from customers.

Paypa Plane uses PayTo, a new payments platform-based product to allow businesses to make real-time direct debit payments to customers.

CBA’s investment is intended to create a digital link between a business and a payer, giving more control and transparency. This means it can provide significant cost savings and cash-flow assurance to businesses, as well as in-built compliance and customer care.

CBA group executive business banking Mike Vacy-Lyle commented:

Our partnership will accelerate CBA’s delivery of PayTo for our business customers and over time, open up other new capabilities to revolutionise the payments experience for businesses and consumers.

The New Payments Platform is a significant initiative for Australia’s digital economy and has already brought the benefits of real-time payments to consumers and businesses. Today’s announcement is part of our continued investment in our payments ecosystems, and the NPP, to bring the best payments experiences to our customers.

We want to help our business customers offer quality payment experiences that delight their customers, maximise their ability to get paid, and spend less time on administration and collections…

About the CBA share price

Over the past 12 months, the CBA share price has nudged up more than 5% in value. However, year to date, the company’s shares are down more than 7% amid weak investor sentiment.

On valuation grounds, CBA is the second-largest company on the ASX with a market capitalisation of approximately $159 billion.

The post CBA (ASX:CBA) share price stutters despite new fintech partnership appeared first on The Motley Fool Australia.

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• Watch out! These 4 ASX shares have been tipped to disappoint during earnings season
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Motley Fool contributor Aaron Teboneras 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 Bruce Jackson.

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ASX travel shares are taking off today amid news a decision on international borders could be “imminent”.

Qantas Airways Limited (ASX: QAN), Flight Centre Travel Group Ltd (ASX: FLT) and Webjet Limited (ASX: WEB) shares are climbing following rumblings tourists may soon be able to enter Australia.

Let’s look at what is at play today.

Decision on international border expected

Travel shares on the ASX could be gaining today in anticipation of an announcement on Australia’s borders.

Speculation is mounting that the Federal Government will reveal early this week when it will reopen borders to international tourists.

In an interview with ABC Insiders on Sunday, Home Affairs Minister Karen Andrews said:

The next phase is to open to tourists. We need to bring those back so as soon as we can, we will be opening to international tourists – it’s imminent.

So, that is a priority for us now. And I know that the Prime Minister and I know that I have been working over the last few weeks in particular to make sure that we are ready to open to international tourists as soon as it is safe to do so. 

Further, Prime Minister Scott Morrison said the reopening will be addressed in Parliament this week. This will come as welcome news to investors in ASX travel shares. In a press conference in Sydney on Sunday, Morrison commented:

As we go into this parliamentary week, there are many important matters that we’ll be addressing. One of those we will be addressing very early on is the issue of the opening up of our international borders to international visitors again. 

On Friday, the Qantas share price surged 4% after announcing changes to its frequent flyer program. The airline will cut the number of points required to book hotels or holiday packages. Also on Friday, Qantas CEO Alan Joyce compared the West Australian border restrictions to North Korea.

In comments reported on 7 News, Joyce said.

It’s starting to look like North Korea.

It’s going to be closed indefinitely at this stage unless we have a plan to start living with COVID and opening to up the rest of the country.

However, WA Premier Mark McGowan slightly eased restrictions on Saturday, despite the border reopening remaining on hold, the ABC reported. More compassionate exemptions for people with strong WA connections or medical reasons to travel are now in place.

Travel shares gain traction

At lunchtime on Monday, Qantas and Webjet shares are up 1.64% and 1.54%, respectively.

Meanwhile, ASX travel share Flight Centre is seeing the greatest surge on the back of the news, rising 4.5%. This continues a good run for the travel agent. Flight Centre was one of the best performers last week, gaining 10%.

As my Foolish colleague James noted, investors may be optimistic the travel market recovery is on the way.

