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The Telstra Corporation Ltd (ASX: TLS) share price is edging higher today after announcing an unlikely partnership.

At the time of writing, the telco giant’s shares are up 0.5% to $3.93.

Why is the Telstra share price rising?

The Telstra share price is rising today after it announced a deal with archrival TPG Telecom Ltd (ASX: TPG).

According to the release, Telstra and TPG have signed a ground-breaking ten-year regional Multi-Operator Core Network (MOCN) commercial agreement. This agreement will provide significant value to Telstra’s wholesale mobile revenues, while providing TPG’s subscribers with 4G and 5G services within a defined coverage zone across regional and urban fringe areas.

Under the deal, TPG will gain access to around 3,700 of Telstra’s mobile network assets, increasing TPG Telecom’s current 4G coverage from around 96% to 98.8% of the population. Whereas Telstra will gain access to TPG’s spectrum across 4G and 5G, which will allow it to grow its network, increase capacity and continue to provide the country’s largest and fastest network.

“Significant value to shareholders”

Telstra’s CEO, Andrew Penn, believes the deal provides significant value to shareholders and customers and was a continuation of its strategy to maximise the utilisation and monetisation of its assets.

He commented: “This additional spectrum will mean that all Telstra customers will continue to experience Australia’s best and fastest network across the country, in combined 4G and 5G speeds. In particular, the spectrum agreement will ensure that regional and rural customers will now experience faster speeds in more locations on their mobiles.”

The company estimates that the deal will deliver between $1.6 billion and $1.8 billion of revenue to Telstra over the initial 10-year term.

“A material uplift”

TPG’s CEO, Iñaki Berroeta, was pleased with the deal and expects it to significantly expand its mobile network footprint in regional Australia and enable growth of its customer base in regional and metropolitan areas.

He said: “It represents a material uplift in the capability of our network and will provide significant value for TPG Telecom shareholders over the medium and long term. We will be open for business in regional and rural Australia like never before, offering a 4G network that provides 98.8% population coverage and rapidly growing 5G coverage across the nation. The agreement demonstrates best-practice asset utilisation and a commitment to rationalising our operations to deliver a better customer experience, while increasing capital efficiency.”

In response to the agreement, TPG will decommission the 725 mobile sites it currently operates within the coverage area. It notes that this will reduce environmental impact, energy consumption, operating costs, and future capex.

The post Telstra (ASX:TLS) share price rises on surprise TPG deal appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Endeavour Group Ltd (ASX: EDV) share price is in celebration mode on Monday.

At the time of writing, shares in the drinks and hotel network operator are up 11% to $7.23.

Endeavour share price pops amid maiden listed results

• Group sales relatively flat on prior corresponding period, down 0.3% to $6.3 billion
• Earnings before interest and tax increased 3.2% to $556 million
• Group net profit after tax (NPAT) grew 15.6% to $311 million
• Online sales reached $603 million, reflecting an increase of 24.8%
• Earnings per share (EPS) up 16% to 17.4 cents per share
• Fully-franked interim dividend of 12.5 cents per share

What happened during the first half?

Today is a milestone for Endeavour Group, its first full financial reporting period since listing on the ASX. Making it an even more exciting moment is the positive reaction to its half-year results.

After months of trading without a price-sensitive announcement, investors are responding positively to the information disclosed today.

Despite cycling against strong comparables and pushing through a challenging period with Omicron, Endeavour’s sales slipped a minimal 0.6% to $5.7 billion across the retail division. Boding well for the Endeavour share price, earnings improved amid premiumisation and a reduction in promotional spend.

Additionally, the company’s hotel operations remained impacted by COVID-19 measures. Compared to H1 FY20 (2019), sales were down 26%. However, sales lifted 1.9% to $680 million compared to the previous corresponding period.

What did management say?

Endeavour Group managing director and CEO Steve Donohue commented on the result:

Our first 6 months trading as an independent business has demonstrated the structural resilience of the Group. We maintained Group Sales in line with last year, and improved our profitability significantly. This is a positive result during a period which was heavily impacted by COVID-19. These financial outcomes have been delivered through the hard work and dedication of our team who have responded diligently and flexibly to many COVID-19 related challenges.

Regarding the impacts on the hotel segment, Donohue said:

Our Hotels business was particularly hard hit in H1 F22. There were multiple and extensive COVID-19 impacts in the first quarter, including lockdowns in the key markets of Victoria and New South Wales. We have however, continued to invest in our Hotels, retained core team members, deployed new digital services and created COVIDSafe environments; all of which enabled the business to rebound strongly during periods when COVID-19 impacts abated.

