Tag: Motley Fool Australia

Robo-investing (sometimes also called robo-advice) is a term you may have come across over the past year or 2. It’s a rather poor choice of name in my view, but it has stuck nonetheless, and so here we are.

Its proponents will tell you that robo-investing is a cheap, easy and effortless way of investing that can tailor a portfolio for your needs. Its detractors might call it fee-laden snake oil, and question whether it’s appropriate for its target market (individuals who want passive, hands-off investing).

So who’s right? Well, that’s what we’ll try and answer today.

What is robo-investing?

Robo-investing refers to an investment service that builds a custom-made portfolio of passive investments – usually exchange-traded funds (ETFs) – depending on a client’s age and risk profile. It has attracted the ‘robo’ name because of its hands-off approach. A platform offering robo-investing is typically digital and automated. It will not usually involve you speaking to a financial advisor or even a human.

So using ETFs, the platform will construct a portfolio for you.

If you’re a younger investor, a typical robo-portfolio will include a high allocation to ‘growth assets’. This is usually a mixture of ASX shares, international shares and perhaps property.

In contrast, if an older investor with a ‘less-risk’ profile came along, a robo-platform would instead construct a more ‘balanced’ portfolio, mixing shares with defensive assets like bonds, cash and perhaps gold.

In both cases, the robo-investor will do all of the work for you, reinvest dividends and perhaps rebalance the portfolio from time to time – all while you carry on living your life and not worrying about how your investments might be tracking. Some even offer ‘automated’ investment plans that might, for example, direct-debit you $20 a week to put towards your portfolio.

Sounds good, right?

Are robo-platforms a good idea?

I don’t have a problem with the concept of robo-investing, per se. I think it can be an easy and relatively fun way of investing your money, particularly if you aren’t partial to dabbling in the markets yourself. And I also think there’s a lot of merit for a ‘set-and-forget’ approach to investing that using a robo-advisor can foster.

However, not all robo-investing platforms are equal. Some might charge you usurious fees. A 1% or even 0.5% fee might sound cheap, but it adds up to a lot over time and can prove rather expensive seeing as you can always just invest in individual ETFs yourself.

Foolish takeaway

If the concept of robo-investing appeals to you, then, by all means, go for broke and run with it. But make sure you shop around for the best platforms that offer a reasonable price. There are many out there that simply charge too much for my liking.

More reading

• 3 coronavirus ASX shares to buy as consumer preferences change
• Buy these fantastic ASX tech shares for potential market beating returns
• Origin share price falls along with demand for gas and electricity
• Why Afterpay, Bapcor, NRW, & Super Retail shares are climbing higher today
• The rocketing Aussie is shaping up as a new threat to the profit season

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.

The post What is robo-investing, and should you do it? appeared first on Motley Fool Australia.

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The skyrocketing Australian dollar is catching experts off-guard and could soon prove to be a new risk to the ASX reporting season.

The Aussie battler charged above US72 cents for the first time since early 2019 and is likely to push even higher.

Why ASX investors should care is because many S&P/ASX 200 Index (Index:^AXJO) stocks have US dollar exposure. A stronger Aussie means lower earnings when profits are converted into the local currency.

Strong Aussie crimps earnings and dividends

Dividends could also very well be impacted by this. For instance, mining giants like BHP Group Ltd (ASX: BHP) declare their payouts in US dollars.

The good news is that the impact of the exchange rate won’t be material on FY20 results given that the year’s just past, but the raging Aussie could be a talking point in the outlook statements.

This is particularly so as currency strategists see further upside for our currency, according to the Australian Financial Review.

What’s driving the Australian dollar

To be sure, it isn’t strength in the Aussie that’s driving the gains. It’s weakness in the US dollar as its safe haven status comes under threat.

The rampant COVID-19 pandemic that’s still ripping through the US and forcing some states to consider second lockdowns are one factor.

This is making the US Federal Reserve chair Jerome Powell nervous, and if the Fed is worried, investors should be too.

