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The Magellan Financial Group Ltd (ASX: MFG) share price is up 2.94% after the company released its funds under management report for August 2020 yesterday. At the time of writing, the Magellan share price is trading at $60.14 after closing yesterday’s session lower for the day at $58.42.

What was in the announcement?

According to Magellan, its total funds under management were up by $2.35 billion from the previous month to $100.87 billion at 31 August 2020.

Retail funds under management were up from $26.59 billion at 31 July to $27.49 billion at 31 August.

Institutional funds under management rose from $71.94 billion at 31 July to $73.38 billion at the end of August.

Funds invested by Magellan in global equities rose from $74.82 billion at the end of July 2020 to $77.12 billion at the end of August 2020. Funds invested in infrastructure equities declined from $16.6 billion at 31 July to $16.36 billion at 31 August. Magellan had $7.39 billion invested in Australian equities at the end of August, up from $7.11 billion at the end of July.

In August, Magellan’s funds under management were supported by net inflows of $566 million, this included net retail inflows of $208 million and net institutional inflows of $358 million.

About the Magellan share price

Magellan Financial Group is a funds management company that operates listed and unlisted managed funds. It has grown significantly since it was founded in 2006 and the rising Magellan share price has seen it become a top 100 ASX company.

In the financial year to 30 June 2020, Magellan had average funds under management of $95.5 billion, an increase of 26% compared to the prior year. Adjusted net profit after tax increased by 20% to $438.3 million in the 2020 financial year. Total dividends for the 2020 financial year increased by 16% to 214.9 cents per share, these were franked at 75%.

In August, Magellan announced that it would restructure its retail global equity fund offerings. The company stated that it would consolidate its unlisted Magellan Global Fund, its listed Magellan Global Equities Fund and its listed closed-end Magellan Global Trust into a single fund with an open-end class and a closed-end class, both of these will be listed on the ASX.

The Magellan share price is up 99.8% since its 52 week low of $30.10, it is up 4.17% since the beginning of the year. The Magellan share price is up 12.52% since this time last year.

More reading

• Why Magellan, Nufarm, Opticomm, & Scentre shares are storming higher
• ASX 200 rises 0.3%, CSL reveals COVID-19 vaccine manufacturing deals
• Are IOOF shares in the buy zone today after the MLC acquisition?
• 2 ASX dividend growth shares I would buy right now
• This ASX-listed company makes $5.7 million per employee

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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I like to keep an eye on substantial shareholder notices. This is because these notices give you an idea of which shares large investors, asset managers, and investment funds are buying or selling.

Two notices that have caught my eye today are summarised below. Here’s what these fund managers have been buying:

Star Entertainment Group Ltd (ASX: SGR)

A notice of initial substantial holder shows that Yarra Capital has taken advantage of the pullback in the Star share price in 2020 to increase its stake. According to the notice, between May and September Yarra Capital picked up a total of 2,014,834 Star share for a total consideration of $6,015,210.12. This equates to average price of $2.99 per share, which is roughly in line with where the Star share price is trading today.

This brought the fund manager’s stake to a total of 50,850,614 shares, which represents a 5.3637% interest in the casino and resorts operator. The good news is that it may not be too late to follow Yarra Capital’s lead. Last month analysts at UBS put a buy rating and $3.90 price target on the company’s shares.

Super Retail Group Ltd (ASX: SUL)

Another notice of initial substantial holder reveals that Challenger Ltd (ASX: CGF) has been buying this retailer’s shares over the last few months. According to the notice, Challenger bought a total of 1,873,578 Super Retail shares between May and September. This means the fund manager now owns 11,719,193 Super Retail shares, which represents a 5.19% stake in the company.

Challenger was buying as recently as 3 September when the Super Retail share price was fetching ~$11.00. This is around 3% higher than where its shares are trading at present. But its shares may not be trading lower than this buy price for long. Late last month Citi put a buy rating and $11.90 price target on Super Retail’s shares following its full year results release.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• This ASX-listed company makes $5.7 million per employee
• 5 things to watch on the ASX 200 next week
• Super Retail share price edges higher on FY20 result
• Is the Star Entertainment share price a gamble right now?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited and 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.

