The Ramsay Health Care Limited (ASX: RHC) share price could surge next week.

According to reporting by the Australian Financial Review, apparently there is a new National Health Reform Agreement which could stop public hospitals charging privately insured patients for insurance benefits.

The agreement means the public hospitals won’t be able to get any extra financial benefits for treating private patients. Apparently around 14% of public hospital beds are being used by private patients. This causes non-private patients to have to wait longer.

Michael Roff from the Australian Private Hospitals Association said: “We know the practice has driven up premiums and disadvantages public patients who are pushed further down public hospital waiting lists.” Not so good for the Ramsay share price or earnings if private patients are in public hospitals.

Why this could cause the Ramsay Health Care share price to surge

I think the Ramsay Health Care share price could be a good performer next week, assuming the overall share market doesn’t fall.

There are at least two key reasons why people are happy to go to a Ramsay hospital. They think the cost isn’t too much. And they think they’ll get quicker (and arguably a better) service at Ramsay than using a public hospital. This change could help both of those factors. Why go to a private hospital if you get cheaper, preferential treatment at a public hospital?

This practice by public hospitals has reportedly pushed up the price of private health insurance premiums, which would also essentially indirectly push up the cost for policyholders. Lower private health costs could mean more patients for Ramsay. Potentially good news for the Ramsay share price. Volume is important for private hospitals, just like hotels. 

People may also decide that they don’t want to wait longer for public hospital service. They may be inclined to go to a private hospital like Ramsay. As the largest private hospital business it would likely be the biggest beneficiary from this agreement.

Foolish takeaway

With the ongoing coronavirus global pandemic, we’re not likely to see a huge increase in patients for Ramsay. But it tilts the scales for Ramsay. The Ramsay share price certainly isn’t cheap right now. But it usually isn’t. The coronavirus spread will stop in Europe eventually. Ramsay’s earnings could come bouncing back. The Ramsay share price may rise before then, perhaps as early as next week.

More reading

• These ASX healthcare shares could bring your portfolio to life
• New to investing? Put $500 into these top ASX 200 shares
• $3,000 invested in these 3 ASX industries could make you a fortune in the future
• 3 high quality ASX healthcare shares to buy and hold forever
• If you invested $10,000 in the Ramsay Health Care IPO, this is how much you’d have now

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care 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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Can gold really protect a portfolio of ASX shares?

There used to be many different asset classes you could use to protect an ASX share portfolio. Cash was always a favourite – as evidenced by the old phrase ‘cash is king’. But fixed-interest instruments like government bonds were another alternative. These assets even had the potential to increase in value during a share market crash or a recession if the government decided to cut interest rates.

Unfortunately, today we live in a whole new world.

Since interest rates are now effectively zero (or 0.25% to be completely accurate), cash is no longer the ‘safe place’ to store wealth for more than a few months. Even if you manage to snag an interest rate on a term deposit or savings account of 1.5% (rare these days), your money is still losing value to inflation.

Government bonds are even worse today. Right now, the yield you can expect from a 10-year Treasury bond is sitting at 0.87% per annum. And these government bonds will only meaningfully rise further in value if interest rates go negative, which probably won’t happen anytime soon.

So where does that leave us if we want to protect our portfolios from any future market crashes? The only real answer that comes to mind is gold.

Gold has always been viewed as a ‘safe haven’ asset and as a powerful vessel for wealth preservation. But is the yellow metal still relevant as a ‘guardian angel’ of an ASX portfolio? Let’s look at some numbers.

A golden protector?

Let’s take a look at how the S&P/ASX 200 Index (ASX: XJO) performed during the most recent market crash.

So from the peak (20 February) to the trough (23 March), the ASX 200 fell approximately 36.5%.

Over the same period the price of gold went from around US$1,611 an ounce to US$1,500 – hardly a protective cloak for a share portfolio.

But let’s also look at gold priced in Australia dollars. So on 20 February, an ounce of gold would have cost an Australian investor around $2,422. On 23 March, this same ounce would have set the investor back roughly $2,600 – giving a nice 7.35% return over the month.

Not quite enough to offset the losses from the share market, but better than a poke in the eye, that’s for sure.

Should we use gold as portfolio protection?

As we have seen, gold can provide some protection in an ASX portfolio, but it is by no means a perfect mechanism. I think investing in gold isn’t really worth doing if portfolio protection is your only goal. If you’re truly a long-term investor, having some short-term cash on the sides is probably a better protection mechanism.

There are other reasons why gold can be useful. Protecting against currency debasement and inflation is one, having a physical and incorruptible store of wealth is another.

But if you really want to build wealth instead of storing it, ASX shares are a far better bet in my view!

More reading

• How you can get very rich with ASX 200 shares
• How I would build a $100,000 ASX portfolio with ETFs
• The TPG share price is up 26.68% in 2020. Too late to invest?
• 3 ASX dividend shares with yields over 10%
• How does the economy affect the ASX 200 share market?