The Fed is trying to keep the US economy afloat by continuing to pull on its quantitative easing (QE) levers. This keeps its financial system well lubricated with cash, but it hurts the value of the US dollar.

Throw in uncertainties caused by the upcoming presidential election and the worst quarterly GDP reading for the US economy ever, and you can see why sentiment is this poor.

A$ heading higher

Currency forecasters are scrambling to revise their estimates for the Aussie given that the headwinds against the US dollar isn’t abating.

The AFR reported that most experts weren’t expecting the Aussie to trade at US70 cents until the end of 2020.

Westpac Banking Corp (ASX: WBC) is one of the more aggressive forecasters. It was initially predicting the Aussie to hit US72 cents by end of this calendar year but has lifted its forecast to US74 cents.

ASX winners and losers

I suspect currency experts will be expecting the US dollar will continue to weaken into 2021, and that will crimp on earnings for a wide range of ASX stocks.

Some ASX shares with material exposure to the greenback include the Boral Limited (ASX: BLD) share price, Brambles Limited (ASX: BXB) share price and Reliance Worldwide Corporation Ltd (ASX: RWC) share price – just to name a few.

On the flipside, the stronger Aussie will benefit importers, such as retailers. Possible winners are the Nick Scali Limited (ASX: NCK) share price and Reject Shop Ltd (ASX: TRS) share price.

More reading

• ASX 200 sinks 1.5%: AMP disappoints, big four tumble, Super Retail surprises
• What’s dragging the CBA, Westpac and AMP share prices lower today?
• Here are the dividends this broker thinks CBA and the big four will pay in 2020
• Fortescue’s share price in focus as it beats guidance on record quarterly shipments
• 2 top ASX dividend shares to buy for income in 2020

Brendon Lau owns shares of BHP Billiton Limited and Westpac Banking. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Reliance Worldwide Limited. The Motley Fool Australia has recommended Reliance Worldwide 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 The rocketing Aussie is shaping up as a new threat to the profit season 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 with a sizeable decline. The benchmark index is currently down 1.5% to 5,952 points.

Here’s what has been happening on the market today:

AMP update disappoints.

The AMP Limited (ASX: AMP) share price has crashed lower after releasing an update on its expectations for the first half of FY 2020. The financial services company revealed that it expects to report an underlying profit for retained businesses in the order of $140 million to $150 million. This appears to have fallen well short of expectations and was due to a range of negative factors. These include market volatility and a credit loss provision in AMP Bank.

Big four banks tumble on class action news.

The big four banks are all tumbling lower on Friday and acting as a major drag on the ASX 200. The worst performers in the group today are the Commonwealth Bank of Australia (ASX: CBA) share price and the Westpac Banking Corp (ASX: WBC) share price with declines of approximately 2.2%. This appears to be due to news that the banks are to be hit with a new class action. AMP is also being hit with the same class action.

Super Retail surprises.

The Super Retail Group Ltd (ASX: SUL) share price has been a very positive performer on Friday after the release of a surprisingly strong FY 2020 update. After experiencing a 26.2% decline in monthly like-for-like sales in April, they rebounded 26.5% in May and 27.7% in June. This led to Super Retail recording total sales growth of 4.2% in FY 2020. In addition to this, the retailer advised that it expects its pro forma EBITDA to be between $327 million and $328 million. This will be up from $315 million a year earlier.

Best and worst ASX 200 performers.

The best performer on the ASX 200 on Friday has been the Super Retail share price by some distance. Its shares have jumped 11% higher following its aforementioned update. The worst performer has been the AMP share price. It is down over 11% after its guidance for the first half of FY 2020 fell well short of expectations.

More reading

• Why Afterpay, Bapcor, NRW, & Super Retail shares are climbing higher today
• The rocketing Aussie is shaping up as a new threat to the profit season
• What’s dragging the CBA, Westpac and AMP share prices lower today?
• Why AMP, FlexiGroup, Marley Spoon, & Origin shares are tumbling lower
• Telstra and 2 more ASX shares I’d like to buy with $5,000

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Super Retail 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 ASX 200 sinks 1.5%: AMP disappoints, big four tumble, Super Retail surprises appeared first on Motley Fool Australia.

