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Do you have $500 spare to invest?

Because that’s all you need if you have the patience to buy ASX shares for the long run.

Of course, it always helps to buy stocks for as low a price as possible. Each cent you don’t spend on the initial outlay is a potential cent that will go towards profits later.

Here are two cheap ASX shares I think could be smart buys for investors that are willing to hold them for years:

Doubled in a year, but no doubt these are still cheap ASX shares

The Avita Medical Inc (ASX: AVH) share price has more than doubled over the past year, so it might seem absurd that I’m calling it “cheap”.

But the stock is still down more than 70% from its pre-COVID high.

The biotechnology stock makes regenerative products for burns patients. The nature of the sector means supreme patience is required from investors for products to go through all the testing and approval hurdles.

Professional investors are bullish on the future for Avita Medical.

According to CMC Invest, nine out of 10 analysts covering the stock are rating it as an add. Among those, eight think it’s a strong buy.

Multiple tailwinds for this US giant

Block Inc CDI (ASX: SQ2) shares have halved since April 2022, so it’s certainly looking cheap right now.

But the ASX stock only listed in January 2022 after the US giant acquired Australia’s Afterpay.

If you look at the track record of the original stock, Block Inc (NYSE: SQ), the current discount is even more astounding.

From its August 2021 peak, the Block share price is now down more than 77%.

The fintech has multiple factors running in its favour for the coming years.

First is that interest rate rises may have peaked and some cuts might even be around the corner. That will be a boost for growth stocks and consumer-facing businesses like Block Inc.

Second is that the business has consciously made an effort recently to reduce costs and reckless stock dilution to remunerate staff.

The third is that its interests in cryptocurrency could soon become a tailwind rather than a burden, as that market emerges from a multi-year winter.

Already Bitcoin (CRYPTO: BTC) has rocketed 42% in value over the past six months, with the approval and launch of spot ETFs in the US giving it a major long-term push.

All three analysts studying Block Inc rate it a strong buy right now, according to CMC Invest.

The post Have $500? 2 absurdly cheap ASX shares I think long-term investors should buy right now appeared first on The Motley Fool Australia.

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More reading

• Why Block, Domino’s, IDP Education, and Sayona Mining shares are sinking like stones today
• The ASX 200 stock that could rocket now that Bitcoin ETFs are running
• 2 ASX 200 shares that could surge in 2024 if the RBA cuts interest rates
• Here are the top 10 ASX 200 shares today
• How I’d invest $300 a month in ASX shares to target $22,000 annual passive income!

Motley Fool contributor Tony Yoo has positions in Avita Medical, Bitcoin, and Block. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Avita Medical, Bitcoin, and Block. The Motley Fool Australia has positions in and has recommended Bitcoin and Block. The Motley Fool Australia has recommended Avita Medical. 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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ASX ETF provider BetaShares says last year was a record year for growth in exchange-traded funds (ETFs).

BetaShares co-founder Ilan Israelstam says ETFs received $15 billion in net inflows from investors in 2023.

This, along with asset value appreciation, helped the Australian ETF industry achieve its highest increase in annual funds under management (FUM) ever, up 33% in 2023 to a total market cap of $177.5 billion.

While this was happening, unlisted Australian managed funds had their worst year on record, with net outflows of $36.9 billion.

Israelstam said:

The industry grew $43.7B in 2023 – an industry record in terms of $ annual growth. 2/3 of this growth came from market appreciation with the remainder deriving from investor inflows and unlisted fund conversion activity.

Israelstam said Australians had fully embraced ETF investing via the ASX and Cboe Australia since the products were introduced in 2001.

He added that investors’ clear preference for ETFs today was leading to many unlisted managed funds being converted into actively managed ETFs, representing “a significant ‘changing of the guard’ in the Australian asset management industry”.

What type of ASX ETFs did investors favour in 2023?

The net inflows of $15 billion into ETFs last year represented a 12% increase on 2022.

Receiving the most funds were fixed-income, Australian shares and international shares ETFs.

Fixed-income ETFs received $5.3 billion, up from $3.6 billion in 2022. Israelstam said this reflected investors’ desire for defensive assets and higher income in an uncertain economy last year.

