So you’re ready to invest your first $2,000 in ASX shares. Above all else, congratulations! In my opinion, far fewer Australians invest than they should. And in this low interest rate world we all live in, I think it’s more important than ever to do so.

But investing isn’t easy – it can even be likened to walking through a minefield. There are tricks and traps everywhere. That’s why most successful investors today got to where they are by learning how to avoid these mines. And perhaps by getting blown up once or twice along the way!

So with that sobering thought in mind, here are 3 things I think all investors should do before investing their first $2,000 into ASX shares.

1) Find a broker

Before you buy ASX shares, you’ll need a broker. In the past, brokers used to be someone you would call up and pay a commission to for buying shares on your behalf. Today, most brokers are more akin to the ‘eBay’ of stocks. That is, they represent an online marketplace where you can buy and sell shares.

Of course, they all still charge for the privilege, so finding one that suits your needs is important. The brokerages offered by the Big Four banks are always a good place to start. This includes something like Commonwealth Bank of Australia’s (ASX: CBA) CommSec or National Australia Bank Ltd.’s (ASX: NAB) nabtrade.

2) Work out a strategy

Investing can be a tight line to walk. You need to find enough money to invest without worrying about whether or not you’ll unexpectedly need the money within at least the next 5 years. It’s pretty awful if you’re forced to sell your shares in the middle of a market crash because your income changes or you prang your car.

So, before you start investing your first $2,000, you’ll need to work out how much you can afford to invest. This includes making sure you still have enough cash around to meet any future needs – whether they be expected or unexpected.

3) Find the right ASX shares to invest in

Many first-time investors start off by trying their hand at highly speculative shares. These might include biotech companies or small-cap miners. Not only will these investments probably not turn out well for a beginner, but they may also result in the unfortunate side-effect of putting a new investor off shares altogether. That’s why I think most new investors should start simply with something like a market-tracking index fund or a managed trust.

The Vanguard Australian Shares Index ETF (ASX: VAS) is always a solid choice. Or you could go for more internationally-focused funds like the iShares Global 100 ETF (ASX: IOO) or Magellan Global Trust (ASX: MGG).

These kinds of investments won’t make you rich overnight – but then again, most solid investments don’t aim to.

More reading

• 2 ASX growth shares I’d buy before Afterpay shares
• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• Why Kogan, NAB, Qantas, & Sydney Airport shares are racing higher
• Is today’s BHP, NAB or Afterpay share price a good investment?
• Why today might be a good day to buy NAB and Westpac shares

The post Ready to invest your first $2,000 in ASX shares? Do these 3 things first appeared first on Motley Fool Australia.

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It’s been an up and down year so far for the ASX real estate investment trusts (REITs) in 2020.

While the S&P/ASX 200 Index (ASX: XJO) is down 11.05% this year, many Aussie real estate shares have struggled.

Despite the volatility, I think there are still some good buying opportunities at current prices. Here are a couple of my favourites to check out today.

2 ASX REITs to buy with $1,000 today

I think it’s hard to ignore National Storage REIT (ASX: NSR) right now. 

National Storage specialises in self-storage units and business could be set to boom. Shares in the ASX REIT are trading at $1.84 per share – exactly where they started the year.

That’s despite a failed $1.9 billion takeover bid by a couple of private equity groups earlier this year. 

However, the current economic environment could be good for National Storage. People may be looking to downsize and lower their rental or mortgage payments as COVID-19 continues to hit the economy hard.

There could also be more relocations, as people adjust to a new remote working setup. That’s good news for self-storage facilities, as it could likely result in people looking to store some of their belongings for the time being.

Another ASX REIT that could be worth watching is Mirvac Group (ASX: MGR).

Mirvac is a diversified property developer with interests in residential, commercial and industrial real estate.

Many people have been expecting a large property crash in 2020. However, interest rates are at record lows and many Aussies are still desperate to buy.

Add in the re-opening of Aussie retail stores and offices around the country and in my opinion this ASX REIT may outperform in 2020.

Of course, nothing is certain right now. The Mirvac share price has fallen 23.52%, year to date, so investors don’t look to be convinced that earnings will be strong in August.

Foolish takeaway

These are just a couple of the ASX REITs I’ve got my eye on in 2020. REITs can provide consistent portfolio income and could be a good income option for long-term buyers.