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The share prices of 3 stalwarts of the S&P/ASX 200 Index (ASX: XJO) have collectively fallen this morning in early trade.

At the time of writing, the Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) share prices have retreated by close to 2% to $71.88 and $17.32, respectively. The AMP Limited (ASX: AMP) share price has been the hardest hit of the 3 financial institutions, falling by as much as 12% to lows of $1.475.

What’s dragging these ASX blue-chips lower?

Class action woes

This morning, the ABC revealed that hundreds of thousands of Australians who were forced to pay ‘excessive insurance premiums’ may have a basis for pursuing compensation claims against the financial companies, as part of 3 separate class actions.

Although court claims against Commonwealth Bank and Westpac’s superannuation arm, BT Group, are expected to be commenced early next week, AMP has already been informed of claims filed against it this week in the Federal Court.

The practice leader for Shine Lawyers, the firm leading the litigation against Commonwealth Bank, AMP and Westpac, said the companies’ “business models were set up to promote their own products and their own interests ahead of those of their own clients and their members.”

The court actions mainly relate to life insurance and income protection policies offered by the 3 institutions.

It is anticipated that the 3 court actions are expected to be some of the largest since the Banking Royal Commission, and that is going to hurt all 3 companies if they are found to be liable for the alleged breaches.

The expected payout if wrongdoing is proven could be in the tens of millions, and that’s a significant headwind sending the share prices of all 3 lower.

AMP has also been hit hard due to its announcement to the market this morning pertaining to profit guidance for the first half of FY20. As reported by my Foolish colleague here, the struggling financial institution expects underlying profit to be in the range of $140–$150 million. Judging by the dramatic fall in the AMP share price this morning, the market believes this result is an underperformance.

Is this a buying opportunity?

Some would argue that this morning’s news provides investors with the ability to buy discounted shares in CommBank, Westpac and AMP.

Commonwealth Bank will announce its full-year results and provide an update on its dividend on 12 August, so many investors may take today’s opportunity to buy in and take advantage of its excellent dividend record moving forward. Westpac and CommBank (and until relatively recently, AMP) shares have historically paid out sizeable yields on a fully-franked basis to their shareholders, making these financial institutions a reliable income source for many Australian investors.

On the other hand, this litigation may lead to further negative price movements for these 3 ASX shares in the coming days and weeks, as others may sell out and take profits from the recent resurgence of financial stocks.

The three companies are such large institutions that their share prices will eventually make a comeback, so in my opinion the majority of shareholders will likely take today’s news as a short-term headwind.

More reading

• The rocketing Aussie is shaping up as a new threat to the profit season
• ASX 200 sinks 1.5%: AMP disappoints, big four tumble, Super Retail surprises
• Why AMP, FlexiGroup, Marley Spoon, & Origin shares are tumbling lower
• Telstra and 2 more ASX shares I’d like to buy with $5,000
• A top ‘coronavirus share’ to buy this August

Motley Fool contributor Toby Thomas owns shares of Commonwealth Bank of Australia. 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 What’s dragging the CBA, Westpac and AMP share prices lower today? appeared first on Motley Fool Australia.

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There is no better time to start investing in ASX shares than right now. The sooner you start, the more time you’ll have to consolidate gains and grow your investments. You don’t need huge amounts of money to start investing in the ASX or even international share markets. What you do need is the motivation and determination to get started. So how do you do that?

Start small, think big 

Small amounts can add up to a big investment over time. Consistency is key here. Some trading platforms will let you invest with as little as a few dollars at a time. Over time what seemed like inconsequential amounts can add up to something very substantial indeed. 

Calculate how much of your income you want to put towards investments. Then put that money aside, whether on a weekly, fortnightly, or monthly basis. If it helps, you can open a separate account for investment funds. This can remove some of the temptation to access and spend the money. Add to your investment fund incrementally, but regularly. 