Australian shares ETFs received $5.2 billion, up from $4.4 billion in 2022. International equities ETFs received $2.9 billion, down from $3.3 billion in 2022.

The top 5 performing ETFs in 2023

BetaShares has also revealed the top five performing ETFs trading via the ASX and Cboe in 2023.

Although investors ploughed more funds into defensive ETFs last year, it was growth ETFs that delivered the best performance. This was largely due to the broader market turnaround in the second half.

At the top of the list is BetaShares Crypto Innovators ETF (ASX: CRYP), which delivered total returns of 215%.

Here are the others making up the top five ETFs of 2023 for total returns. You’ll note that all of them provide exposure to cryptocurrencies and tech shares.

Two of these products trade on the Cboe exchange (formerly known as Chi-X) rather than the ASX. They are the Global X 21Shares Bitcoin ETF (EBTC) and the Global X 21Shares Ethereum ETF (EETH).

These are managed investment trust ETFs that provide investors with an interest in bitcoin and ether held in cold storage by Coinbase (NASDAQ: COIN), the world’s largest cryptocurrency custodian.

What companies are you buying with the No. 1 ASX ETF?

According to the BetaShares Cryp fact sheet, this crypto ETF aims to track the performance of an index (before fees and expenses) comprising global companies at the forefront of the crypto economy.

The top three holdings in the ETF are Marathon Digital Holdings Inc (NASDAQ: MARA) at 12.4%, Coinbase Global Inc (NASDAQ: COIN) at 9.9%, and Galaxy Digital Holdings Ltd (TSX: GLXY) at 9.4%.

More ETF options for investors in 2023

Last year, 56 new ETFs were launched in Australia, making it the biggest year on record for new products.

Israelstam said:

In what is certainly an accelerating trend, a large proportion of the new launches in 2023 were Active ETFs (46% or 26 funds), with the majority of these launches being via the creation of traded classes of existing unlisted funds (which we call ‘conversions’).

At the end of 2023, the biggest ASX ETF remained the Vanguard Australian Shares Index ETF (ASX: VAS). It tracks the performance of the S&P/ASX 300 Index (ASX: XKO) and has a market cap of $14.38 billion.

What’s next for ASX ETFs in 2024?

Israelstam predicts that investors will continue to adopt ETF investing this year, and markets will be more positive. He reckons total ETF FUM could rise to $200 billion and go as high as $220 billion in a strong market.

In terms of the types of ETFs that investors may favour in 2024, Israelstam thinks international shares will be more attractive as interest rates come down.

He said:

.. we would fully expect investors to adopt more meaningfully growth oriented exposures typically found in global equities ETFs going forward.

We recently documented the top performers of 2023 among ETFs holding only Australian shares.

There was a clearly dominant theme among Aussie shares ETFs, and it wasn’t crypto or tech. It was environmental, social, and corporate governance (ESG).

The post In a record year for ETFs growth, this ASX crypto fund returned 215% appeared first on The Motley Fool Australia.

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More reading

• How much does Vanguard Australian Shares Index ETF (VAS) pay in dividends?
• 3 no-brainer ASX 300 shares I’d buy right now without hesitation
• How I’d build a backup superannuation fund with $10,000 and 5 ASX shares
• I’m buying cheap ASX shares to build my wealth in 2024 and beyond
• How I’d create investment cash flow in retirement from ASX ETFs

Motley Fool contributor Bronwyn Allen has positions in Vanguard Australian Shares Index ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Betashares Crypto Innovators ETF and Coinbase Global. 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 Scott Phillips.

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I’d love to receive $30,000 of annual passive income, but right now, I’m only getting a fraction of that. I hope to get there in the future!

So how quickly could I reach that target?

It’d be easy if I won the lottery or inherited $1 million. Then I’d just need to invest in a portfolio of ASX shares with an average dividend yield of 3%.

Every household has a different financial setup, so regularly putting money into the stock market will depend on individual situations. Investing $1,000 per month seems like a nice round target, so I’m going to use that as an example to get us to $1 million.

The share market has returned an average of roughly 10% per annum over the long term. Future returns could be stronger or weaker than that, particularly in the short term.

In 24 years, the total value could grow to $1.06 million. With a 3% dividend yield, that’s actually $31,800 of annual passive income. If a 20-year-old could reach that by age 44, they’d be sitting very nicely (financially)!