What’s next?

Looking ahead, Endeavour has warned that the first six weeks of trading in the second half is tracking behind FY21. Hotels operations are trending 2.9% below last year’s sales, while retail is 2% behind the comparable period. Despite these figures, concern doesn’t appear to be impacting the Endeavour share price today.

Furthermore, the company is wary of potential headwinds including input cost inflation, interest rate increases, and increased competitiveness.

Finally, shareholders can expect to receive their 12.5 cents per share dividend on 28 March. Importantly, shares will go ex-dividend from 1 March.

Endeavour share price snapshot

The Endeavour share price has managed to navigate a difficult environment to provide market-beating returns in the last year. For context, the S&P/ASX 200 Index (ASX: XJO) is up 5.9% in the past 12 months. Meanwhile, the Aussie drinks retailer is up 8.1%.

Based on the current share price, Endeavour Group is trading on a price-to-earnings (P/E) ratio of 26 times.

The post Crack a bottle! Endeavour (ASX:EDV) share price jumps 11% on profit lift appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Motley Fool Australia Chief Investment Officer Scott Phillips joined Peter Overton on Nine’s Late News on Sunday night to discuss the big economic week ahead, including company earnings from Rio Tinto Limited (ASX: RIO), Coles Group Ltd (ASX: COL) and Endeavour Group Ltd (ASX: EDV), plus wages data and business conditions as the RBA weighs up its next move.

The post The week ahead: Earnings, wages and business conditions. Scott Phillips on Nine’s Late News appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Lendlease Group (ASX:LLC) share price is taking a tumble in early trade, down 2.4%.

Lendlease shares closed Friday at $10.31 and are currently trading for $10.07.

Below we look at the highlights from the ASX 200 international property group’s financial results for the half year ending 31 December (1H FY22).

Lendlease share price slides on losses

• Statutory loss after tax came in at $264 million
• Earnings per share (EPS) of 4.1 cents
• Launched $6 billion of investment partnerships to grow funds under management
• Interim dividend of 5 cents per share, unfranked, payable on 16 March

What else happened during the half year?

Lendlease reiterated that FY22 is a reset year for the company. It is working to simplify its operating model with an eye to future growth. And the company has been impacted by the ongoing pandemic.

Despite the sizeable statutory loss, Lendlease reported a core operating profit after tax of $28 million. This figure, the company said, “Reflects Statutory earnings adjusted for non-operating items and the non-core segment.”

The $264 million statutory loss was driven by the loss of $262 million from non-operating items. These included restructuring charges, development impairments and revaluation gains. There was also a loss of $30 million recorded from the company’s non-core segment.

The property group said its gearing of 12% is at the lower end of its 10–20% target range. It has $3 billion in liquidity, comprised of $800 million cash and $2.2 billion in available undrawn debt.

What did management say?

Commenting on the results, Lendlease CEO Tony Lombardo said:

Despite the ongoing impacts of COVID-19, we’ve made significant progress in reducing the cost base of the organisation as well as improving operational execution and capital allocation decisions.

We also made significant headway progressing projects and initiatives we expect will drive future profits. This includes introducing major new investors to our platform, growing our funds under management, and achieving important planning milestones across projects in San Francisco, London and Sydney.

Lendlease CFO, Simon Dixon added:

Financial strength is a priority as we transition through a reset year for the Group. Simplification is enabling a lowering of our operating cost structure that will enhance returns as growth re-emerges.

What’s next?

Lendlease said it expects that the second half of FY22 will see “significant improvement” in its core business activity and profitability, with the first half forecast to “mark the trough”.

The company said costs savings will start to be realised in the upcoming months, with improved productivity from its construction segment amid reduced COVID restrictions. Lendlease has numerous multi-billion projects under development.

Looking ahead, Lombardo said, “We’re confident Lendlease has passed the low in profitability. While COVID risks remain, improved visibility of factors within our control provides more certainty on the outlook for the Group.”

The company releases it full year results on 22 August.

Lendlease share price snapshot

Over the past 12 months the Lendlease share price is down 14%. That compares to a gain of 6% posted by the S&P/ASX 200 Index (ASX: XJO).

Year-to-date, Lendlease shares are down 7%.