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The S&P/ASX 200 Index (ASX: XJO) dividend environment has seen a significant shakeup with household dividend shares such as the big four banks, Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD) unable to maintain market leading yields. In this new era of dividend investing, here are 3 ASX 200 dividend shares that pay a reliable 5% yield. 

1. WAM Capital Limited (ASX: WAM) 

WAM is a Listed Investment Company (LIC) that provides investors exposure to an actively managed diversified portfolio of undervalued growth companies on the ASX.

In FY20, its portfolio delivered an outperformance of 4.4% against the ASX 200 and declared a fully franked dividend of 7.75 cents per share. This brings its total dividends paid for the year to 15.5 cents or a dividend yield of 8.50% at today’s prices. 

WAM has an incredibly consistent history of dividend payments with more than a decade of steadily increasing dividends. Given the significant changes to its investment portfolio to adjust to today’s new environment and its flexible mandate to increase and decrease cash weightings where required, I believe WAM is the ASX 200 dividend share fit for all seasons. 

2. Rio Tinto Limited (ASX: RIO) 

The iron ore spot price has hit a 15-month high following record imports from China. In the first eight months of the year, China imported 759.91mt of iron ore, rising 11 per cent from the January-August period in 2019, according to customs data.

From a supply perspective, Brazil has struggled to maintain output while the rest of the world has been modestly impacted by temporary COVID-19 restrictions. With raging demand and challenging supply side conditions, Australian iron ore miners are positioned to reap the rewards.

I believe Rio Tinto will provide investors exposure to a diversified materials portfolio while ensuring that the upside to iron ore is captured. The recent strength in commodities has enabled Rio Tinto to pay a market-leading dividend yield of 5.90% at today’s prices. I expect iron ore miners to continue to act as leading ASX 200 dividend shares in the short-medium term.  

3. Tassal Group Limited (ASX: TGR) 

Tassal is engaged in the farming and distribution of Atlantic salmon and prawns. In the company’s FY20 results, the company delivered a 13.3% increase in operating EBITA and a 13.4% increase in operating earnings before interest, taxes, depreciation and amortisation (EBITDA).

The business has a strong growth record with year-on-year NPAT growth typically in the low-mid teens. Positive consumer trends in areas such as demand for sustainable brands, home eating and cooking, increasing health awareness and easy to prepare meal solutions further support Tassal’s salmon and prawn sales volumes.

Given its price-to-earnings ratio of just 10, I believe Tassal shares represent good value at today’s prices. Much like WAM, the company’s consistent and strong cash flows has seen more than a decade of steady dividends. It currently pays a dividend  yield of 5.20%.

More reading

• ASX 200 Weekly Wrap: Friday crash pulls ASX back below 6,000 points
• Why the Transurban share price is outperforming today
• WAM Capital share price edges higher on takeover bid
• 2 ASX dividend shares with yields over 10%
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Scentre Group (ASX: SCG) share price has been a strong performer on Tuesday.

In morning trade the Westfield shopping centre operator’s shares are up almost 2.5% to $2.24.

Why is the Scentre share price pushing higher?

Investors have been buying Scentre shares this morning after the release of an update on its rental collections for the month of August.

According to the release, the company was able to collect a total of $183 million of gross rent in August. This represents 86% of monthly gross rental billings, which is another month on month improvement for Scentre.

For example, in June the company collected 80% of gross rental billings and then 82% in July.

This is a major improvement and putting it within sight of its pre-pandemic levels. In both January and February, Scentre was collecting 94% or $200 million of gross rental billings.

Is it safe to buy Scentre shares?

While the trends are certainly improving for Scentre, I’m not in a rush to invest just yet. Especially given speculation that the company could be considering a major equity raising in the near future to reduce its debt load.

However, one broker that remains positive on the company is Morgan Stanley. Even after factoring in the possibility of a $1.8 billion equity raising, the broker has held firm with its overweight rating and $2.70 price target.

This price target represents potential upside of 20% for its shares over the next 12 months. The broker has also pencilled in a 16.4 cents per share distribution in FY 2021, which equates to a very generous 7.3% dividend yield.

Though, not everyone is as positive. Last month Citi retained its sell rating and cut its price target to $1.98. This price target implies potential downside of almost 12% for its shares.

Finally, sitting in the middle is Ord Minnett. Its analysts currently have a hold rating and a $2.20 price target on Scentre’s shares.

Time will tell which broker has made the right call, but I would side with Ord Minnett right now.