The post Why are ASX travel shares Flight Centre (ASX:FLT), Qantas and Webjet lifting off today? appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
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• Frequent flyer: what changed for the Qantas (ASX:QAN) share price today?
• Here’s why the Webjet (ASX:WEB) share price is up 10% in a week
• ‘It’s a real blow’: Flight Centre (ASX:FLT) CEO weighs in on government’s latest vax plans

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 Flight Centre Travel Group Limited and Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The stomach-churning volatility that hit our markets since the start of the year does not bode well for ASX initial public offering (IPO) hopefuls.

This view was echoed by several experts who spoke with The Australian, even though they remain divided on whether this is the time to be picking up bargains after the big sell-off.

The turn in sentiment towards new floats follows a boom in ASX IPOs in 2021. The Australian Financial Review reported 240 listings last year – the highest number in 14 years!

ASX IPOs coming off a high in 2022

Many fund managers seem to believe that the IPO market will be more subdued this year. This includes Tribeca Investment Partners portfolio manager Jun Bei Liu.

“IPO timelines will have to be pushed out,” she told The Australian.

“We’ve seen some very expensive tech stocks debut recently that have performed very poorly and that doesn’t bode well for the sector.”

Why new floats look vulnerable to sinking

While many ASX IPOs may not be in the tech index, the sharp drop in IT shares around the world is a big turnoff for would-be investors.

This is primarily because of valuations. IPO wannabes want to sell their shares at a good premium, but the derating in the market that is characterised by the tech collapse will make this very difficult.

From this perspective, venture capitalists will be reluctant to float their private companies now, according to Steve Johnson of Forager Funds.

“I think activity in that space will be dramatically curtailed,” said Johnson. “The other thing that I think it curtails is their ability to raise and burn a lot of cash.”

New ASX IPOs versus established shares

If many market darlings are now trading at more attractive valuations after the pull-back, why would investors want to back an ASX IPO given that the newbie doesn’t have the same track record as its listed rivals?

Further, many companies hitting the bourse for the first time are operating at a loss. Investors are less willing to bet on their future growth due to the uncertainty caused by the sputtering COVID-19 recovery and rising interest rates.

Is this time to buy the dip?

Perhaps a more important question for ASX investors now is whether they should be buying the dip. There is much less consensus among the experts on this question.

Liu sees “plenty of bargains” and highlighted Xero Limited (ASX: XRO) shares as an example. Another she finds interesting is the WiseTech Global Ltd (ASX: WTC) share price.

However, Johnson does not agree and warned the Wisetech share price still looks overvalued. He also issued a similar warning about the Megaport Ltd (ASX: MP1) share price.

“Megaport, on 20 times revenue, that’s just a very, very, very optimistic valuation,” he said.

“We could have a lot of our portfolio invested in this space, but I don’t want to do that until I see widespread distress.”

The post Are ASX IPOs in for a struggle in 2022 following the boom? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended MEGAPORT FPO, WiseTech Global, and Xero. The Motley Fool Australia owns and has recommended WiseTech Global and Xero. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Melbana Energy Ltd (ASX: MAY) share price is off to the races today.

Shares in the ASX junior explorer are up 24.3% at time of writing, to 4.6 cents per share.

Below we take a look at the company’s latest oil exploration update that looks to be stoking ASX investor interest.

What drilling update was announced?

Melbana Energy’s share price is surging after the company reported it had intersected a “significant oil interval” at its Alameda-1 exploration well in its Block 9 contract area onshore Cuba.

Melbana said drilling overnight reached a depth of some 3,590 metres measured depth (MD) and 3,420 metres true vertical depth (TVD). At that depth “a lithology change was detected, potentially signifying the bottom of the reservoir”.

The company decided to call total depth for its current 8.5-inch section to preserve the oil already found there. It said, “The gas behaviour in this interval was better than anticipated and there have been significant oil shows present throughout on the shale shakers and in cuttings samples.”

Melbana is now preparing to log this section for a better grasp of the encountered hydrocarbons.