The post Lendlease (ASX:LLC) share price tumbles on ‘reset year’ results appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The BlueScope Steel Limited (ASX: BSL) share price is in the red after the company released its earnings for the first half of financial year 2022.

At the time of writing, the BlueScope share price is $18.74, 1.78% lower than its previous close.

Here are the highlights of the company’s earnings results:

BlueScope Steel share price slips despite profits surging

• Net profits after tax (NPAT) of $1.64 billion – up from $1.31 billion in the prior comparable period
• Total revenue of around $9.4 billion – up from around $5.8 billion
• Underlying earnings before interest and tax (EBIT) came to $2.2 billion – $1.67 billion higher
• Underlying pre-tax EBIT return on invested capital of 43.7% – up from 11%
• Unfranked 25 cent interim dividend announced
• Ongoing share buyback increased by up to $700 million over the next 12 months

At the period’s end, BlueScope had $696 million in net cash. It also ended the period with an operating cash flow of $688 million – up from $422 million

So far, the company’s share buyback – originally worth up to $500 million – has seen $285 million of stock purchased.

Over the first half, BlueScope’s North Star business brought in underlying EBIT of around $1.2 billion – 1,665% more than it did in the first half of financial year 2021.

Its Australian Steel Products segment saw $688 million of underlying EBIT, while its Building Products Asia and North America fetched $266 million. That represents increases of 165% and 77% respectively.

Meanwhile, the company’s New Zealand and Pacific Islands segment saw underlying EBIT of $86 million – a 50% increase.

However, its Budlings North America and Corporate and Eliminations segments’ underlying EBIT dropped 74% and 7% respectively – reaching $18 million and a loss of $82 million respectively.  

What else happened in the first half?

During the first half, BlueScope announced collaborations with Rio Tinto Limited (ASX: RIO) and Shell to work towards net zero.

Its partnership with the former sees it working to create low emissions steel. With the latter, the company is exploring renewable hydrogen at Port Kembla.

Also at Port Kembla, BlueScope began a feasibility assessment to reline and upgrade the steelwork’s No. 6 Blast Furnace last half.

The project will secure the company’s domestic ironmaking needs from 2026 and is expected to cost around $1 billion.

It also acquired MetalX – a United States-based two site ferrous scrap steel recycling business – for US$240 million. The business supplies 20% of the scrap material used at BlueScope’s North Star mini-mill.

The first half also saw the company continue its expansion of the North Star mini-mill. The project cost BlueScope $165 million over the 6 months ended 31 December.  

Finally, the company announced its Port Kembla Steelworks and its steel processing sites have been given ResponsibleSteel site certification today.

The steelworks is the first site in the Asia Pacific and the fourth site in the world to be given the certification.

What did management say?

BlueScope managing director and CEO, Mark Vassella commented on the company’s first-half results, saying:

Underlying EBIT for the half year was $2.20 billion, clearly the best half-year performance BlueScope has produced in its 20-year history as a listed company.

Demand in key segments, especially in building and construction, has been strong, coupled with particularly robust margins driven by increased steel prices in Asia and the US.

The balance sheet remains strong with $696 million net cash, which combined with our strong cash flow, gives us confidence to invest for the long-term growth and resilience of the group. BlueScope is well positioned for a low carbon future where it can continue to deliver strong returns to shareholders.

What’s next?

Interested in the BlueScope share price? Here’s what the company is expecting from its full-year results.

BlueScope expects to record between $1.2 billion and $1.35 billion of underlying EBIT for the second half of financial year 2022.

That would make the current half its second-best half-year performance.

However, that expectation is subject to spread, foreign exchange, and market conditions. There are also elevated risks brought about by the pandemic.

The company has noted COVID-19 could impact operations, supply chains, and demand.

Additionally, volatility in steel prices and spreads, as well as the current geopolitical environment could hamper its performance.

BlueScope share price snapshot

The BlueScope share price had a rough start to 2022. It has fallen 9% year to date.

However, it is still 10% higher than it was this time last year.

The post BlueScope (ASX:BSL) share price tumbles despite ‘best half-year’ ever appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

At this point in their evolution, cryptocurrencies aren’t turning into the hedge against market negativity that some investors thought they might. While the price of gold hit $1,900 per ounce for the first time since June 2021, cryptocurrencies are falling as geopolitical tensions rise. Leading the way among the bigger names today is Shiba Inu (CRYPTO: SHIB), which dropped almost 10% early Sunday. The meme coin was still trading down 8.2% as of noon ET Sunday.