More reading

• Last chance to buy ASX REIT shares cheaply
• 4 ASX shares I would avoid for 2020
• ASX 200 plunges 3.1%, Afterpay suffers
• Quarterly rebalance: Coles and Fortescue added to ASX 20, Zip joins the ASX 200
• How household savings could boost these ASX share prices

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price has come under pressure on Tuesday following the release of an update on its equity raising.

At the time of writing the airport operator’s shares are down 2.5% to $5.60.

What did Sydney Airport announce?

On Monday Sydney Airport announced the completion of the retail component of its fully underwritten, pro rata accelerated renounceable 1 for 5.15 entitlement offer.

According to the release, approximately 53,000 of the company’s retail shareholders elected to partially or fully take up their entitlements.

This amounted to eligible retail shareholders subscribing for approximately 94.2 million new shares worth a total of $430 million, which reflects a participation rate of 62% by value.

Retail shortfall bookbuild.

Given that less than two-thirds of the retail entitlements were taken up by shareholders, the company offered approximately 58.1 million new shares for sale via a retail shortfall bookbuild.

This morning Sydney Airport announced that these shares were successfully offloaded at a price of $5.50 per new share. This represents a premium of $0.94 per new share over the offer price of $4.56 per share.

This brought the gross proceeds from the retail entitlement offer to approximately $695 million. Which, combined with its institutional offer, brings the total raised to $2 billion.

This equity raising leaves Sydney Airport with liquidity of $4.6 billion to ride out the storm.

“Strongly positioned when the recovery emerges.”

Sydney Airport’s Chairman, Trevor Gerber, was pleased with the support shown for the equity raising.

He commented: “We would like to thank our securityholders for their continued support. The funds raised will enhance our financial resilience in these challenging times and ensure that we are strongly positioned when the recovery emerges.”

This echoes comments made by the company’s Chief Executive Officer, Geoff Culbert, last month.

He said: “The equity raising will position Sydney Airport for the future. Sydney Airport took pre-emptive action at the start of the COVID-19 pandemic, putting in place significant liquidity which gave us the flexibility to monitor how the situation evolved. Six months into the pandemic, there remains uncertainty as to how long it will take for aviation markets to return to pre-COVID-19 levels.”

“Accordingly, Sydney Airport is taking further decisive action to strengthen its balance sheet and to help ensure it remains well capitalised to meet the challenges presented by an uncertain COVID-19 operating environment, and to ensure it is positioned for growth in the future,” he added.

More reading

• Why Afterpay, ASX, Mesoblast, & Sydney Airport shares are dropping lower
• ASX 200 Weekly Wrap: Friday crash pulls ASX back below 6,000 points
• Why the beaten down share price of this ASX blue chip will fly again
• Top ASX Stock Picks for September 2020
• These market veterans believe a share market pullback is coming. Here’s their surprising advice…

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The recent stock market crash may have caused paper losses for many investors. After all, it was the largest fall in stock prices since the global financial crisis occurred over a decade ago.

However, it may also present an opportunity to buy high-quality businesses while they trade on low valuations. Over time, they have the capacity to deliver sound share price recoveries in many cases.

This could make them significantly more appealing relative to other mainstream assets. As such, now could be the right time to build a diverse portfolio of stocks to benefit from their improving total returns in the coming years.

Low valuations after a stock market crash

Although some share prices have recovered after the stock market crash, a large number of high-quality businesses continue to trade on low valuations. This suggests that they offer wide margins of safety, which could translate into impressive capital returns over the coming years.

A strategy of buying companies when they trade at a discount to their intrinsic value has generally been a sound means of generating market-beating returns in the past. It enables investors to use the stock market’s fluctuations to their advantage, in terms of buying at low prices and potentially selling at higher prices in future.

With the stock market crash causing extremely challenging trading conditions for many industries, some businesses with solid balance sheets and strong track records of profit growth currently trade at low prices. This could make today the ideal time to buy them, as they commence the process of rebuilding after the present economic difficulties they face.

Recovery potential

Of course, low share prices after the stock market crash are unlikely to remain present in perpetuity. The stock market has an excellent track record of recovering from even its very worst declines to post new record highs.

While a recovery may seem unlikely for some businesses that face difficult operating conditions, over time fiscal and monetary policy stimulus is likely to lead to world economy back to stronger levels of growth.