Do I need to wait 24 years to get $30,000 of annual passive income?

There are a few key ways to build up that cash flow faster.

First, by investing more. In my example, we talked about $1,000 per month. Maybe you can only invest $1,000 per month in the first year, but then circumstances change, and you can invest $2,000 per month. It would take less than 18 years if $2,000 were invested per month.

The second option is to choose investments that could deliver stronger growth. I regularly write about ASX shares I think are capable of producing returns that could beat the market.

FiThe third option is to choose investments with a higher dividend yield. I’ve assumed the dividend yield for the portfolio will be 3%. But there are plenty of businesses with much higher dividend yields.

Keep in mind that higher-yielding ASX shares could reduce their passive income and company growth rate (because it’s not keeping as much money available to invest for growth).

Having said that, a portfolio with an average yield of 6% would mean the portfolio only needs to reach $500,000. That’s half the size!

Reaching $500,000 is a much more achievable total. Going for higher-yield stocks may sacrifice some growth, but we can re-invest the dividends received into more shares and build wealth using compounding.

The post How quickly could I build a $30k annual passive income with ASX shares? appeared first on The Motley Fool Australia.

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More reading

• At 20x earnings and a 4% yield, surely I can’t ignore this ASX 200 stock?
• Brokers say buy these ASX 200 dividend stocks with juicy yields
• Why I think Lovisa stock is an amazing ASX 200 buy for both dividends and growth
• If I invested $10,000 into Pilbara Minerals shares 10 years ago, I would have…
• Retirees: 2 Top ASX dividend shares I’d buy now for passive income in 2024

Motley Fool contributor Tristan Harrison 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 Scott Phillips.

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Investors love to use the price-to-earnings (P/E) ratio to value ASX 200 stocks. But the P/E ratio isn’t an absolute indicator of whether an ASX 200 stock is cheap or not.

For example, I would be happy to pay a 20x earnings multiple for Lottery Corp Ltd (ASX: TLC) shares. But if ANZ Group Holdings Ltd (ASX: ANZ) shares were going with a P/E ratio of 20, I wouldn’t buy them with free money.

Yet there’s one ASX 200 stock that I think is currently in a sweet spot with its P/E ratio of 20. At this valuation, this stock also comes with a fully franked dividend yield of 4.2%.

I’m talking about Coles Group Ltd (ASX: COL).

Coles is a business we’d all be familiar with. The company is the second-largest grocer in Australia, with a market capitalisation of just over $21 billion.

Is this ASX 200 stock cheap?

Just to be clear, I don’t view Coles’ 20x earnings multiple as bargain-basement cheap. But I do think it represents a decent and compelling value for an ASX 200 stock today.

Especially so considering its arch-rival consumer staple Woolworths Group Ltd (ASX: WOW) is currently 35% more expensive than Coles with its present multiple of around 27. That’s with a much lower dividend yield of roughly 2.87%.

Think about what you are buying at this 20x earnings multiple. You are getting one of the most resilient businesses in Australia that all of us either have to shop at or visit a competitor in the same sector.

After all, we all need, not want, to buy the food, drinks and household essentials that Coles sells. That’s regardless of whether the economy is booming or in recession or whether we have high or low inflation.

And Coles is often the cheapest, or at least second-cheapest, place you can obtain these consumer staples.

That makes this ASX 200 stock phenomenally strong and resilient, in my view.

This strength can be seen in Coles’ dividend track record. Since hitting the ASX boards in its own right in late 2018, Coles has been able to raise its annual dividend every single year.

If you’re looking for a healthy, reliable ASX 200 stock that pays out generous dividends, I think it’s hard to go past Coles right now.

The post At 20x earnings and a 4% yield, surely I can’t ignore this ASX 200 stock? appeared first on The Motley Fool Australia.

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More reading

• Woolworths share price in the red as CEO denies trying to ‘cancel’ Australia Day
• Boost your second income with these buy-rated ASX dividend stocks
• How I’d build a backup superannuation fund with $10,000 and 5 ASX shares
• Own Woolworths shares? Here’s a $15 billion piece of news
• Top ASX shares to buy in 2024 instead of investing in a term deposit

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lottery. The Motley Fool Australia has positions in and has recommended Coles Group. 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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If you’re in the market for some ASX 200 dividend stocks, then it could be worth taking a look at the two listed below.