So what

With the prospects of a Russian invasion into Ukraine seemingly increasing, Shiba Inu wasn’t the only cryptocurrency dropping. The price of Bitcoin also hit $38,000 for the first time in two weeks today. It is starting to look like gold and other precious metals may hold on to their place as leading market hedges against uncertainty and inflation. 

Now what

There was also another recent sign that cryptocurrencies are being treated more like equities. Federal Reserve officials have been under increased scrutiny over the last year concerning personal investments in stocks and bonds that may appear to have a conflict with central bank decisions. On Friday, new regulations were formally announced where Fed officials won’t be able to trade assets that include stocks and bonds, as well as cryptocurrencies. 

Those rules will take effect May 1, and some investors may view it as another sign that cryptocurrency coins like Shiba Inu won’t provide the balancing force in their portfolios that they intended. 

Some early investors have been wildly successful with bets on Shiba Inu. But for the values of cryptocurrencies in general to have staying power, there will need to be use-cases for them that might range from alternative currencies to stores of value against inflation and other things that tend to negatively affect markets. Recent events aren’t supporting the latter, and Shiba Inu dropped accordingly today. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Shiba Inu was down 10% today appeared first on The Motley Fool Australia.

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Howard Smith has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and recommends Bitcoin. The Motley Fool Australia owns and recommends Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Altium Limited (ASX: ALU) share price is on the slide on Monday morning following the release of its half year results.

At the time of writing, the electronic design software provider’s shares are down 9% to $31.36.

Altium share price lower despite solid growth

• Revenue up 28% over the prior corresponding period to US$102 million
• EBITDA margin improved by 3.5 basis points to 34.1%
• Operating cash flow up 33% to US$33 million
• Net profit after tax up 38% to US$23 million
• Interim dividend up 11% to 21 Australian cents per share
• Cash and cash equivalents of US$195 million

What happened during the first half?

For the six months ended 31 December, Altium delivered a 28% increase in revenue over the prior corresponding period to US$102 million.

The core Board and Systems business performed very well, reporting a 16% increase in revenue to US$79.17 million. This was driven by double digit growth across all regions (except for China) and the NEXUS platform. Management revealed that it experienced strong adoption of Altium 365 during the period. This means there are now over 19,700 monthly active users, which is up 54% since August.

But arguably the highlight of the period was the company’s Octopart search engine, which doubled its revenue to US$22.2 million. This was driven by tailwinds from the global electronic parts shortage.

Management commentary

Altium’s CEO, Aram Mirkazemi, was pleased with the half.

He said: “Altium delivered a strong performance for the first half of fiscal 2022. Momentum has returned to our core PCB business and our business model transition is going smoother than expected with minimal headwinds. Our Octopart business is performing at its all-time best and the adoption of our cloud platform Altium 365 exceeds our expectations.”

“The overwhelming response to Altium 365 from our customers and the broader engineering software industry is most heartening. We are picking up pace toward market dominance and accelerating our transformative vision to digitally connect electronic design and manufacturing to the broader engineering ecosystem.”

“While I am very pleased with our first half performance, we must maintain intensity and focus in the second half, as our first half performance should be compared to a low-base last year that was impacted by COVID and the business and organizational model changes that we made as we pivoted to the cloud,” Mr Mirkazemi added.

Outlook

The company’s outlook was a bit of a mixed bag, which may explain the weakness in the Altium share price today. Although it is guiding to the top end of its previous revenue guidance range, it is expecting to achieve the low end of its margin guidance range.

Altium’s guidance stands at:

• Revenue between US$213 million to US$217 million (18-20% growth).
• Underlying EBITDA margin of 34-36%.
• ARR growth of 23-27%.

It explained: “Altium is upgrading its revenue guidance for fiscal 2022 to the high-end of the range. The margin is likely to be at the low end of the guided range or thereabouts, as Altium plans to scale up its leadership recruitment including new cloud and enterprise sales roles in an increasingly competitive talent market.”

The post Altium (ASX:ALU) share price sinks 9% on half year results appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Altium. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The AGL Energy Limited (ASX: AGL) share price is pushing higher on Monday morning.

At the time of writing, the energy company’s shares are up 9% to $7.82.

Why is the AGL share price rising today?