More reading

• We’re in recession. What does that mean for investors?
• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• 3 of the best ASX 200 tech shares for your watchlist
• The Kogan share price is surging higher following another positive business update
• Is the Westpac share price too high?

Motley Fool contributor Ken Hall 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 2 ASX REITs to buy with $1,000 today appeared first on Motley Fool Australia.

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Treasurer Josh Frydenberg admitted the inevitable, on Wednesday.

Australia is in a recession.

Under the accepted definition of a ‘technical recession’, Australia would need two quarters of GDP contraction in a row.

(Don’t get me started on arbitrary labels. That’s a rant for another day.)

And Wednesday’s GDP numbers for January to March showed a decline of 0.3%.

In ordinary times, that’s the first shoe to drop, and we’d all wait to see what the April – June quarter brings, hoping madly to avoid having to use ‘the R word’.

But these aren’t ordinary times.

Everyone accepts that coronavirus restrictions will bite — hard — making the current quarter an absolute lock for economic contraction.

So sure are we all that even the most optimistic, clinging-to-the-faintest-hope politician needs to admit that we’re in recession.

It’s a foregone conclusion.

So the market crashed on the news, right?

Not so fast, Olly.

The ASX 200 was up 1.8% on Wednesday, the very day the news was announced.

Huh?

Not only that, but we’ve gained around 20% since the mid-March lows.

The economic news keeps getting worse. The ASX keeps getting better.

So much for the doom-and-gloomers, thus far at least.

Buy why? How?

Before we get to that, Flight Centre Travel Group Ltd (ASX: FLT) and Corporate Travel Management Ltd (ASX: CTD) (I own shares in the latter) were up 8% yesterday on nothing more than an announcement that Qantas was tripling its number of daily flights: from ‘bugger all’ to ‘not quite bugger all’.

No actual extra flights, yet. No extra bookings, yet. Just an announcement, of an intention, by one airline, while the other domestic airline remains mired in administration.

Huh?

Has the market lost its marbles, or is there some sanity prevailing here?

I think it’s the former. Here’s why:

I want to present you with a simplified version of the sort of algebra that wonky analysts do to value companies.

In the full, complicated (but really useful) version, they forecast growth, and allow for an expected return. They also recognise that if $1 in 5 years time is worth less than $1 today (because, why wait for the same return if you don’t have to?). That’s the ‘time value of money’.

So the summary below is woefully simplified for the purpose of valuing a company, but is useful to illustrate a point.

Let’s say you have $100, and I offer you 10% a year for 5 years.

Assuming I’m as good as my word, in 2025 you’ll have $150 (your $100 back, plus $10 per year).

Now, let’s say I came to you and said ‘Look, there’s this coronavirus thing. I can’t pay you this year. But it’ll be over soon enough. I’m pretty sure I can pay you next year, and we’re both convinced I’ll definitely be able to pay you in 2022’.

Your investment won’t deliver $150 any more.

The $10 payment in 2020 is gone. And 2021 is uncertain. Maybe a 50% chance.

Your $150 is reduced by $10 for 2020, and we’ll lop $5 off our expected 2021 payment.

Instead of getting $150, you reckon $135 is more likely.

Your money is now worth 10% less than it otherwise would have been worth ($135 divided by $150).

Apply that to the sharemarket (with the caveats I outlined above), and shares should fall by 10%. And maybe 15% once you factor in all of that ‘time value of money’ stuff.

So how much did the market fall between mid-February and mid-March? About 38%, give or take.

Seems kinda overdone in hindsight, doesn’t it?

And, given that, the rally over the past 6 – 8 weeks seems rather logical, rather than blind optimism.

And even more so, given the regular stimulus announcements made during that time, adding more cushioning for a struggling economy.

The ‘don’t panic’ message is one I’ve tried to hammer home in this space ever since the beginning of the pandemic. So far, it’s been the right approach.

I’m not a ‘victory lap’ kinda guy. And even if I was, it’s patently obvious the race isn’t over.

There are a multitude of things that could go wrong, for the economy and for markets, over the coming months. Frankly, the most likely cause of a market fall is probably investor sentiment, I reckon. Investors and traders run in packs.