Open a share trading account

There are many different online brokerage options available. Investigate these now, before you are ready to actually place a trade. Check the fees involved, the range of securities that can be traded, and any value-added services available. 

Like everything else in life, there is a cost to investing. Trading ASX shares incurs brokerage charges. Ensure you understand the fees and charges levied by your chosen broker. These will impact on your returns. If you trade frequently, you can expect to incur more brokerage fees. If brokerage fees are fixed and you buy smaller portions of shares, your brokerage fees will be proportionately higher. 

Figure out your goals

There are a vast array of investment options available both in Australia and abroad. Before you figure out which investment option(s) you want to pick, it pays to understand what you’re investing for. What are you trying to achieve? You could be looking to get an early start on a retirement nest egg, build a second income stream, or diversify your assets. 

Your investment choices should be informed by your goals and risk tolerance. If you have longer-term goals, you can afford to take on a relatively larger amount of risk – there is a longer time period over which to ride out volatility in returns. Those with lower risk tolerances should opt for investments where returns are more certain. Oftentimes, however, this means returns are also lower. For example, bonds have historically provided lower returns than equity. 

Potential investments should be assessed through a matrix of your goals and risk tolerance. Highly risky investments such as derivatives will not be suitable for many, but blue-chip ASX shares will be appropriate for a lot of investors. Those with longer-term horizons may be more willing to gamble on growth shares for capital gains while those looking for an income stream will instead seek dividend shares. 

Do your research

Take your time to assess the investment landscape. There are more than 2000 shares listed on the ASX. And the ASX itself is only a small proportion of the global investable universe. Narrow down the type of securities you are interested in. This could be bonds, domestic shares, international shares, or something else. It is advisable to diversify across asset classes, although the precise mix of assets will depend on the individual. 

Once you’ve figured out the asset classes you’re interested in, you can look at individual investments. To diversify within an investment class, you could consider exchange-traded funds (ETFs). ETFs are traded like shares and offer exposure to a basket of underlying securities. ETFs are available which provide exposure to ASX shares, international shares, fixed-interest securities, and more.

To invest directly in ASX shares, you will need to assess the companies listed on the ASX and decide which you think will perform well. Your investigations will be informed by your goals and risk profile. If an income stream is a priority, you may look to mature, profitable companies in stable industries like Coles Group Ltd (ASX: COL) and AGL Energy Limited (ASX: AGL). If potential capital growth is more important, you could look for younger, more disruptive companies with high growth prospects, like Afterpay Ltd (ASX: APT) or Megaport Ltd (ASX: MP1).  

Make an investment 

Once you’ve figured out your preferred investments, it’s time to execute on your plan. Presuming you’ve opened an online brokerage, you can put in a trading order. Orders can either be at the price you nominate or at the market price. If the price you nominate is lower than the market price, your trade will only be executed if the share price falls. 

Once your trade has cleared, you will officially be an investor. Congratulations! You might think that you can sit back and take it easy from here, but that is not really the case. It’s important to keep an eye on your investments. Plus you’ll want to keep watching and researching future investment opportunities. 

Remember the value of time

Don’t expect magic overnight. It took years for Warren Buffett to become Warren Buffett. Time is one of our most undervalued assets. Time allows returns to compound, which means, over time, they become greater and greater. Time also allows investors to ride out periods when the market is experiencing a downturn or providing flat returns. Time also allows you to learn and grow from your mistakes.

If you are considering investing in ASX shares, a timeline of five or more years is recommended. This allows a decent period to ride out volatility in share prices. You should keep an eye on your investments while you hold them, but don’t obsess over them. Checking the price of your ASX shares daily multiple times a day will not make a difference to your long-term returns. 

Foolish takeaway

The sooner the better is the motto when it comes to long-term investing. The sooner you start, the sooner your portfolio can start growing. Follow the steps above to get started investing and take control of your financial future. 