Investors have been bidding the AGL share price higher today after it received and rejected a takeover approach. Buyers appear optimistic that an improved offer may be tabled down the line.

According to the release, AGL received an unsolicited, preliminary, non-binding indication of interest from a consortium led by Brookfield Asset Management and Atlassian co-founder Mike Cannon-Brookes’ private investment firm, Grok Ventures.

The parties, collectively known as the Brookfield Consortium, are wanting to acquire 100% of the shares in AGL Energy for $7.50 per share by way of a scheme of arrangement. This represents a premium of just 4.7% to the AGL share price at the close of play on Friday.

The AGL Energy Board advised that it believes the proposal materially undervalues the company on a change of control basis and is not in the best interests of shareholders. As a result, it has rejected it and advised shareholders that they do not need to take any action.

What now?

The AGL Energy Board has stated that it remains committed to progressing the proposed demerger of AGL Energy to establish two separately listed businesses, AGL Australia and Accel Energy.

It believes the proposed demerger will deliver better value for AGL Energy shareholders than this takeover proposal.

AGL Energy’s Chairman, Peter Botten, commented: “The proposal does not offer an adequate premium for a change of control and is not in the best interests of AGL Energy shareholders. Under the Unsolicited Proposal the Board believes AGL Energy shareholders would be forgoing the opportunity to realise potential future value via AGL Energy’s proposed demerger as both proposed organisations pursue decisive action on decarbonisation.”

The post AGL (ASX:AGL) share price up 9% amid takeover approach from Atlassian co-founder and Brookfield appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Last Tuesday, BHP Group Ltd (ASX: BHP) dropped its first-half result for the 2022 financial year, delivering a better-than-expected scorecard.

The mining giant’s shares pushed 3% higher during morning trade, though they ended the day slightly in the red. Geopolitical tensions between Russia and Ukraine dragged down the S&P/ASX 200 Index (ASX: XJO) that day by 0.51% to 7,206 points.

Nonetheless, the BHP board opted to declare a record interim dividend of US$1.50 for shareholders.

In the H1 FY22 results call between management and investors, a number of questions were asked regarding BHP’s capital initiatives.

As reported by Livewire, Montgomery Investment Management’s Joseph Kim discussed if the miner should pay dividends or conduct a buyback.

The rundown of BHP’s mammoth interim dividend

Following the company’s half-year results, management highlighted sales and profit growth on the back of favourable commodity prices.

In particular, the group’s main commodity, iron ore, surged above US$200 in July 2021. For every US$1 per tonne the price increased, BHP made $US119 million on underlying earnings before interest, tax, depreciation and amortisation (EBITDA).

The board declared a record interim dividend, totalling US$7.6 billion or a payout ratio of 78% for the first half. This is much higher than the company’s minimum policy of a 50% payout ratio.

Is this the best course of action for BHP?

While investors won’t be complaining about being handsomely rewarded, the BHP share price will fall on the ex-dividend date.

In contrast, a share buyback takes existing shares off the market and, in turn, supports earnings-per-share (EPS) growth. Traditionally, this leads to a higher share price in the future as shareholder value strengthens.

BHP CEO Mike Henry noted that the company’s earnings are cyclical, along with the rest of the resource industry.

Even though there has been a short-term rally in commodity prices, BHP’s earnings are heavily weighted to iron ore. The steelmaking ingredient accounts for around 60% of operating EBITDA.

With record prices realised for coking coal and copper along with the surging price of iron ore, BHP opted against the share buyback. This is because the miner would have been seen to be operating in a pro-cyclical manner. That is, the behaviour and actions of a measurable product or service which moves together with the cyclical condition of the economy.

In addition, the company has the option of returning extra franking credits in the form of an off-market buyback. This would allow it to purchase its own shares much cheaper than what they are going for at the moment.

BHP management clearly believes that the current share price of $47.96 represents good value for investors.

BHP share price summary

Despite travelling 15% higher in 2022, the BHP share price is relatively flat over the last 12 months, up 1.3%.

The company’s shares saw a heavy sell-off in August after reaching an all-time high of $54.55. Since then, its shares hit a 52-week low of $35.56 in November, before rebounding almost 40% higher.

Based on valuation grounds, BHP presides a market capitalisation of roughly $242 billion, and has approximately 5.06 billion shares outstanding.