Here’s why brokers have tipped them as buys:

Centuria Industrial Reit (ASX: CIP)

The first ASX 200 dividend stock that has been given the seal of approval by brokers is Centuria Industrial.

It is Australia’s largest domestic pure play industrial REIT. It owns a portfolio of high-quality industrial assets that are situated in urban infill locations throughout Australia. This includes distribution centres, logistic hubs, data centres, manufacturing hubs, and cold storage facilities.

The team at Macquarie is positive on the company and has an outperform rating and $3.41 price target on its shares.

As for income, the broker is expecting dividends per share of 16 cents in both FY 2024 and 16.5 cents in FY 2025. Based on the current Centuria Industrial share price of $3.18, this represents yields of 5% and 5.2%, respectively.

Deterra Royalties Ltd (ASX: DRR)

Another ASX 200 dividend stock that could be a buy according to brokers is mining royalty company Deterra Royalties.

Its primary focus is on bulks, base metals, and battery metals. This includes the lucrative Mining Area C iron ore operation, which is co-owned by mining behemoth BHP Group Ltd (ASX: BHP).

Morgan Stanley is feeling positive about the company thanks to high iron ore prices. It has an overweight rating and $5.65 price target on its shares.

As for dividends, it is forecasting fully franked dividends per share of 40.3 cents in FY 2024 and 30.1 cents in FY 2025. Based on the current Deterra Royalties share price of $5.38, this will mean yields of 7.5% and 5.6%, respectively.

The post Brokers say buy these ASX 200 dividend stocks with juicy yields appeared first on The Motley Fool Australia.

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More reading

• 2 defensive ASX income shares I think investors should consider buying for bumper returns!
• Analysts say these 3 ASX dividend stocks are buys with big yields
• Here are the top 10 ASX 200 shares today
• 3 ASX dividend stocks to boost your income portfolio in 2024
• Where I’d invest $3,000 into ASX dividend shares in January

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 positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. 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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Lovisa Holdings Ltd (ASX: LOV) stock is a really attractive investment to me for both its dividends and growth. The S&P/ASX 200 Index (ASX: XJO) share has plenty of pleasing characteristics, which I’ll explore in this article.

Lovisa sells affordable jewellery to younger shoppers.

Strong profitable growth

Investors often like to judge a company based on profit and how much it’s expected to make. In FY23, on a 52-week comparative basis, Lovisa grew net profit after tax (NPAT) by 20.1% to $68.2 million.

A key part of Lovisa’s growth (and that of almost any ASX 200 share) is revenue growth. Store count growth is a large driver of revenue growth. In FY23, Lovisa’s revenue rose by 33.1% on a 52-week basis, and the store count grew by 27% (or 172 stores) to 801 stores.

A lot of those new stores have been open for less than a year, so a full 12 months of operations will add to revenue and profit. Opening a new store or entering a new country comes with costs before any revenue flows in. It’s an upfront investment but well worth it.

Lovisa entered a number of new markets in FY23, including Hong Kong, Taiwan, Namibia, Botswana, Spain, Italy, Hungry, Romania, UAE and Mexico. In FY24, it’s entering markets like China and Vietnam. The longer the growth runway, the more it can help Lovisa stock.

At the end of FY23, it had 195 stores in Australia and New Zealand out of a global total of 801.

The company could open a significant number of potential stores in the next decade.

For now, I’m just working on the premise that Lovisa can roughly double its store count over the next five years. This could boost its revenue and profit by roughly double, particularly if operating leverage can help with its growing store count. This would then be very supportive of Lovisa’s stock price, in my opinion.

Great dividends

If revenue and profit can continue to grow at the rate I think it might, there could be a lot of scope for the dividend to keep growing if it sticks to the same dividend payout ratio.

I’d expect capital growth to make up the larger portion of overall returns over the long term from this ASX 200 share. But the dividends are a welcome boost, particularly if we don’t want to sell any shares and still benefit from the profit growth.

In FY23, the company paid an annual dividend per share of 69 cents. That translates into a trailing cash yield of 3% and a grossed-up dividend yield of around 4%.