Right now, they’re all believing in each others’ confidence. If that starts to wane, the pack can reverse course quickly. That’s how we ended up with the stock market’s pandemic overreaction (not to the health crisis, but to the economic impacts) in the first place!

About now, you might be thinking “Yeah, but the economy!”

It’s true, the economy is suffering right now. But ‘the economy’ isn’t really a thing, other than a conglomeration of the people that make up business owners, employees, parents, kids, retirees and everyone else. 

So it’s important to remember that it’s not the economy that suffers, but people.

And, as WSJ columnist Jason Zweig tweeted yesterday:

“It is deeply uncomfortable to watch Wall Street party while Main Street emerges from lockdown into tear gas, but the market isn’t taking a moral position.”

It is uncomfortable.

But don’t let that blind you, as an investor, to the way you need to think about markets.

Share prices are, at their core, ‘the sum total of all future cash flows, discounted for the ‘time value’ of when that cash is received’.

And, as with my super-simplified example above, even a dead stop in profits for one year doesn’t impact the underlying value of a company as much as you might think (or as much as the market assumed, in March).

Remember, too, that while shares are up 20% over a couple of months, they’re still around 17% down from the late February high point.

Context is a funny thing. “How on earth are shares up 20%?” and “Shares are down almost 20%” are both correct — but the starting points (and dates) are different.

I understand the feeling of not wanting to invest until ‘the coast is clear’.

But it’s important to remember that by that time, prices will likely be much higher.

The stock market is absolutely connected to the economy, but the timeframes are hugely different.

Wednesday’s GDP was a snapshot of a recent — yet past — three month period.

Share prices are an estimate of all — future — cashflows, from here to eternity.

It requires a very particular effort to partition those things, and treat them separately.

Many can’t. That’ll probably cost them a fortune.

We confuse those two things at our peril.

And I think you and I should keep investing, with our eyes not on yesterday or today, but on the long-term horizon.

Fool on!

More reading

• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• 3 of the best ASX 200 tech shares for your watchlist
• The Kogan share price is surging higher following another positive business update
• Is the Westpac share price too high?
• Is today’s BHP, NAB or Afterpay share price a good investment?

Motley Fool contributor Scott Phillips owns shares of Corporate Travel Management Limited. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia has recommended Flight Centre Travel 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 We’re in recession. What does that mean for investors? appeared first on Motley Fool Australia.

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The Afterpay Ltd (ASX: APT) share price has risen by 12.19% from Monday to Thursday this week. This company has pioneered the buy now pay later (BNPL) sector in Australia. It currently has a market cap of ~$13 billion and has spawned a large number of clones trying to replicate its success. 

The BNPL companies entered a raging bull market after weeks of consecutive good news announcements and large gains. The market has realised ‘pay later’ is here to stay. Openpay Group Ltd (ASX: OPY) saw its share price rise by 160% from Monday to Thursday, followed by all BNPL companies on the ASX.

Where does the Afterpay share go now?

I believe a good growth-share should have a chance of returning 10 times the initial investment. From initial share price to today the Afterpay share price has risen by an amazing 1,669%. Yet, I don’t think it is still a good growth share. For it to rise another 10 times or 1,000%, it would need to have a market cap over $130 billion. I just don’t think it is going to happen.

CSL Limited (ASX: CSL) did it, but CSL also has a lot of unique products and intellectual property, creating a massive barrier to entry. Afterpay has no barrier to entry, an array of smaller competitors both local and international and faces the Australian market entry of Klarna, which is 5% owned by Commonwealth Bank of Australia (ASX: CBA).

While I don’t necessarily think the companies below are better than Afterpay, I do believe they are more likely to see large scale growth in their share price. 

Sezzle Inc (ASX: SZL)

Many commentators often compare Zip Co Ltd (ASX: Z1P) favourably with the Afterpay shares. However, I prefer Sezzle. Sezzle is ASX-listed but headquartered in the United States. As such, it is a native company in the prized market for BNPL companies. Sezzle is focussed squarely on the Gen Z and millennial markets. It reaches them via its merchants primarily.

The company increased its users and its merchants tenfold between 2018 and 2019. Today it has a network of 1.3 million users and 14.9 thousand merchants.