Motley Fool contributor Sebastian Bowen 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.

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I believe that every Australian investor can make $1,000 a month in dividends. To do that you need to invest in ASX dividend shares.

In this era of very low interest rates it’s more important than ever for your money to be working hard for you. High interest savings accounts aren’t really paying ‘high’ interest any more.

ASX dividend shares give Aussie income investors an advantage. Franking credits can really boost the yield (or reduce the tax liability) for Aussies.

If you receive a fully franked $7 dividend then you’ll receive $3 of franking credits attached. A normal Aussie tax payer whose only income is the fully franked $7 dividend would get a $3 tax refund when they do their tax return. It depends on your tax situation and taxable income on how much of your franking credits are refunded, or just reduce the tax liability.

How big does your portfolio need to be to make $1,000 a month in dividends?

Our work income is the most important source of earnings until we retire. It’s much easier to generate work income than build up enough money to make thousands of dollars in dividends.

But compound interest and diligent saving can build up an impressive nest egg. Receiving $1,000 a month in passive income is obviously $12,000 a year. How big of a nest egg you need will depend on what you invest in and the yields those shares have. If your portfolio has a 10% dividend yield then you’d ‘only’ need $120,000.

There are some shares that offer that kind of yield, but not many. And they probably won’t show much capital growth because the profit is largely being paid out as dividends. I’m thinking of shares like WAM Research Limited (ASX: WAX) and Naos Emerging Opportunities Company Ltd (ASX: NCC).

What about a lower yield?

If your portfolio has a 6% dividend yield you’d need $200,000. A 6% yield is still high and today’s ultra-low interest rates mean there aren’t many good shares left with yields above 6%. But the coronavirus sell-off has helped those yields a bit. For that type of yield I’d go for WAM Microcap Limited (ASX: WMI), Future Generation Investment Company Ltd (ASX: FGX), Brickworks Limited (ASX: BKW), Rural Funds Group (ASX: RFF) and Duxton Water Ltd (ASX: D2O). Exchange-traded funds (ETFs) like BetaShares Australia 200 ETF (ASX: A200) and Betashares FTSE 100 ETF (ASX: F100) could offer sustainable higher yields in the future at the current prices once the coronavirus pandemic is over.

If your portfolio has a 4% dividend yield you’d need a portfolio worth $300,000. This is the type of yield where you can invest for both yield and growth. I’m thinking of shares like Magellan Global Trust (ASX: MGG) and Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) that might be good.

The above numbers exclude the implications of income tax – every reader will have a different tax situation, but unless you need income this year it might be better to go for longer-term growth shares with lower yields.

How to reach your target portfolio size

The share market has historically produced returns of 10% per annum over the long-term. So that may be a decent number to use in any calculations. Right now it’s a decent time to invest with share prices lower than earlier in the year.

If you invest $1,000 a month it would take just over seven years to reach a portfolio of $120,000 growing at 10% per annum. To reach $300,000 it would take less than 14 years.

Market-tracking investments like index exchange-traded funds (ETFs) will help you achieve what the market does. Some of the ideas in this space are iShares S&P 500 ETF (ASX: IVV) and Vanguard MSCI Index International Shares ETF (ASX: VGS).

You could try to grow your portfolio faster than the market by going for the best growth shares. I’m thinking about shares like Pushpay Holdings Ltd (ASX: PPH), Bubs Australia Ltd (ASX: BUB) and MFF Capital Investments Ltd (ASX: MFF).

More reading

• 10 top ASX growth shares to buy in June for strong returns
• 3 ASX dividend shares with yields over 10%
• 10 quality ASX shares to buy in June
• 3 fantastic ASX growth shares I would buy and hold for decades
• Why it could be the perfect time to buy this Vanguard ETF

Tristan Harrison owns shares of DUXTON FPO, FUTURE GEN FPO, Magellan Flagship Fund Ltd, MAGLOBTRST UNITS, RURALFUNDS STAPLED, WAM MICRO FPO, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO. The Motley Fool Australia owns shares of and has recommended Brickworks, PUSHPAY FPO NZX, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended BUBS AUST FPO, DUXTON FPO, and Vanguard MSCI Index International Shares ETF. 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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The S&P/ASX 200 Index (ASX: XJO) was on form again last week and recorded a 4.7% gain to finish it at  5755.7 points.

While a good number of shares climbed higher with the market, not all were on form last week.

Here’s why these were the worst performing ASX 200 shares over the period:

The TechnologyOne Ltd (ASX: TNE) share price was the worst performer on the ASX 200 with a 7.8% decline. The enterprise software company’s shares have come under pressure since the release of its half year results the previous week. One broker that wasn’t overly impressed was UBS. It has downgraded TechnologyOne’s shares to a sell rating with an $8.20 price target. Its shares ended the week at $9.14.