More reading

• Why Afterpay, Bapcor, NRW, & Super Retail shares are climbing higher today
• Is the Fortescue share price too expensive?
• Why Fortescue and these ASX 200 shares are at record highs
• Coles and Wesfarmers share prices reach for new highs. Should you invest?
• 3 top ASX shares to buy for growth investors in August

Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO and COLESGROUP DEF SET. The Motley Fool Australia has recommended MEGAPORT 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.

The post Want to start investing? Here’s how appeared first on Motley Fool Australia.

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It looks set to be a disappointing end to the week for the S&P/ASX 200 Index (ASX: XJO). In late morning trade the benchmark index is down a sizeable 1.5% to 5,961.7 points.

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

The AMP Limited (ASX: AMP) share price has crashed 12% lower to $1.48 after providing an update on its expectations for the first half of FY 2020. The embattled financial services company expects to report underlying profit for retained businesses in the order of $140 million to $150 million. This was below the market’s expectations and due to a range of negative factors including market volatility and a credit loss provision in AMP Bank.

The FlexiGroup Limited (ASX: FXL) share price is down over 5% to $1.26. This follows the release of an update on its FY 2020 results. FlexiGroup expects to report a cash net profit after tax of $29 million. This is down 61.9% from $76.1 million a year earlier. Some of this decline is due to a macro overlay provision of $31 million post tax. This relates to the projected impact of economic conditions due to the pandemic.

The Marley Spoon AG (ASX: MMM) share price is down 5.5% to $3.26. This appears to be down to profit taking after a sensational gain on Thursday following its second quarter update. During the quarter the global subscription-based meal kit provider experienced a surge in demand due to the pandemic. This led to the company reporting second quarter revenue of 73.3 million euros, which was a massive 129% increase on the prior corresponding period.

The Origin Energy Ltd (ASX: ORG) share price is down 4% to $5.40 following the release of its fourth quarter update. The energy company revealed a 5% decline in full year Integrated Gas revenue. Although it achieved increased production, this was offset by fewer purchases, gas inventory movements, a higher proportion of spot LNG sales, and lower domestic prices. Energy Gas sales fell 4% to $259.2 million for the year.

More reading

• FlexiGroup share price sinks 7% lower on disappointing FY 2020 update
• AMP share price on watch following first half profit guidance
• Results: Marley Spoon share price surges 40% on market update
• Why Afterpay, Fortescue, Marley Spoon, & Splitit shares are racing higher
• Marley Spoon share price on watch after 129% jump in Q2 revenue

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended FlexiGroup 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 Why AMP, FlexiGroup, Marley Spoon, & Origin shares are tumbling lower appeared first on Motley Fool Australia.

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The Prospa Group Ltd (ASX: PGL) share price sunk 15% at the open this morning after the online lender released its unaudited results. Prospa is forecasting lower growth over FY20 as well as making additional provision for credit losses due to the impacts of COVID-19. 

Prospa shares have since regained some of their losses to be trading 7.65% down at the time of writing.

What does Prospa do?

Prospa is an Australian online business lender. Customers can borrow up to $300,000 with a 10-minute application, with funding available in as little as 24 hours.

Prospa first listed on the ASX last year at an offer price of $3.78. The Prospa share price fell to 75 cents this morning but has since recovered slightly and is now sitting at 84 cents. 

What did Prospa report?

Prospa’s unaudited results show a material impact from the coronavirus-induced economic downturn. The lender reports its loan originations have decreased, while provisioning for credit losses has increased. Total loan originations were materially impacted in April and May, but did pick up meaningfully in June. 

Prospa provided 5,501 customers with COVID-19-related relief packages between 1 March and 31 May 2020. These were typically full deferrals of 6 weeks duration or partial deferrals for 12 weeks. Interest during the deferral periods was capitalised. 

The environment remains challenging for Prospa’s small business customers. As a result, the company has set aside a $20 million provision to take into account the impact of the COVID-19 pandemic. An additional $5.5 million is being written off following a review of loan book receivables. 