For example, the last stock market crash in 2008/09 caused many investors to become bearish about the prospects for the economy and stock market. However, within a few years, stock prices had generally recovered and investors who bought equities ahead of their turnaround generated high returns in many cases.

Relative appeal

The stock market crash may have dissuaded some investors from buying equities. It may even have convinced them to seek less risky assets such as bonds and cash. However, with low interest rates likely to persist over the medium term, the returns on cash and bonds may prove to be very disappointing.

Similarly, property investments may fail to keep pace with stocks when it comes to total returns. High house prices in many parts of the world could mean that now is the right time to buy undervalued stocks ahead of a likely recovery. They could make a bigger impact on your financial prospects over the long run.

More reading

• Sydney Airport share price lower after completing $2 billion equity raising
• ASX investors given a $1.7bn injection of COVID-19 hope
• 2 ASX shares I’d buy with $750 right now
• Why I would buy Appen and these ASX tech shares after the selloff
• A practical guide on how to invest in ASX shares

Motley Fool contributor Peter Stephens has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (Index:^AXJO) is building on yesterday’s gain as positive leads from overnight markets and optimism for a free COVID-19 vaccine lifts animal spirits.

The top 200 benchmark jumped 0.8% in early trade after notching up a 0.3% gain on Monday.

The upbeat mood is helped by the federal government’s $1.7 billion commitment to provide two potential vaccines for all Australians.

Ready to use COVID-19 vaccine by January?

One of these vaccines could be ready for use in as little as five months, according to a report on Business Insider.

The Morrison government signed contracts with pharmaceutical companies to secure 85 million doses of two vaccines.

One of the deals is with AstraZeneca for their production of the University of Oxford vaccine. The other is for another vaccine being developed by the University of Queensland.

CSL in the frontline of COVID fight

If these treatments are proven to be safe and effective in clinical trials, they will be made in Melbourne at CSL Limited’s (ASX: CSL) facilities.

This puts our largest ASX stock on the frontline of the pandemic. But don’t get too excited. While CSL’s topline will benefit from the contract to produce the vaccines, it won’t be making much profit in this situation.

However, what it will gain in terms of reputation could be a worth more over the longer-term. CSL is already a household name, but it will become a national icon if it’s linked to a successful COVID-19 treatment.

Australian could be first to be vaccinated

Our Prime Minister believes we could be among the first in the world to get vaccinated against the dreaded coronavirus, which infected close to 30 million people worldwide and claimed nearly 900,000 lives.

“Australians will gain free access to a COVID-19 vaccine in 2021 if trials prove successful,” said Prime Minister Scott Morrison said in a statement released yesterday.

“There are no guarantees that these vaccines will prove successful, however the agreement puts Australia at the top of the queue, if our medical experts give the vaccines the green light.”

$1.7 billion is a “cheap” gamble

There is a big “if” in the statement. Most drugs don’t make it past Phase 3 trials, although there are promising signs for both these candidates.

The bottom line is that $1.7 billion is a cheap price to pay given that the cost of COVID-19 to the Australian economy is 100 times that and counting.

When will a COVID-19 vaccine be ready?

The University of Oxford vaccine is already in Phase 3 trials (final human trials) and is the most advanced candidate in the world – if you ignored Russia’s claims.

This vaccine will be the first to be available if all the stars align, and so far, it’s producing a strong immune response without any major safety concerns.

The University of Queensland’s drug isn’t far behind, and it too is showing good promise. This candidate is currently in Phase 1 trials and should be available from mid-2021 onwards if everything goes to plan.

Sadly, things seldom do in the world of drug development, or investing for that matter.

Fingers crossed fellow Fools!

More reading

• A practical guide on how to invest in ASX shares
• Polynovo and one more ASX growth share to buy in 2021
• Is the Mesoblast share price a bargain yet?
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises 0.3%, CSL reveals COVID-19 vaccine manufacturing deals

Brendon Lau owns shares of CSL Ltd. Connect with me on Twitter @brenlau.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If I were investing with $750 today there are at least two ASX shares that I would buy.

You don’t need $10,000 to start investing. The great thing about investing in shares is that you can invest relatively small amounts. If you were investing in property you normally need a deposit of at least 10% of the property value.