EML Payments Ltd (ASX: EML)

EML payments is a fintech company more diverse than the Afterpay share. Its core business is selling gift cards at supermarkets. This is a high-margin revenue stream which the company continues to grow via acquisition of Prepaid Financial Services in Ireland.

However, they are also one of the great enabling firms of the fintech sector. Its product, EML ControlPay is the payments engine behind many of the world’s surging BNPL companies. These include Zip Co, Italian BNPL company Scalapay, and Sezzle. If this continues they will be receiving benefits of the BNPL marketplace across many companies and many countries.

Foolish takeaway

I am very confident both of these companies can increase their market caps tenfold. In the case of EML, that would mean a market cap over $10 billion. In the case of Sezzle, a market cap over $2.5 billion. I would be happy to own either of these shares. 

More reading

• Why Appen, CSL, Openpay, & Zip Co shares are tumbling lower
• Is today’s BHP, NAB or Afterpay share price a good investment?
• Why today might be a good day to buy NAB and Westpac shares
• Could the Openpay share price signal a wider boom for BNPL?
• 3 small cap ASX tech shares that could be stars of the future

Daryl Mather owns shares of Sezzle Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and Emerchants Limited. The Motley Fool Australia has recommended Emerchants Limited and Sezzle Inc. 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 2 ASX shares better than the Afterpay share appeared first on Motley Fool Australia.

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June means the financial year is drawing to a close and it’s a good opportunity to boost your super.

Let’s dive into some good reasons to think about topping up your retirement accounts this month.

Why you should try to grow your super in June

There’s a couple of arguments in favour of trying to grow your super. For one, you could be getting ‘free money’ from the Federal Government, depending on your income level.

The Aussie government will contribute up to $500 to your super fund when you boost your super by $1,000 on an after-tax basis.

To take advantage of this, you need to make sure you meet the eligibility requirements. This includes having a super balance under $1.6 million and a total income less than $38,564. You can also receive a progressively lower government contribution amount if your income is between $38,564 and $53,564.

This means you could potentially grow your super by a total of $1,500 in June. It’s hard to beat a 50% instant return on investment, even if you won’t reap the benefits until you reach the preservation age.

With the S&P/ASX 200 Index (ASX: XJO) falling lower in 2020, now could be a good time to get some superannuation units at a discount.

There’s also the potential to contribute on a before-tax basis. If you contribute before 30 June, you could lower your taxable income in FY20.

For instance, if you earned $50,000 during the year and have managed to save $13,000. You could potentially boost your super by $13,000, claim the tax deduction and make your taxable income $37,000 for the year.

That means your marginal tax rate would fall from 32.5 cents to just 19 cents. All of that while giving your retirement funds a big boost.

What’s the catch?

Of course, contributing additional funds to superannuation is not for everyone. There are always the potential regulatory risks (i.e. government changes) and the fact that your money is locked away for a long time.

However, if you’re looking for simple ways to reduce your tax this year, growing your super is a straight forward way to do it.

More reading

• We’re in recession. What does that mean for investors?
• 2 ASX shares better than the Afterpay share
• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• Talisman Mining share price jumps 12% as drilling set to begin at Lucknow
• Why Appen, CSL, Openpay, & Zip Co shares are tumbling lower

Motley Fool contributor Ken Hall 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 Should you aim to grow your super in June? appeared first on Motley Fool Australia.

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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a subdued note. The benchmark index is currently down 0.35% to 5,970.8 points.

Here’s what is happening on the market today:

Big four banks push higher.

The big four banks are doing their best to drag the market higher. At lunch all four are trading notably higher than the market. Two of the best performers have been National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC). This is thanks partly to a broker note out of UBS this morning. Its analysts have upgraded both banks to a buy rating with $20.50 price targets.

Appen shares drop on insider sales.

The Appen Ltd (ASX: APX) share price has tumbled lower today after investors responded negatively to news of high levels of insider selling. The artificial intelligence company announced that Non-Executive Chairman, Chris Vonwiller, sold 2 million Appen shares on-market. Also selling shares was its CEO and Managing Director, Mark Brayan and Non-Executive Director, Bill Pulver. They sold 95,535 shares and 275,000 shares, respectively.

Qantas continues to soar.