The above provisions have contributed to an expected earnings loss before interest, tax, depreciation, and amortisation (EBITDA) of $18 million to $22 million. Prior to these adjustments EBITDA was expected to be $4 million to $8 million for FY20. Revenue grew at an annualised rate of 10% over the 9 months to March. This slowed abruptly with the onset of the pandemic, meaning Prospa now expects its FY20 growth to be around 4%. 

What is the outlook for Prospa? 

Prospa says it is seeking to support its small business customers to rebuild and invest for the future. The company is an approved lender under the SME Guarantee Scheme. This scheme has been extended to 30 June 2021 by the Federal Treasurer to support small business recovery. Prospa continues to provide customer relief packages but reports the volume of customer support requests has returned to pre-COVID levels. 

Prospa says it adapted quickly to the challenge of supporting customers as they navigate this period of economic uncertainty. The company says it sees customers across all sectors planning for their recovery.

Prospa’s full-year results will be announced on 27 August. The Prospa share price is trading at 84 cents per share at the time of writing, which is down more than 80% on this time last year.

More reading

• Why AMP, FlexiGroup, Marley Spoon, & Origin shares are tumbling lower
• Telstra and 2 more ASX shares I’d like to buy with $5,000
• FlexiGroup share price sinks 7% lower on disappointing FY 2020 update
• Reliable ASX dividend shares still exist
• Osprey Medical inks new deal with GE Healthcare

Motley Fool contributor Kate O’Brien 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 Prospa share price sinks 15% as online lender announces COVID provisions appeared first on Motley Fool Australia.

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It’s an interesting time to buy ASX shares right now.

The August earnings season is almost upon us. That means we’ll get a good look at Aussie companies’ operations and their finances.

That also means we could see some big share price moves in the next month or so. While that can seem scary, there could be some potential buys right now by picking up shares that may surprise on the upside, come reporting season.

Here are a few ASX shares that I’d like to buy with $5,000 today.

3 ASX shares I’d like to buy with $5,000

First cab off the rank is Telstra Corporation Ltd (ASX: TLS).

The Telstra share price is down just 5.3% this year, but could be good value in my opinion.

The obvious concern is around the NBN and potential impact on long-term earnings. However, I think Telstra’s leadership in the 5G network space could help offset that.

Of course, investors are already pricing that into the share’s current $3.35 valuation. But with the coronavirus pandemic clouding growth and earnings expectations, it’s worth watching Telstra next month.

The Aussie telco has historically been a strong ASX dividend share. It’s currently yielding 2.99% but that may change after August.

A spike in demand thanks to working from home arrangements may boost earnings. Either way, I think we could see more volatility in the Telstra share price this August.

Telstra aside, I also like the look of Saracen Mineral Holdings Limited (ASX: SAR).

The ASX gold share has already rocketed 78.85% higher in 2020 thanks to record gold prices.

Gold prices have surged since March as investors were spooked by the bear market and sought out ‘safe haven’ assets. So the big question is just how good the August earnings result will be for Saracen.

It may not be a cheap buy at $5.92 per share, but I wouldn’t bet against ASX gold shares in 2020.

Finally, I think a broad market index fund could be a good place to invest $5,000.

A passive fund like BetaShares Australia 200 ETF (ASX: A200) could be a good option. This BetaShares ETF seeks to track the S&P/ASX 200 Index (ASX: XJO) with a management fee of just 0.06% p.a.

If you want to invest in ASX shares but don’t have a targeted view on which industries, a broad market ETF could fit the bill.

Foolish takeaway

These are just a few ASX shares that I’d like to buy right now. Of course, it’s important for investors to consider the overall portfolio fit and investment horizon before buying in.

More reading

• A top ‘coronavirus share’ to buy this August
• 5 things to watch on the ASX 200 on Friday
• Coles and Wesfarmers share prices reach for new highs. Should you invest?
• ASX 200 rises 0.75%, Fortescue impresses and Macquarie remains robust
• 3 underperforming ASX 200 stocks that could beat earnings expectations

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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 Telstra and 2 more ASX shares I’d like to buy with $5,000 appeared first on Motley Fool Australia.