I think these two ASX shares would make really good buys:

Bubs Australia Ltd (ASX: BUB)

Bubs is an infant formula business which specialises in goat milk products.

I think it has done a good job of growing the business from a small operator into a company which could deliver big growth. It has its own manufacturing facility in Australia and sells a variety of products.

Infant formula is the main engine for growth though. Bubs’ infant formula has a gross profit margin of around 40%, which is much higher than the overall business gross margin 24%. As infant formula becomes a larger part of the business, Bubs will become more profitable for its revenue.

In FY20 the ASX share’s infant formula revenue grew by 69%, so that segment is now 55% of the business, up from 30% in FY19. Total revenue grew by 32% to $62 million over the year.

Whilst I’m excited by the Chinese revenue growth potential, I think the ‘other markets’ is particularly exciting which now represents 10% of revenue. Vietnam is a key growth market right now. Asia is a very big market, even if you exclude China. 

Bubs recently decided to pursue in-market manufacturing in China. So Bubs is going to acquire a stake in the Beingmate manufacturing facility in China. It’s also looking to launch its China label products into the general trade channel.

The launch of Bubs vitamins and minerals could also be a good move if it gains traction with customers, particularly in Asia.

There are a lot of things going on with Bubs. But I think it only has to be reasonably successful with its overseas growth to deliver solid shareholder returns from the current Bubs share price of under $0.90.

WAM Microcap Limited (ASX: WMI)

I think ASX small cap shares are a great way to deliver good returns. However, you need to be even more picky with small caps than large caps. Smaller businesses have a lot more growth potential, but there’s also a lot more risk.

It’s a lot easier to grow a company’s revenue from $100 million to $200 million than it is to grow revenue from $10 billion to $20 billion.

WAM Microcap is a listed investment company (LIC) which invests in small caps with market capitalisations under $300 million at the time of acquisition. Its portfolio has performed very well since inception, its gross returns per annum has been 17.8% since June 2017.

Some of its current ASX share investments are names like Citadel Group Ltd (ASX: CGL), Redbubble Ltd (ASX: RBL), City Chic Collective Ltd (ASX: CCX), Reject Shop Ltd (ASX: TRS), People Infrastructure Ltd (ASX: PPE) and Temple & Webster Group Ltd (ASX: TPW).

WAM Microcap offers diversification as it’s invested in dozens of names in its portfolio. But it also offers protection with a relatively large cash position. At 31 July 2020, it had a 15.9% cash position weighting. That provides some downside protection and also means it has ammunition if share prices fall.

The LIC is able to pay out a growing dividend from its investment profits. At the current WAM Microcap share price it has an ordinary grossed-up dividend yield of 5.9%. It has also paid a special dividend in each financial year since it listed.

Foolish takeaway

I think WAM Microcap is a nice option for total returns with a mix of dividend and capital growth. Meanwhile, Bubs is an exciting option for long-term growth if it can capture a bit of market share in Asia.

More reading

• Bubs share price trading at a 5-month low. Is this a buying opportunity?
• Here’s how to make a $1 million portfolio by investing $1,000 a month
• I love volatile ASX share market days like today
• ASX 200 rises 0.8%, investors bet on SkyCity
• Why I just bought this ASX share for the long-term

Tristan Harrison owns shares of WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BUBS AUST FPO and Temple & Webster Group Ltd. The Motley Fool Australia has recommended BUBS AUST FPO, Citadel Group Ltd, People Infrastructure Ltd, and Temple & Webster Group Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The tech sector has come under a spot of pressure this month due to a profit taking selloff on Wall Street.

I believe this has pulled a number of ASX tech shares down to very attractive levels.

So if you’ve been sitting patiently and waiting for an opportunity to invest in the sector, I think now could be your time.

Here’s why I think these ASX tech shares are in the buy zone:

Appen Ltd (ASX: APX)

The first share to consider buying is this artificial intelligence services company. I believe the global leader in the development of high-quality, human annotated datasets for machine learning and artificial intelligence (AI) has the potential to grow its earnings at a very strong rate over the 2020s. This is thanks to the growing importance of machine learning and AI for businesses and governments. And with the Appen share price down over 25% from its 52-week high, now could be an opportune time to invest.