It has been another positive day for the Qantas Airways Limited (ASX: QAN) share price on the ASX 200. After recording a 7% gain on Thursday, the airline operator’s shares are up a further 3.5% today.  Investors have been buying Qantas’ shares after it announced an increase in domestic flights for June and July. Subject to demand, by the end of July Qantas’ domestic capacity could be 40% of pre-pandemic levels. One broker that appears pleased with the news is Morgan Stanley. This morning it retained its buy rating and $5.20 price target.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Friday has been the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price with a 6% gain. The Qantas announcement appears to have given the airport operator a boost today. The worst performer is the Pro Medicus Limited (ASX: PME) share price with a 5% decline. Earlier this week UBS downgraded the company’s shares to a neutral rating on valuation grounds.

More reading

• We’re in recession. What does that mean for investors?
• Why Appen, CSL, Openpay, & Zip Co shares are tumbling lower
• 3 of the best ASX 200 tech shares for your watchlist
• The Kogan share price is surging higher following another positive business update
• Why Kogan, NAB, Qantas, & Sydney Airport shares are racing higher

James Mickleboro owns shares of Westpac Banking. 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 owns shares of Appen Ltd. 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 ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again appeared first on Motley Fool Australia.

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The Talisman Mining Ltd (ASX: TLM) share price is racing higher today, up 12.25% to 11 cents on the back of a drilling and corporate update.

Talisman Mining is an Australian mineral development and exploration company focused on opportunities in base and precious metals.

The company’s key asset is the Lachlan Project within the Cobar/Mineral Hill region in New South Wales. Talisman believes there is significant potential for the discovery of substantial base metals and gold mineralisation within this land package.

Additionally, in August 2019, Talisman entered into a farm-in agreement with privately-owned Lucknow Gold in relation to the Lucknow Gold Project in NSW. The Lucknow Goldfield is located within the Macquarie Arc which hosts extensive gold and copper mineralisation, including Newcrest Mining Limited (ASX: NCM)’s Cadia-Ridgeway mine and Regis Resources Limited (ASX: RRL)’s McPhillamy’s project.

Before we dig into the announcement, it’s important to note that Talisman Mining sits at the smaller end of the ASX with a current market capitalisation of around $20 million.

What did Talisman Mining announce?

This morning, Talisman revealed that diamond drilling at the Lucknow Gold Project will begin this month. 

The planned diamond drilling will target an interpreted high-grade lode offset position at Lucknow where historic production was in excess of 400,000 ounces at grades of more than 100 grams per tonne (g/t) gold. 

Drilling was supposed to start in April but was postponed due to COVID-19.

Talisman also provided a corporate update this morning, revealing that exploration drilling and ongoing business development activities have resumed. As a result, the company has lifted a number of measures put in place from the beginning of April in response to the pandemic.

Accordingly, director fees have reverted to pre-COVID-19 levels and senior executives have returned to a full-time working week on pre-pandemic salaries. In addition, the company is expecting a staged return to work for its remaining workforce over the coming weeks, in line with anticipated workflows.

Talisman Mining shares are currently changing hands at 11 cents apiece and have a 4-week average turnover of $34,602 according to Market Index.

More reading

• We’re in recession. What does that mean for investors?
• 2 ASX shares better than the Afterpay share
• Should you aim to grow your super in June?
• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• Why Appen, CSL, Openpay, & Zip Co shares are tumbling lower

Motley Fool contributor Cathryn Goh 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 Talisman Mining share price jumps 12% as drilling set to begin at Lucknow appeared first on Motley Fool Australia.

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In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the week with a day in the red. At the time of writing the benchmark index is down 0.4% to 5,968 points.

Four shares that have fallen more than most today are listed below. Here’s why they are tumbling lower:

The Appen Ltd (ASX: APX) share price is down almost 4% to $29.31. This follows an announcement which revealed that several directors have been selling shares. The biggest seller was its Non-Executive Chairman, Chris Vonwiller. He offloaded 2 million Appen shares on-market for an average of $29.00 per share. This represents a total consideration of $58 million. The company’s CEO, Mark Brayan, also sold shares.

The CSL Limited (ASX: CSL) share price is down 4% to $283.02. The biotherapeutics company’s shares have come under a bit of pressure in recent weeks amid concerns that plasma collections could be impacted due to the pandemic. One broker that isn’t concerned is Citi. On Thursday it retained its buy rating and $334.00 price target on CSL’s shares.

