There are a number of ways that Australians can invest in ASX shares for passive income. We can invest in stocks in our names, through a company, a trust, superannuation and so on.

Investing for passive income through superannuation makes sense to me for various reasons. I believe the low tax rate is a key benefit.

Remember that the net income we can use for spending is what we receive from our investments after tax. A full-time working Australian may lose a third (or more) of the received passive income to tax – it depends on what tax bracket they’re in.

Due to the above, Australians can benefit from superannuation because of the lower tax rate.

Super has a lower tax rate in the accumulation phase compared to normal individual tax rates for a full-time earner. In retirement, the income tax rate could be as low as 0%.

Each Australian’s household tax position is different, so we’ll just look at targeting a certain passive income level, without talking about tax for the rest of the article.

How much is needed in superannuation for $6,500 of monthly passive income?

Receiving $6,500 per month in dividends translates into $78,000 annually. I’d bet most Australians would love to receive that level of dividends each year without having to do any further work for the money.

One of the main questions Aussies need to think about is what sort of investments they want to own and what dividend yield comes with that investment.

For example, a portfolio with a dividend yield of 6.5% can be half the size of a portfolio with a dividend yield of 3.25% when targeting $78,000 of yearly income (or any other income goal).

This means that for a 6.5% yield, the portfolio would need to be $1.2 million, whereas it would need to be $2.4 million at a 3.25% yield.

Using a middle value, a 5% dividend yield would require a $1.56 million portfolio to generate an average of $6,500 in monthly passive income.

The final dividend yield I’ll note is 4%. It would take a $1.95 million portfolio value to unlock $78,000 of annual dividends.

The types of ASX dividend shares I’d look at

There are plenty of ASX dividend shares that superannuation investors can use to invest in superannuation, in their personal name, or through other structures.

Some of the stocks with lower yields that I’d look at are Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), L1 Long Short Fund Ltd (ASX: LSF), Lovisa Holdings Ltd (ASX: LOV), Wesfarmers Ltd (ASX: WES) and APA Group (ASX: APA).

Turning to investment options with higher dividend yields, I’d consider names like Future Generation Australia Ltd (ASX: FGX), Telstra Group Ltd (ASX: TLS), WCM Quality Global Growth Fund (ASX: WCMQ), Centuria Industrial REIT (ASX: CIP), Rural Funds Group (ASX: RFF), Charter Hall Long WALE REIT (ASX: CLW), Dexus Industria REIT (ASX: DXI), PM Capital Global Opportunities Fund Ltd (ASX: PGF) and Hearts and Minds Investments Ltd (ASX: HM1).

The post How much is needed in superannuation to target a $6,500 monthly passive income? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Future Generation Australia, Hearts And Minds Investments, L1 Long Short Fund, Rural Funds Group, Washington H. Soul Pattinson and Company Limited, and Wcm Quality Global Growth Fund. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Apa Group, Rural Funds Group, Telstra Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Lovisa and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Australian investors continue to funnel billions of dollars into some of the ASX’s most popular exchange-traded funds (ETFs), with Vanguard ETFs and Betashares dominating many portfolios.

For investors building a portfolio for the long haul, these funds can provide a simple way to gain exposure to hundreds of companies. Vanguard Australian Shares Index ETF (ASX: VAS) and BetaShares Australia 200 ETF (ASX: A200) target the local market, while Vanguard MSCI Index International Shares ETF (ASX: VGS) and BetaShares Nasdaq 100 ETF (ASX: NDQ) give investors access to overseas markets.

But which funds have delivered the goods?

VAS: the Australian market workhorse

The top Vanguard ETF offers exposure to the 300 largest companies listed on the ASX, providing investors with a straightforward way to own a slice of corporate Australia.

Its recent performance has been underwhelming, falling around 3% over the past month and 1% over 12 months. But short-term performance isn’t necessarily the main attraction.

VAS provides broad exposure across Australian industries and a relatively attractive income stream. Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP) are among its largest holdings, each representing more than 10% of the portfolio.

The fund’s dividend yield is around 3.7%, although investors should remember that Australian equities are heavily concentrated in financials and resources.

A200: low-cost Australian exposure

BetaShares Australia 200 ETF (ASX: A200) offers a similar proposition to the Vanguard ETF VAS, tracking the 200 largest Australian companies.

It has also struggled recently, down around 3% over the past month and 1% over 12 months.

Where A200 really stands out is cost. Its management fee is just 0.04%, while funds under management have climbed to around $11 billion.