The dividend may not be as strong in FY24 based on the current retail conditions, but by FY26, it could pay an annual dividend per share of 91 cents (according to Commsec). This would be a potential cash yield of 4% or a grossed-up dividend yield of more than 5%.

At the current Lovisa stock price, I’d be happy to buy some shares for the long term and top up on any sell-offs.

The post Why I think Lovisa stock is an amazing ASX 200 buy for both dividends and growth appeared first on The Motley Fool Australia.

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More reading

• Here’s how I’m targeting a generous ASX passive income in retirement!
• Here are the top 10 ASX 200 shares today
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Tristan Harrison has positions in Lovisa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Pilbara Minerals Ltd (ASX: PLS) shares have been on a wild ride over the last 12 months.

After soaring to a 52-week high of $5.43 in August, the lithium miner’s shares ended the week at $3.53.

While the decline over the five months might be disappointing for some, I doubt that longer term shareholders will be too dismayed.

That’s because Pilbara Minerals’ shares have delivered staggering returns for them over the last decade.

The state of play a decade ago

If you were to have invested in Pilbara Minerals shares 10 years ago, you wouldn’t have been investing in an ASX lithium share.

This battery making ingredient wasn’t on the menu for the company at that point.

For example, in November 2013, the company raised $750,000 to support drilling activities at the Tabba Tabba Tantalum Project in Western Australia.

It wasn’t until a year later that the company signed an agreement to “evaluate the potential to produce high-grade lithium carbonate from the extensive lepidolite mineralisation at its 100%-owned Pilgangoora Lithium-Tantalum Project in the Pilbara region of Western Australia.”

The company’s CEO at the time, David Biddle, said: “This is a great opportunity which could unlock substantial value.”

He wasn’t wrong.

What would $10,000 invested in Pilbara Minerals shares 10 years ago be worth now?

If you had been lucky enough to invest $10,000 into Pilbara Minerals shares in January 2014, you would have been able to snap them up for 3 cents each.

This means you would have ended up holding approximately 333,333 units.

Fast forward to today, with the Pilbara Minerals share price now fetching $3.53, those units would be worth almost $1.2 million if you had held onto them.

It’s also worth noting that over the last 12 months, the company has paid out 25 cents per share in fully franked dividends.

That would have seen you receive a pay check of approximately $83,000 in dividends for the 12 months.

I think I might look for the next Pilbara Minerals this long weekend!

The post If I invested $10,000 into Pilbara Minerals shares 10 years ago, I would have… appeared first on The Motley Fool Australia.

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More reading

• Here’s what Bell Potter is saying about the Pilbara Minerals share price
• Here are the top 10 ASX 200 shares today
• Is the Pilbara Minerals’ interim dividend at risk of being axed?
• Why Karoon Energy, Kogan, Northern Star, and Pilbara Minerals shares are jumping today
• Pilbara Minerals shares charge higher on rock solid Q2 update

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 Scott Phillips.

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If I were retired, I would make sure to keep investing in ASX dividend shares to fund a comfortable lifestyle with passive income that would ideally last as long as I needed it to. But I wouldn’t just invest in any dividend-paying share if I was in this fortunate position.

For retirees, income certainty is one of the most important traits that a dividend share can possess. After all, we wouldn’t want to have any unexpected passive income droughts in our golden years just because a company decides to cut its dividend.

So with that in mind, here are two ASX dividend shares I would happily buy if I were retired today for 2024 and beyond

2 ASX dividend shares I would buy for passive income in 2024

Telstra Group Ltd (ASX: TLS)

First up is a company we’d probably all know (and may or may not love), Telstra. Retirees who have been relying on dividends for many years might have bad memories of Telstra’s dividend cuts back in 2016 and 2017.

However, the Telstra of today is a completely different beast, with the woes of the NBN rollout well behind it.

Today, the telco easily maintains its role at the top of the Australian mobile and broadband markets. Telstra is simply the preferred provider of telecommunication services in the country.

According to the Australian Competition and Consumer Commission (ACCC), the company has a near-41% share of total NBN connections. Its closest rival, TPG Telecom Ltd (ASX: TPG), has just a 21.3% share. The numbers are similar when it comes to mobile connections.

