Interest rates are at ultra-low levels and look likely to remain that way for the foreseeable future.

As a result, I continue to believe investors would be better off putting any excess funds into the share market rather than leaving them to gather paltry interest in an account.

But where should you invest these funds? Here are three top shares I would invest $5,000 into right now:

Freedom Foods Group Ltd (ASX: FNP)

I think Freedom Foods could be worth considering for that $5,000 investment. It is a growing diversified food company with a focus on healthy eating trends. The company has been investing heavily in its future growth over the last few years and looks set to reap the rewards in the coming years. Especially given its significant lactoferrin and UHT production capacity and the insatiable demand for these products in Asia. Combined with the rest of its growing business, I believe Freedom Foods is well-positioned to grow its earnings at a strong rate over the next decade.

NEXTDC Ltd (ASX: NXT)

Another share that I would invest $5,000 into is NEXTDC. It is Asia’s most innovative Data Centre-as-a-Service provider and busy building the infrastructure platform for the digital economy. I believe this leaves NEXTDC in a very strong position to benefit from the accelerating adoption of cloud computing. This is because as cloud computing usage increases, demand for its data centre outsourcing solutions and connectivity services is likely to increase along with it. This year the company has seen a big lift in demand. So much so, it recently announced plans to build a new data centre in Sydney.

Pro Medicus Limited (ASX: PME)

Another option to consider investing $5,000 into is Pro Medicus. It is a leading provider of a full range of radiology IT software and services to hospitals, imaging centres, and healthcare groups globally. The key product in its portfolio is Visage 7. Pro Medicus’ Visage 7 technology delivers fast, multi-dimensional images streamed via an intelligent thin-client viewer. It offers users robust clinical capabilities and scales to the needs of massive organisations. Demand has been very strong over recent years, leading to strong sales and profit growth. For example, during the first half of FY 2020, Pro Medicus reported a 32.7% increase in net profit after tax to $12.1 million. Although the pandemic is likely to stifle its growth in the second half, I remain confident that its long-term potential is enormous.

More reading

• These ASX tech shares could be destined for big things thanks to cloud computing
• These ASX 200 shares are up over 40% in 2020
• Why I would buy these exciting ASX growth shares right now
• Why a buy and hold strategy for ASX shares is best
• Should you invest in super or your ASX share portfolio?

James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia has recommended Freedom Foods Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Where I would invest $5,000 into ASX shares immediately appeared first on Motley Fool Australia.

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Alternative ASX dividend shares could be a great way to boost your income during these times.

Popular ASX dividend shares like National Australia Bank Ltd (ASX: NAB), Sydney Airport Holdings Pty Ltd (ASX: SYD) and Transurban Group (ASX: TCL) have disappointed shareholders because of the coronavirus.

But alternative ASX dividend shares could be the answer. Here are three very interesting ideas:

Vitalharvest Freehold Trust (ASX: VTH)

This is an agricultural real estate investment trust (REIT) which owns berry and citrus farms in Australia. It earns fixed rental income and variable rental income from Costa Group Holdings Ltd (ASX: CGC), its tenant.

The variable rental income is a share of profit from the farms, which is an interesting time to be able to get some of the profit considering food prices are rising.

Each year Vitalharvest will pay out most (or all) of its net rental profit. The last 12 months amounts to a trailing distribution yield of 6.7%. A solid yield from the alternative ASX dividend share. The last year includes a lot of disruption, so the next 12 months could be materially better.

Duxton Water Ltd (ASX: D2O)

The water entitlement business is definitely one of those investments that could count as an alternative ASX dividend share. It’s the only share on the ASX that purely owns water entitlements.

It leases the water to farmers to ensure they get the water they need for their operations. Some of it is leased with multi-year leases, which locks in attractive water income for Duxton Water, providing good visibility.

It’s these leases that have given the Duxton Water Board the confidence to forecast that dividends can grow over the next two years with an increase every six months.

Based on the next 12 months of projected dividends, it currently has a forward grossed-up dividend yield of 6.1%.

Rural Funds Group (ASX: RFF)

Farmland is a very different asset class compared to most other investments on the ASX. Rural Funds is the biggest agricultural REIT on the ASX. It has a diverse property portfolio including cattle, almonds, vineyards, macadamias and cotton.

One of the most attractive things about Rural Funds as an alternative ASX dividend share is that it aims to increase its distribution by 4% each year. This is possible thanks to the contracted rental indexation, regular productivity investments and the occasional accretive acquisition.

Rural Funds has forecast another increase for FY21. It offers a forward distribution yield of 6%.

Which alternative ASX dividend share to buy?

Vitalharvest is an interesting idea, it may prove to be the strongest performer over the next 12 months. But for consistent dividend growth I think Rural Funds and Duxton Water would be better buys today.

More reading

• 3 safe and strong ASX dividend shares to buy right now
• 2 ASX shares I plan to hold til I’m 100
• 3 Warren Buffett ASX dividend shares to buy right now
• 3 industries that may never recover from COVID-19
• Beat falling rates with these strong ASX dividend shares

Motley Fool contributor Tristan Harrison owns shares of COSTA GRP FPO, DUXTON FPO, and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO and RURALFUNDS STAPLED. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended DUXTON FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Is there any price better than free?

I mean, seriously: Free!

Costless.

Gratis.

$0.

It has to be the best deal going around, right?

Right?

You’re onto me, aren’t you.

You know that there’s a ‘but’ coming.

A huge ‘but’.

Maybe not. Maybe…

Just kidding. You’re right. 

Free is good.

But!

Nothing is truly free. 