Like VAS, its largest holdings include CBA and BHP, so investors face a similar concentration risk.

For a low-cost Australian core holding, however, A200 remains difficult to overlook.

VGS: taking the portfolio global

VGS tackles one of the biggest drawbacks of an Australia-only portfolio: concentration.

The Vanguard ETF provides exposure to developed international markets and has returned around 8% over the past year.

The US accounts for a significant portion of the portfolio, with technology heavyweights including Apple Inc (NASDAQ: AAPL) and Nvidia Corp (NASDAQ: NVDA) among its largest holdings, each representing more than 5% at the time of writing.

That international diversification opens the door to industries and companies that have a much smaller presence on the ASX.

NDQ: the growth bet

If A200 is the steady option, ASX: NDQ is the higher-octane alternative.

NDQ has gained around 11% over one year and an impressive 75% over five years, powered by its exposure to technology and other US growth companies.

Nvidia and Apple are among its biggest holdings, while the fund’s 0.48% management fee is considerably higher than the 0.18% that Vanguard ETF VGS charges.

After such a powerful run, the question for investors is whether they’re buying tomorrow’s growth or yesterday’s winners.

Foolish takeaway

There isn’t one obvious winner. A200 has the cost advantage, VAS offers broad Australian exposure, VGS provides greater diversification, while NDQ has delivered the strongest growth.

For long-term investors, the better choice may depend less on picking a winner and more on combining complementary ETFs.

The post Vanguard ETFs vs. Betashares ETFs: Who’s coming out on top? appeared first on The Motley Fool Australia.

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• If I invest $10,000 in BHP shares, how much passive income will I receive in 2027?
• How much superannuation is needed to target $5,500 per month in passive income?
• My top ASX passive income stocks for the next 10 years

Motley Fool contributor Marc Van Dinther has positions in BHP Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, BetaShares Nasdaq 100 ETF, and Nvidia. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Apple, BHP Group, Nvidia, 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.

Shares in Lovisa Holdings Ltd (ASX: LOV) have fallen about 20% since the company reported its full-year result, creating a buying opportunity, according to the team at UBS.

UBS has released a new research note on the company with a bullish share price target, which I’ll get to shortly.

First, let’s have a look at Lovisa’s full-year results.

Profit and revenue heading in the right direction

The jewellery retailer boosted total revenue 17.6% to $938.8 million, while comparable store sales were up 2%.

The company opened 160 new stores during the year, to have 1136 at the end of June.

Net profit came in at $95.6 million, up 10.7%, while the dividend was increased 22.2% to 33 cents per share.

Lovisa Chief Executive Officer John Cheston said of the result:

Lovisa has once again been able to deliver strong global sales and profit growth, with the highlights being continued growth in the Americas and Europe and another exceptional Gross Margin performance. I would like to share my appreciation to the global team for their hard work in delivering these outstanding results and continuing the global momentum of the business.

Lovisa said its ongoing focus on the quality of the store network resulted in 43 underperforming stores being closed and 12 relocations.

The company added:

We will continue to focus on store profitability and where landlords don’t provide a profitable rent we will take action on stores not delivering to required levels of return on investment. With a footprint now in over 50 markets and increased support structures in place we are well positioned to continue our global rollout across both existing and new markets. We continue to focus on opportunities for expanding both our physical and digital store network, with structures in place to drive this growth in existing and new markets and formats, with a long new store runway supporting continued store rollout momentum. Our balance sheet remains strong with available cash and debt facilities supporting continued investment in growth.

Lovisa shares looking cheap

UBS said with the share price having weakened, the risk-reward for the shares “is now attractive and we upgrade our rating from neutral to buy”.

UBS added:

LOV enjoys significant store growth potential assisted by a consistent format across markets while leveraging a low ticket price and socialisation by a predominantly youth consumer base, typically a stronger consumer cohort. Store growth, the key EBIT driver, was strong in FY26 (160 gross, 12 relocations, 43 closures) with this expected to continue in FY27.

UBS has a price target of $28 on Lovisa shares compared to $23.07 at the time of writing.

Lovisa is valued at $2.4 billion.

The post What sort of upside is UBS predicting for Lovisa shares? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• 33 ASX shares going ex-dividend next week
• How much is needed in superannuation to target a $70,000 annual passive income?
• How much do I need to retire on $80,000 a year at 50?
• 2 top ASX shares to buy and hold for the next decade

Motley Fool contributor Cameron England 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 Lovisa. The Motley Fool Australia has recommended Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.