Commenting on the exploration, Melbana Energy executive chairman Andrew Purcell said:

This well is not affording much chance for rest for our hard-working team here on the ground in Cuba. But no one is complaining given what this well continues to tell us. We’re all looking forward to the results of the forthcoming logging program to learn more about this extensive oil interval we’ve intersected.

Melbana Energy share price snapshot

The Melbana Energy share price has rocketed 340% over the past 12 months, compared to 3% gain posted by the All Ordinaries Index (ASX: XAO).

Buoyed by soaring energy prices, which has seen crude oil trade at 7-year highs in the New Year, Melbana Energy shares are up 120% so far in 2022.

The post Melbana Energy (ASX:MAY) share price rockets 24% on ‘significant’ oil find appeared first on The Motley Fool Australia.

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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 Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Can you put your money in nothing but boring S&P 500 index funds and grow your retirement nest egg to seven figures? The short answer is yes.

While the performance of the S&P 500 can vary dramatically from year to year, it is surprisingly consistent over multidecade periods. Depending on the exact period you’re looking at, the total return (including dividends) of the S&P 500 has historically averaged 9%-10% per year.

For our purposes, we’ll use the middle of this range — 9.5% — to keep things simple. If you’re relatively young and buy a low-cost S&P 500 index fund like the Vanguard S&P 500 ETF (NYSEMKT: VOO), it’s reasonable to expect this type of return over time.

While a gain of 9.5% in a single year might not sound thrilling, consider this: If you were to invest $65,700 in an S&P 500 index fund and averaged a 9.5% return each year, you’d have a million-dollar investment value in 30 years.

How much should you invest to reach seven figures?

Obviously, not everybody reading this has more than $65,000 just sitting around to put into an S&P 500 index fund.

With that in mind, here’s how much you should plan to invest monthly in S&P 500 index funds to retire a millionaire at age 65. If you’re relatively young, it might be less than you think.

Your Current Age	How Much to Invest Each Month
25	$216
30	$379
35	$557
40	$913
45	$1,540
50	$2,729

Data source: Author’s own calculations, using annual 9.5% compounding. Rounded to the nearest dollar.

If $1 million isn’t your goal, you can adjust these higher or lower. For example, if your goal is a $2 million nest egg, simply double the monthly savings account.

Two big caveats

No investment that can produce wealth like this is without risk and although the S&P 500 isn’t exactly a “high-risk” investment on a long-term basis, there are a couple of things to keep in mind.

For starters, in a real-world portfolio, you probably wouldn’t just invest in an S&P 500 index fund until you retire. As you get closer to retirement, your tolerance for big swings in your portfolio declines. Over the past 50 years, the S&P 500 has gained or lost as much as 37% in a single year — if you’re 65, do you really want your savings to fluctuate that much?

So, as you get closer to retirement, you’ll probably want to gradually shift some of your savings into lower-volatility (but lower-return) investments like bonds and CDs.

It’s also important to mention inflation, especially because it’s running relatively high right now. In short, $1 million in 30 years isn’t going to be the same thing as $1 million today.

However, the point is that it is certainly possible to retire a millionaire with S&P 500 index funds if you can stomach the volatility. If not, you might want to err on the side of caution and plan to invest a little extra each month to compensate for this gradual asset shift over time.

Warren Buffett’s favorite investment

Billionaire investor Warren Buffett is widely considered one of the best stock-pickers of all time but has said that low-cost index fund investing — and an S&P 500 index fund in particular — is the best way to invest for the majority of Americans. In fact, Buffett has even advised his own wife to invest her inheritance this way after he’s gone.

In a nutshell, while we wholeheartedly believe it’s possible to beat the market with individual stocks, the reality is that many people don’t have the time, knowledge, or desire to research and select stocks properly. And that’s OK. As Buffett says, “It is not necessary to do extraordinary things to get extraordinary results.”

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Are index funds all you need to retire a millionaire? appeared first on The Motley Fool Australia.

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Matthew Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool owns and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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