Nearmap Ltd (ASX: NEA)

Although the Nearmap share price is only down 10% from its 52-week high, I still think it is worth considering. It is a leading aerial imagery technology and location data company that gives businesses instant access to high resolution aerial imagery, city-scale 3D datasets, and integrated geospatial tools. Due to the quality of its platform, new product launches, and its sizeable market opportunity, I believe Nearmap can grow at a strong rate over the 2020s.

Whispir (ASX: WSP)

The Whispir share price is down 21% from its 52-week high. I think this could make it well worth considering an investment in the software-as-a-service communications workflow platform provider. I believe Whispir has a very bright future ahead of it thanks to its industry-leading software platform. This platform allows governments and businesses to deliver actionable two-way interactions at scale using automated multi-channel communication workflows. Management estimates that the Workflow Communications platform as a Service market could be worth US$8 billion per year by 2024.

More reading

• Top ASX growth shares to buy in September 2020
• Broker picks best ASX small cap stocks to buy from the reporting season
• Where to invest $500 into ASX shares right now
• Buy these exciting ASX shares after the tech selloff
• 4 exciting small cap ASX tech shares to watch

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 and recommends Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Nearmap Ltd. The Motley Fool Australia owns shares of Appen Ltd. The Motley Fool Australia has recommended Nearmap Ltd. and Whispir Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Industry commentators often make it sound much harder than it is to invest in the share market. However, retail investors like you have a number of practical advantages over these perceived experts. You can invest in the share market for longer. You have relatively little cash to invest, so you can buy what you want. And you don’t have to provide quarterly, half-year or full-year performance updates.

So given that you have all of these advantages, here is a practical guide on how to invest in ASX shares. 

Get a broker

No, not a guy in an expensive pinstripe suit who’s going to charge you $100 to buy or sell what you’re telling him to. Online discount brokers provide a low cost and easy way to buy and sell shares. A number of them even provide some research, charting, watchlists and other tools.

A simple google search or use of a comparison site can be used to find the right broker for you. A quick search shows that you can currently get brokerage for as low as $9.50 per trade.

Formulate a strategy

The so-called experts will say that the hardest thing is to know what to buy. I think they’re nearly right. I personally think that the hardest part of investing is managing your emotions and biases. But stock selection still makes the podium tough.

The key to picking which ASX shares to invest in is to understand yourself and formulate a strategy accordingly. Have decades to invest? Have a huge emergency fund? Risk taker at heart? Then a growth-oriented portfolio will suit you best.

Naturally conservative? Needing the cash in 5 years? Wanting some income to live off of? Then a more defensive dividend portfolio might be for you.

Take the time to write down your goals, financial position and reflect on your psychology. It will serve you well and help you sleep at night.

Research, research, research

For first time investors in ASX shares, this relates to both your general share market and investing knowledge, as well as specific stocks.

Building your fundamental investing knowledge will make you faster at researching businesses, as well as more confident and faster in your decision making. Nowadays there are plenty of free or low cost resources out there. From YouTube, to blogs, to books, find out as much as you can about investing.

At a share-specific level, start to understand some businesses within your ‘circle of competence’. This could be the industry you work in, or products you use everyday. The Motley Fool provides great coverage of a lot of ASX shares on the website and even more detailed and in-depth research in the stock picking services.

Buy and hold, then buy some more

Buy and hold a diversified portfolio for the long term. Personally, I would recommend that new investors start buying broad-based exchange traded funds (ETFs) and then build a diversified portfolio of at least 15–20 shares. This number of investments boosts your chances of beating the market, whilst also reducing the chances of you losing your money over the long term.

An often overlooked key to this is your investing time horizon. Over 20 years, an investment in the S&P/ASX 200 Index (ASX: XJO) or S&P 500 has very little chance of losing you money. Each year less than that will increase your chances of losing money exponentially.

If you’re looking for ideas, my favourite ASX shares to buy now are Nanosonics Ltd (ASX: NAN), Xero Limited (ASX: XRO) and Resmed Inc. (ASX: RMD). Here’s a write up on Xero and some other favourites.

More reading

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• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises 0.3%, CSL reveals COVID-19 vaccine manufacturing deals
• Invest like Warren Buffett and buy and hold these ASX shares

Lloyd Prout owns shares of Nanosonics Limited, Xero Limited and ResMed Inc and expresses his own opinions. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited. The Motley Fool Australia has recommended ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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