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The FlexiGroup Limited (ASX: FXL) share price is sinking lower on Friday following the release of an update on its FY 2020 expectations.

At the time of writing the financial services company’s shares are down 7.5% to $1.23.

What did FlexiGroup announce?

For the 12 months ended 30 June 2020, FlexiGroup’s transaction volumes reached $2.5 billion across its continuing products. This represents a 16% increase on the prior corresponding period.

Despite this solid volume growth, the company expects to report a sharp decline in its cash net profit after tax.

FlexiGroup’s unaudited FY 2020 cash net profit after tax is expected to be $29 million, down 61.9% from $76.1 million a year earlier.

Some of this decline is attributable to a macro overlay provision of $31 million post tax. This relates to the projected impact of economic conditions due to the COVID-19 pandemic.

Excluding this provision, the company’s cash net profit after tax would be down 21.1% year on year to $60 million.

One positive was that its bad debt ratio has remained stable. The company has taken a proactive and supportive approach to assist its customers following the bushfires and during the pandemic. These actions have helped deliver unaudited net losses/average net receivables performance of 4.1% in FY 2020. This compares to 4.2% a year earlier.

COVID-19 provision.

The company’s Chief Executive Officer, Rebecca James, explained that the COVID-19 provision was the prudent thing to do.

She said: “The increased macro overlay provision is a necessary and prudent step as we continue to manage the continued economic uncertainty as a result of COVID-19. What’s particularly reassuring is that despite the significant economic headwinds experienced this year for both the business and our customers, we’ve continued to manage the portfolio in a prudent way.”

Humming along.

FlexiGroup’s chair, Andrew Abercrombie, spoke positively about its humm platform, which rivals Afterpay Ltd (ASX: APT) and  Zip Co Ltd (ASX: Z1P) in the buy now pay later market.

He commented: “This is a strong result, which has seen humm become the only BNPL product which has produced both profits and growth in exceptionally challenging economic circumstances. Balance sheet debt was also reduced during the period notwithstanding the growth in the business.”

“The successful execution of our transformation strategy by the Management Team over the last twelve months has seen flexigroup become one of the largest interest free instalment providers in Australia and New Zealand, with 2.1 million customers and 56,000 merchants,” he added.

Mr Abercrombie appears optimistic on the company’s prospects in FY 2021.

He concluded: “The record customer and retailer numbers experienced over the course of FY20 also put flexigroup in a strong position heading into FY21, supporting future volume growth across our products.”

More reading

• Why AMP, FlexiGroup, Marley Spoon, & Origin shares are tumbling lower
• These are the 10 most shorted shares on the ASX
• 3 exciting ASX growth shares to buy and hold
• Why Catapult, Eclipx, FlexiGroup, & Whispir shares are charging higher
• FlexiGroup share price jumps 8% higher following BNPL update

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 ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended FlexiGroup 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 FlexiGroup share price sinks 7% lower on disappointing FY 2020 update appeared first on Motley Fool Australia.

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People enter share investing for a range of reasons. Some investors chase high growth and are willing to accept the risk that comes with that. Others look for steady increases in share prices over time. However, many try to combine incremental share price increases, with reliable income, or dividend payments. This is the path that I prefer to take when I can. I do heavy research to find solid ASX dividend shares that are selling cheaply and offering reliable dividend payments.

If you buy these types of shares at a low price, then your personal dividend yield is higher. For example, Fortescue Metals Group Limited (ASX: FMG) currently pays a trailing 12 month dividend yield of 5.9% based on today’s price of $17.36. However, if you paid, say, $8.68 or half the current price, then your personal dividend yield would be 11.8%. That is an outstanding result in anybody’s book. It is very hard to get 10% reliable returns with mid-level risk.