That makes this company extremely resilient, in my view. Telstra maintained its dividend all throughout the pandemic and even gave investors a pay rise last year.

What’s more, Telstra shares offer an attractive and fully-franked dividend yield of almost 4.3% today.

Transurban Group (ASX: TCL)

Next up, we have another company most city dwellers may know if not love. Transurban is the largest toll road operator in the country. It runs almost every toll road in Sydney, as well as several across Melbourne and Brisbane.

If you regularly motor around any of these major cities, you’d be familiar with how hard it is to avoid paying Transurban for the privilege.

Most of the company’s roads are major arterial routes.  But even better (for investors, not motorists), Transurban has generous provisions built into most of its long-term contracts for these toll roads.

Most allow the company to increase its tolls every quarter by at least the rate of inflation. Some even allow increases at the rate of inflation or 4%, whichever is higher.

All this makes Transurban a fantastic and reliable ASX passive income payer, in my view, and one perfect for a retiree. Today, the company has a chunky trailing yield of 4.68% on the table.

The post Retirees: 2 Top ASX dividend shares I’d buy now for passive income in 2024 appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Telstra Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Tpg Telecom. 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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It saddens me greatly that our national day of celebration is so controversial these days.

It’s understandable that the ‘date’ is controversial – I’m not sure the arrival of the First Fleet is the right thing to commemorate, given the impact that event had on Indigenous Australians, and that it would cost us nothing to choose a different date.

It’s just a shame that as a result – and given the various and contradictory emotions January 26th stirs up – the controversy detracts from our ability to celebrate a national day, together, in unity.

Because we have much to celebrate, as a country. And we should.

As I’ve written many times, on January 26th and other dates throughout the year, that we have problems, but I don’t know that there would be many countries on Earth that wouldn’t swap their problems for ours.

And, as I also write regularly, we don’t have to be free of those problems to celebrate the good stuff, just as we shouldn’t let those celebrations blind us to the things we need to fix.

Indeed, while Aboriginal and Torres Strait Islander people were here long, long before 1788, modern Australia had its roots famously (infamously?) as a penal colony.

And from that inauspicious start – criminals and dispossessed original inhabitants – we have built a modern, prosperous, tolerant society. We are blessed with natural beauty and a largely (though not entirely) benign climate.

We have a past that we are still yet to entirely or appropriately reckon with, but we have a future that can be as bright as we’re prepared to make it.

Yes, economically, but more than that, too. After all, the economy is vitally important to the society, but it serves that society, not the other way around.

Australia is one of the richest nations on Earth. We aren’t as equal as some, but we’re far more equal than many, and even that equality sees all but the very poorest Australians better off than almost all of the rest of the world. Native-born Australians truly have won what Warren Buffett calls ‘the ovarian lottery’, and those who have joined us by choice have made a wonderful decision.

We have experienced social, sporting and economic success that is the envy of most other nations. And, as evidenced by recent events, we have started to infiltrate the aristocracy of Europe, and will shortly commence our takeover of those institutions. Queen Mary is playing the long game. Just wait and see… (Okay, that last point may not be entirely true. But you can’t prove it’s not, and it would only take a small change to our Constitution to make Denmark an Australian State. We’d even let Frederick be the first gentleman to Governor Mary Donaldson!)

No, we shouldn’t start believing in an Australian ‘exceptionalism’ of the sort that intoxicates many of our American friends when they think about their homeland. But we should be proud of the country we are and have become.

Because from those reflections, we can take inspiration as we think about the country we aim to be. The things we want to continue doing, and being. The parts of our national life we might want to minimise or jettison, and those things we might want to do more of, or start doing, as we aim to make our country even better.

Our national flag is sometimes hijacked by those who would be less tolerant, more divisive or less caring. That’s not who we are.

But also, its rejection, and the rejection of national pride or national ambition by others also misses the mark.

(No, this isn’t a ‘both sides’ thing: The former are despicable, while the latter are simply misguided, in my view.)

We should be proud to be Australian. Proud of the economic development and success we’ve achieved. Proud that we were one of the first countries to grant women suffrage, and of the secret ballot (that was, for a while, known around the world as ‘the Australian ballot’). Proud of the wealth we’ve created, and the culture we embrace. Proud of the ‘fair go’ and a national system of safety nets that are some of the best in the world. 