There’s always a catch. Or a cost. Or a trade-off.

Sure, Facebook is free. Except that in return you become the product that’s sold to advertisers. And preyed on by apps and advertisers who use what they know about you to mess with you. Exhibit A: Cambridge Analytica. Exhibit B: Targeted (fake) election ads.

Enough said.

Air is free, too. I mean, not clean air — just whatever air polluters choose to leave us with. But of course there’s a cost. You just can’t measure it, so we all, as a group, pretend it’s free to pollute. Some freedom.

And then there are free share trades.

Yet another brokerage mob is offering commission-free trades for Australians who want to trade on the US exchanges.

Free!

What could possibly go wrong?

Well, — and from here on, for the avoidance of doubt (and to placate any lawyers reading), I’m talking generically, and not about any particular current or future broker! — there’s the not-free stuff:

Like inactivity fees.

Or withdrawal fees.

There’s the often-unknown-or-hidden cost of converting your Aussie dollars to greenbacks.

What happens to your email address?

What will you be cross-sold?

Do you have to pay a subscription fee?

What interest will you lose out on by holding your cash with that broker?

Are you covered by CHESS (on the ASX) or the insurance scheme run by SIPC (in the US)?

Free isn’t quite so ‘free’ any more, is it?

Now, I’m not saying the trade-off mightn’t be worth it.

For all I know it’s still a stonking great deal.

Or maybe it’s not.

See, our brains go into meltdown when ‘free’ is mentioned.

If you don’t believe me, consider the foreign exchange mob (I can’t remember who, and I didn’t bother Googling) that markets its services as ‘no commission’.

See if you can get there before me… how could they possibly do it without fees?

Yep, by giving an inferior exchange rate. 

They’re 100% right that no fees are charged, but would you rather:

1. Pay no fees, and get $620 for your $1,000; or 

2. Get $650 for your $1,000 and pay a $10 fee for the privilege?

(Hint, if you answered #1, I have a bridge I’d like to sell you)

And if you reckon no-one would fall for such a deal, ask yourself why the FX dealer uses that pricing mechanic (and marketing strategy).

It’s not quite ‘bait and switch’, but it’s a pretty good case of misdirection, huh?

Want another example? 

I haven’t seen the ad recently, but one Big 4 bank was advertising a ‘cashback’ home loan a while back. All you had to do is sign up to their loan, and they’d throw you a few gorillas ($3,000 from memory) for the deal.

Tempted? Of course you are.

I dare say it was a pretty effective campaign.

I also bet — I’d almost guarantee — that loan had a relatively unattractive interest rate.

It’s almost certainly a dumb financial decision — get a few grand now, pay much, much more over the life of the loan.

But people did it, because our brains short-circuit really quickly on this stuff.

(If they didn’t, the Big 4 Bank and the foreign exchange company wouldn’t waste their time and money on these types of products or marketing campaigns!)

So, when someone offers you something for free, it pays to wonder why — what’s in it for them?

Again, it’s not necessarily a bad thing… but unless you know what the deal is, you’re bringing a knife to a gunfight.

And you know what? That mightn’t even be the worst of it.

Because you know what else free brokerage does?

It lowers the barriers to action… removing what economists call ‘friction’.

When you had to pay $150 to buy or sell shares, it required two things. You needed to save more money (assisting and rewarding discipline) and you needed to trade less frequently (because buying, then selling and buying something else cost $450!)

You had to be thoughtful. Careful. Diligent. Slow. 

Now?

Average holding periods have fallen precipitously. And that was before zero-dollar brokerage exploded in the USA.

If it’s costless (or close enough), then where’s the friction? Where’s the mental handbrake? Where’s the ‘Maybe I’ll think about this for a bit’ response?

Gone? Just about, yeah.

Why not buy today, sell tomorrow morning, buy something else at lunch and then sell it before the end of the day?

Why stop and think? Why be long-term when there’s just no need to.

It’s free!

Or is it?

My old man used to say ‘you get what you pay for, and you pay for what you get’. 

That’s not always true, of course, but it’s a good yardstick.

The other truism is that we value more highly that which we pay for, compared to that we get for free.

Don’t get me wrong — in general, I’m all for lower cost for investors, across the board, including fees paid to fund managers and financial planners.

But remember the examples, above.

Just because the transaction is free, doesn’t mean it doesn’t cost you anything.

For investors, the hidden costs might be the most insidious of all. The temptation to day-trade. To sell on a whim, and buy on another whim. To forget all about the value of ‘long term, buy to hold’ investing, and, hell, just break loose!

And lest you think this is only about brokerage (and I’d be happy if I’ve made you think twice), it’s only partly about that.

Mostly, it’s about the one thing that even those who accept the premise tend to underrate: the overwhelming importance of behavioural psychology.

And, for investors, behavioural finance.

A good stock pick will make you money once. Learning the principles of a good investment will make you money many times. But a thorough and increasingly instinctive understanding of behavioural finance will pay off more times in your life than you can possibly imagine.

That’s the lesson I want you to take from this, to become a better investor (and manager of your own money) by understanding how our brains instinctively work.

Then taking control, and making better decisions.

Fool on!

More reading

• ASX 200 down 0.2%: Big four banks lower and TPG announces demerger plans
• Positive signs for Australia’s jobs market as ABS data points to a recovery
• Why AP Eagers, Lendlease, Pushpay, & ResMed shares are sinking lower
• 2 ASX shares in the firing line of trade tensions with China
• Where I would invest $5,000 into ASX shares immediately

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

The post Just because it’s free, doesn’t mean it won’t cost you appeared first on Motley Fool Australia.

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