The Openpay Group Ltd (ASX: OPY) share price has tumbled 13% to $3.05. The buy now pay later provider’s shares have come under pressure since completing an institutional placement on Thursday. Openpay raised $33.8 million through at a discount of $2.40 per share. These funds will be used to accelerate its growth in the UK and Australia and support further geographic expansion.

The Zip Co Ltd (ASX: Z1P) share price is down 7% to $5.53. This decline appears to be a case of profit taking after some very strong gains this month. Investors have been fighting to get hold of the payments company’s shares after it announced its expansion into the United States. It is moving into the $5 trillion market through the acquisition of New York-based QuadPay.

More reading

• 2 ASX shares better than the Afterpay share
• ASX 200 down 0.35%: UBS upgrades NAB and Westpac, Qantas soars again
• Why the Appen share price could come under pressure today
• Could the Openpay share price signal a wider boom for BNPL?
• 3 small cap ASX tech shares that could be stars of the future

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and ZIPCOLTD FPO. The Motley Fool Australia owns shares of Appen Ltd. 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 Why Appen, CSL, Openpay, & Zip Co shares are tumbling lower appeared first on Motley Fool Australia.

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ASX 200 tech shares could be the best way to grow your wealth over the coming years.

Technology businesses are able to grow much faster than normal businesses because their product is digital. You can “replicate” the product again and again for very little cost. It’s not the same as making, shipping and storing a table, food or anything else physical.

Here are three of the best ASX 200 tech shares for your watchlist:

Altium Limited (ASX: ALU)

Altium is a leading electronic PCB software business which provides software for engineers to design the devices and vehicles of the future. There’s going to be a lot more technology in our lives in the coming years and decades. Altium will play an important part in that.

The ASX 200 tech share has been one of the best performers over the past decade. It has been steadily growing its subscriber base, its profit margins and its cash balance.

It already has an impressive client list including Space X, NASA, Tesla, Google, Amazon, John Deere and many more.

Altium is aiming for market dominance with 100,000 Altium Designer subscribers by 2025. The long-term goal is more important than what goes on in 2020. Clients tend to stick with software once they’re using it. But shorter-term profit could be hampered by the coronavirus effects.

With everything that’s going on, I’m waiting for Altium’s share price to go under $30 before buying any more.

Xero Limited (ASX: XRO)

Xero is another top ASX 200 tech share. It provides users with very useful cloud accounting software. It has a lot of automation tools that are a big timesaver.

It’s a very compelling offering which is why Xero is growing subscribers across the world. New Zealand, Australia and UK are particularly strong markets for Xero.

Xero has such high gross profit margins that every new subscriber adds a lot to the overall business position. The monthly recurring revenue is an attractive feature.

Time will tell what COVID-19 does to Xero and its SME customer base in the shorter-term, but I think Xero has a very compelling offering. Particularly as a cloud-based product that can be accessed from anywhere.

The ASX 200 tech share could eventually become one of the ASX’s biggest businesses if it can keep expanding in the US and UK.

I’d want to wait for a share price under $80 before buying Xero shares.

REA Group Limited (ASX: REA)

REA Group has a very strong market position. It owns realestate.com.au, Australia’s leading property portal. If you want to try to get the best price for your property then you’ll probably use REA Group’s services.

I like REA Group as a diversified play on the property market without having to actually own a property to profit from property.

The ASX 200 tech share is rising again as conditions for property selling return to normal in Australia. There are some potential changes coming up that could cause more property transactions. The end of jobkeeper and a change to stamp duty could cause more properties to come into the market. Higher volumes would obviously be better for REA Group.

I’m also attracted to the idea that REA Group can grow a lot into the future with its stakes in international property sites in North America and Asia. But in the current conditions I’d wait for a share price under $100.

Foolish takeaway

Each of these ASX 200 tech shares have very compelling futures. But with the COVID-19 uncertainty I think we can be picky with our buying, even with how low interest rates are at the moment. That’s why they’re on my own watchlist right now, I’m waiting for a bit of a cheaper price. But for long-term buys I think they’d still be good ideas.

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Tristan Harrison owns shares of Altium. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Altium and Xero. The Motley Fool Australia has recommended REA 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.

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