We should be proud of our sportspeople who have taken on the world, and won. And also our scientists, businesspeople and diplomats. Our war veterans and our aid volunteers. The oldest continuous culture in the world. Our national parks and our philanthropists. And yes, even our sometimes-dysfunctional democracy.

I am the last person to give anyone a free pass if they’re doing the wrong thing, as you may know by now. And we shouldn’t paper over our issues just because other parts of our nation are wonderful. We should never lose sight of our obligation to help make things better, particularly for those who are unable to have an equal chance of making them better for themselves.

But I’m also very careful to remember that being able to point out things that, on a national scale, are usually minor imperfections in an otherwise strong and vibrant country is a privilege many others don’t have – either because dissent is not allowed, or because our problems are tiny compare to the issues many others face.

I will be celebrating Australia today. Not because the date is the right one, or because we have no problems, but because those things can be true at the same time as we recognise how bloody lucky we are to live here, whether we were born here or arrived here to make a new life.

It is my deep hope that this time next year, we can all say that the last 12 months was yet another year of (imperfect) improvement for our country; another year that took the national project further in the right direction.

Happy Australia Day. 

Fool on!

The post Happy Australia Day 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 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 Scott Phillips.

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Believe it or not, many Australians are closer to retirement than they think.

That’s because ASX shares and compounding can accelerate your investment, taking it to a level where each year a useful amount of cash can be extracted.

Let’s take a hypothetical look at how one can do this:

Growth vs dividend vs cyclical shares

We’ll imagine you can start with $40,000 of stocks.

Why that number? Comparison site Finder last year conducted research that found the average amount of savings Australians had in the bank was around that mark.

While there are many different styles one could employ in constructing a stock portfolio, personally I’m a fan of ASX growth shares.

That’s because I find it fun to watch the businesses I’ve backed grow to new levels. It’s fascinating to see what new products and services these companies will come up with next, and the markets that they will expand to.

It’s almost like watching sport.

Also, I find growth stocks arguably lower maintenance than ASX dividend shares or cyclical stocks.

You don’t have to worry about reinvesting dividends each year, which requires decisions about what stocks to buy and complicates capital gains tax calculations.

And cyclical stocks require careful monitoring of macroeconomics and commodity prices, and possible buying and selling, which is a hassle I don’t need.

What kind of returns could I aim for?

Now, with that $40,000 growth portfolio, I reckon it’s not out of the question to get 12% compound annual growth rate (CAGR) out of it in the long run.

Is that realistic? Take some popular stocks as an example: 

• Lovisa Holdings Ltd (ASX: LOV) shares have tripled over the past five years, meaning a CAGR of 24.6%
• An arguably more mature company, Xero Ltd (ASX: XRO), has seen its shares rise 166% over the same time, which equates to 21.6% annually
• And Resmed CDI (ASX: RMD), despite all its Ozempic-related troubles in the past six months, has still gained 84.4% over the last half-decade for a CAGR of 13%

Of course, not every stock in the portfolio will necessarily do as well as the above.

But with careful diversification, these sorts of stars will carry your other picks that haven’t turned out so well, and overall you gain 12% each year.

Passive income to retire on

So that $40,000, with $400 added each month and growing at 12% a year, will end up around: 

• $208,000 after 10 years
• $397,000 after 15 years
• $731,000 after 20 years

The idea is that whenever you decide to turn on the passive income tap, you start selling off that year’s gains and pocket the proceeds.

You can pick when you retire. The later you can leave it, the greater the passive income will be.

In our example, after 10 years the annual income will be $25,000. If you can wait 15 years, the yearly reward will be more than $47,000.

If you have enough patience to not touch the nest egg for two decades, you can harvest an enticing passive income each year in excess of $87,000.

Can you even imagine receiving $87,000 every 12 months in return for no work?

That’s how I’m planning to put my feet up.

The post Here’s how I’m targeting a generous ASX passive income in retirement! appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in Lovisa, ResMed, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa, ResMed, and Xero. The Motley Fool Australia has positions in and has recommended ResMed and Xero. The Motley Fool Australia has recommended Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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