The post Is the BHP (ASX:BHP) record interim dividend the best use of the miner’s cash? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

If you want to retire as a millionaire, you’d better get started on your journey soon. At a savings rate ordinary people might be able to afford, it’s a process that’s achievable, but it can take decades. Fortunately, ETFs serve as a superb investing tool that can make it easier for you to reach that target.

Indeed, you can retire a millionaire with ETFs alone, as long as you manage your end to end financial plan appropriately. You’ll need to start early enough, invest enough money in an aggressive enough strategy, and convert some money to higher certainty choices as your retirement approaches. In many ways, in fact, ETFs can make your investing job easier as you strive to become a millionaire by retirement.

Why ETFs can help you out

Ultimately, an ETF is just a pre-designed collection of investments. The key advantage of any given ETF is that it offers a one-stop-shop to buy multiple investments within the framework of its underlying strategy, often with low overhead costs. That lets you as an investor focus on the overall strategy or strategies that you’re interested in following, and then let the ETFs handle the work of picking the specific investments within that strategy.

Do you want to invest in the S&P 500? There are several ETFs that will let you track that index. Do you want international exposure without having to become an expert in other countries’ accounting rules? There are ETFs that will help there, too. Are you ready to start converting some of your assets to bonds to give you higher-certainty cash flows for your retirement? There are even ETFs that can help out on that front.

If you want to get the long-term benefits of investing without the hassle or effort of scouring financial statements to try to separate winners from losers, ETFs can be a very powerful tool in your arsenal.

Are there any trade-offs?

All that said, there is still no such thing as a free lunch in investing, and ETFs are no exception to that rule. ETFs generally come with ongoing management fees that you’ll pay every year for owning them. Still, those fees could be a bargain compared to the hassle of managing a diversified portfolio.

In addition to the fees, since ETFs are frequently passively managed to match a strategy, chances are you’ll perform somewhere in line with the average of following that strategy. You’ll be less likely to wildly outperform, but at the same time, you’ll be less likely to wildly trail it, too.

On top of that, since ETFs are simply collections of other assets, you’ll need to dig into their holdings to have a clear understanding of what you own. If you want to pay attention to valuation or diversification, you’ll need to investigate each of your ETFs to make sure you didn’t wind up inadvertently over-invested in an asset you’re not really comfortable holding.

How long will it take to get there?

The following table shows how many years it will take to get to millionaire status starting from $0, depending on how much you can sock away each month and what rate of return you earn. As should be obvious from that table, the more you can sock away and the higher the rate of return you earn, the less time it will take for you to become a millionaire.

Monthly Investment	10% Annual Returns	8% Annual Returns	6% Annual Returns	4% Annual Returns
$2,833.33	13.8	15.2	17.0	19.5
$2,250.00	15.6	17.3	19.6	22.8
$2,208.33	15.7	17.5	19.8	23.1
$1,708.33	17.8	20.0	22.9	27.2
$1,500.00	18.9	21.3	24.5	29.4
$1,000.00	22.5	25.6	30.0	36.8
$500.00	28.9	33.4	40.1	51.1

Data source: author.

Over long periods, the stock market has delivered annualized returns somewhere between the 8% and 10% levels, though those returns are neither guaranteed nor are they smooth. That makes market tracking ETFs a wonderful tool to use over the long run to attempt to reach millionaire status.

As for the monthly investment amounts in that table, those top amounts were not pulled out of thin air. They are based on maxing out 401(k) and IRA contributions for the year. In particular:

• $2,833.33 would max out both a 401(k) and an IRA for an investor age 50 or up. The annual limits in that age bracket are $27,000 for 401(k) contributions and $7,000 for IRA contributions. 
• $2,250.00 would max out a 401(k) for an investor age 50 or up.
• $2,208.33 would max out both a 401(k) and an IRA for an investor under age 50. The annual limits in that age bracket are $20,500 for 401(k) contributions and $6,000 for IRA contributions. 
• $1,708.33 would max out a 401(k) for an investor under age 50.

Get started now

Of course, it is possible to reach millionaire status saving less than those amounts, but it will take longer to reach that target. Don’t despair if you can’t start from scratch and reach your savings goal right away. If you start with what you can and add to your investment amounts when you’re able, it beats putting off investing until later. After all, the less time you have until you retire, the more you’ll have to sock away each month to reach the same end state.

So get started now, and give your ETFs the best chance they can of helping you reach retirement as a millionaire. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Can you retire a millionaire with ETFs alone? appeared first on The Motley Fool Australia.

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Chuck Saletta has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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