The Worley Ltd (ASX: WOR) share price wasn’t far behind with a decline of 7.2% last week. The majority of this decline came on Friday when its shares fell 6% on the back of no news. Not even a positive broker note out of Citi could stop its shares from sliding lower. The broker has slapped a buy rating and $12.20 price target on its shares. This is materially higher than where its shares finished the week.

The Saracen Mineral Holdings Limited (ASX: SAR) share price was out of form and fell 5.4% last week. A number of gold miners tumbled lower last week after the price of the precious metal pulled back. This was driven by lower demand for safe haven assets after investors switched back to risk assets.

The CSL Limited (ASX: CSL) share price was an uncharacteristically poor performer last week and dropped 5.1%. This appears to have been driven by profit taking after some strong gains over the last 12 months. One broker that believes this is a buying opportunity is Citi. Last week it upgraded its shares to a buy rating with a $334.00 price target.

More reading

• Insiders have been buying these ASX shares this week
• Build wealth for life with these 2 ASX 200 shares
• Why I think the CSL share price is a strong buy today
• 10 quality ASX shares to buy in June
• 3 fantastic ASX growth shares I would buy and hold for decades

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. 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.

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Investing in exchange-traded funds (ETFs) is one of the best vehicles you can use to create wealth on the share market, outside purchasing individual shares. Firstly, ETFs require almost no effort on your part. Secondly, you can use them to get easy exposure to literally thousands of different companies in one easy trade. This includes companies that might be otherwise unavailable individually to the typical ASX investor.

So with that said, here’s how I would build a $100,000 ETF-based ASX portfolio for diversification and easy returns.

Vanguard Australian Shares Index ETF (ASX: VAS) – $30,000

VAS is the most popular ASX ETF for good reason. It covers the largest 300 companies in Australia, which captures more of the small-cap market that other S&P/ASX 200 Index (ASX: XJO) funds.

With VAS, you are getting most Aussie public companies you can think of. This includes everything from Commonwealth Bank of Australia (ASX: CBA), Telstra Corporation Ltd (ASX: TLS) and Woolworths Group Ltd (ASX: WOW) to JB Hi-Fi Limited (ASX: JBH), Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO). All wrapped up in one investment, I like to think of VAS as a ‘slice of Australia’.

VAS charges a fee of 0.1% per annum.

iShares Global 100 ETF (ASX: IOO) – $30,000

This ASX ETF is a little different from VAS in that invests in the largest 100 companies across the advanced economies of the world. Thus, you are getting exposure to American giants like Apple, Alphabet and McDonalds, as well as British companies like BP and Diageo and Japanese companies like Toyota and Panasonic.

These companies have enjoyed enormous success through their powerful brands, global reach and universality of their products. Hence, I think this ETF is a great asset to have in a well-balanced and diversified portfolio.

IOO charges a management fee of 0.4%

iShares Global Consumer Staples ETF (ASX: IXI) – $30,000

Many investors consider consumer staples shares to be boring. That’s because they represent companies that make the everyday essentials we all rely on. This includes canned food, personal hygiene products, drinks and cleaning materials.

It’s true that these products may not garner the same excitement as the latest tech innovations. Even so, I believe the panic buying we experienced at the beginning of the COVID-19 crisis helps reinforce the overall worth of these types of companies. Thus, I feel this ETF makes a strong addition to an ASX ETF portfolio. Some of this ETF’s top holdings include Procter & Gamble, Nestle, The Clorox Company, Philip Morris International and Kimberly-Clark.

IXI has a management fee of 0.47%.

BetaShares Asia Technology Tigers ETF (ASX: ASIA) – $10,000

ASIA is a fund that tracks the largest companies across Asia, with a focus on those companies that are tech heavyweights. Countries like Taiwan, South Korea, India and Hong Kong are covered, but the fund is dominated by Chinese tech giants like Tencent, Alibaba, Baidu and JD.com.

Even though these markets carry a little more risk, I still think the growth opportunities they offer can’t be ignored in the 21^st century. Therefore, ASIA has a place in our $100,000 portfolio.

ASIA has a management fee of 0.67%

More reading

• The TPG share price is up 26.68% in 2020. Too late to invest?
• 3 ASX dividend shares with yields over 10%
• How does the economy affect the ASX 200 share market?
• Is the Fortescue share price under threat from a potential multi-million dollar earnings hit?
• Brokers name 3 ASX 200 shares to buy right now

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Procter & Gamble, Philip Morris International, Baidu, Kimberly Clark, McDonalds and Telstra Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF and Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO, iShares Global Consumer Staples ETF, and Woolworths Limited. The Motley Fool Australia has recommended Alphabet (A shares). 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 How I would build a $100,000 ASX portfolio with ETFs appeared first on Motley Fool Australia.

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