Reliable ASX dividend shares

One thing I’ve learned throughout my investing journey is that everything carries a level of risk. For example, banks have always been considered reliable dividend shares. However, during the coronavirus pandemic, I learned that the Australian Prudential Regulation Authority (APRA) can tell the banks not to pay a dividend. If a third party can mandate whether my investment pays a dividend or not, that is an additional risk. This had never entered my mind prior to the pandemic.

The reality today is that dividend paying shares are changeable, and require active management. For instance, yesterday Rio Tinto Limited (ASX: RIO) declared the largest dividend payment in its history. This is because China, our largest iron ore customer, is actually a net importer of steel. This means that the millions and millions of tonnes we export to China each year are not enough to meet its needs.

If this changes, then the dividend equation also changes.

Real estate is another sector known to be a strong dividend payer. Nonetheless, this year we saw REITs with a strong exposure to either residential or retail properties suspend dividends due to coronavirus impacts. For example, retail focused REIT, Vicinity Centres (ASX: VCX) suspended its dividend payment on 1 June. Likewise, GPT Group (ASX: GPT) also withdrew guidance on 19 March. 

In contrast, office or commercial focused REITs have not. Centuria Office REIT (ASX: COF), for example, went ex-dividend on 29 June. As with iron ore miners, the clue here is to understand the underlying business. If the market is telling you to change, then you should change.

2 alternative ASX dividend share options

The companies below cover a range of funds that also pay good dividends, are relatively stable, and are presently priced relatively low. 

Infrastructure funds

One of the newer infrastructure funds that interests me is New Energy Solar Ltd (ASX: NEW). This fund acquires, owns and manages large-scale solar generation facilities. It interests me firstly, because it doesn’t build these facilities for somebody else. Therefore, it has more of an annuity, or recurring style revenue stream. All 16 of the company’s solar plants are presently in operation across Australia and the United States. So it is basically an electricity generator with very low operating costs.

Secondly, and most importantly for any share investing, are the economic factors. New Energy is selling at a price to book ratio of 0.68. This means it is selling at approximately 32% lower than its net tangible asset value. At this price, the company has a trailing 12 month dividend yield of 6.8% which I think is very respectable. I believe that, over time, the share price will grow, but it isn’t going to see explosive growth, making this a good entry point. 

Self storage

Abacus Property Group (ASX: ABP) is ostensibly an REIT with 50.6% in office buildings, 34.4% in storage space, 6.8% in small convenience shopping centres, and about 8.2% in non-core assets. However, for me it is the 34.4% storage space I find interesting. Competing for corporate tenants in the office sector requires significant value add. In fact, in order to attract and keep good clients, there is both an initial and an ongoing expense. 

Yet with self storage, this is vastly reduced to low level sustaining costs only, i.e. repairs, security, minor admin and making sure everything works. Abacus has begun to show a growing interest in accumulating storage assets. Recently it increased its holding in rival National Storage REIT (ASX: NSR) to 8.09%. Like New Energy Solar above, this moves more of the company’s revenues into the annuity or recurring business model. 

Importantly, Abacus has a price to book ratio of 0.77 at the time of writing. Like New Energy, one could hypothetically buy the entire company and sell its assets for a profit. Abacus currently has a trailing 12 month dividend yield of 6.95%.

Foolish takeaway

The coronavirus has turned many long-standing investing beliefs on their heads. For example, companies we used to think of as solid ASX dividend shares have found themselves either restricted from paying, or totally unable to pay. The lesson here for me has been that income investors also need to be active investors. Moreover, share investing for income requires a good understanding of the sector dynamics, and making sure that you are buying a company at a good entry price. 

More reading

• Is the Fortescue share price too expensive?
• Why Fortescue and these ASX 200 shares are at record highs
• 2 top ASX shares to buy for reporting season
• ASX 200 rises 0.75%, Fortescue impresses and Macquarie remains robust
• 3 latest ASX 200 stocks to be downgraded by top brokers today

Motley Fool contributor Daryl Mather owns shares of Centuria Office REIT and Fortescue Metals Group Limited. 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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