Tag: Motley Fool

If you’re new to investing and aren’t confident picking stocks, then exchange traded funds (ETFs) could be the answer. ETFs allow investors to buy large groups of shares in one fell swoop.

But which ETFs could be buys? Two that are popular and filled with high quality shares are listed below. Here’s what you need to know about them:

BetaShares NASDAQ 100 ETF (ASX: NDQ)

The first ETF that could be a buy is BetaShares NASDAQ 100 ETF. This ETF provides investors with access to 100 of the largest (non-financial) companies on the NASDAQ stock exchange.

These are many of the biggest and best companies in the world, with a heavy emphasis on the tech sector. Among the 100 shares included in the ETF are giants such as Amazon, Apple, Meta (Facebook), Microsoft, Netflix, Nvidia, Tesla, and Google parent, Alphabet.

BetaShares notes that this ETF could be a good option for local investors due to its focus on a high-growth potential sector that is under-represented on the Australian sharemarket.

Vanguard US Total Market Shares Index ETF (ASX: VTS)

Another option for investors to consider buying is the Vanguard US Total Market Shares Index ETF.

If you want a more balanced ETF with less of a focus on tech shares, then this ETF could be the one for you. It provides investors access to approximately 3,500 shares listed on the U.S. stock market.

Although this still means it gives investors exposure to many of the tech giants listed above, it also gives investors access to well-known blue chips such as Berkshire Hathaway, Caterpillar, Costco, Home Depot, Johnson & Johnson, Proctor & Gamble, and Visa and Mastercard.

Another positive is that many of these companies pay dividends, which means that it also provides investors with a source of income. At present the ETF offers a trailing 1.7% dividend yield.

The post These top ETFs could be great options for beginner ASX investors appeared first on The Motley Fool Australia.

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More reading

• Top ASX ETFs to buy in February 2023
• 2 fantastic ETFs for ASX investors to buy and hold
• The smartest ASX shares to buy with $20 right now
• How I’d invest $300 a month in ASX shares to target an extra income of $20,000 per year
• 3 scintillating ETFs for ASX investors to buy this month

Motley Fool contributor James Mickleboro has positions in BetaShares Nasdaq 100 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. 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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What if you had no investments and wanted to create a portfolio right now?

What are the first five stocks you would buy as the foundation for your investment stable?

This is a great hypothetical to think about to suppress all the noise, macroeconomics and short-term greed. It forces one to consider the genuine long-term prospects of ASX shares.

As a prime example, TMS Capital portfolio manager Ben Clark was recently asked this very question.

Here are the ASX shares he picked:

Start with some old favourites

Clark would start painting his blank canvas with western Australian conglomerate Wesfarmers Ltd (ASX: WES).

“Wesfarmers is a business, which I truly believe, whose management looked after the shareholders superbly,” Clark said in the On The Couch podcast.

“Bunnings, time and again, has proven to be an incredibly good business to own… This lithium venture’s about to come online in the next year or two.”

Wesfarmers’ is “cashed up”, and Clark feels it can exploit the current downturn to take on even more exciting business ideas.

The next two to add to the portfolio would be CSL Limited (ASX: CSL) and Macquarie Group Ltd (ASX: MQG).

“You got to have Macquarie in there,” said Clark.

“It’s driven by some of the smartest people in the country and on the planet, who are all heavily incentivised to make money for themselves and the business.”

For Clark, though, Macquarie differs from many of its international investment banking rivals.

“You’ve got this very strong risk [management] attitude across the bank, at the top of the bank,” he said.

“The business just continues to ground out higher and higher earnings.”

‘Bedrock of a portfolio’

The fourth pick is Brickworks Limited (ASX: BKW) or Washington H Soul Pattinson and Co Ltd (ASX: SOL), both of which own a considerable amount of each other’s shares.

But funnily enough, the ownership overlap doesn’t seem to correlate to synchronous movements in their stock prices.

“You do find their share prices not correlated, bizarrely, because they should be,” said Clark.

“So sometimes Brickworks will appeal to us more, and sometimes Soul.”

Similar to Macquarie and Wesfarmers, these companies have fingers in many different pies. The diversity seems to smooth out their fortunes over time.

Both Soul Patts and Brickworks are famous for increasing their dividends each year over many decades, regardless of how the economy or the stock market is doing.

“Rising stream of income over many, many years. It’s the bedrock of a portfolio.”

A ‘misunderstood’ gem

The fifth stock to add is mining royalties company Deterra Royalties Ltd (ASX: DRR).

“It’s an incredibly interesting business. But I still think it’s misunderstood.”

Despite the massive presence of mining companies on the ASX, listed royalties companies are few and far between. According to Clark, they are much more common on the Canadian and New York stock exchanges. 

But most seem to earn their keep from gold extraction and the subsequent profits of their tenants. Plus the mines have fairly short lives.

Deterra has none of those things.

“What Deterra has is globally unique,” he said.

“Deterra owns a 1.232% royalty over the MAC [Mining Area C], which about two-thirds of BHP Group Ltd (ASX: BHP)’s total iron ore production comes out of… It’s done on revenue, not profit.”

Also, the MAC mine has an estimated 60-year life, and BHP is increasing production out of it over the next few years.

These differences mean there is much more certainty over the income.

“This year, it should push out, including franking credits, a yield of about 11% or 12%,” said Clark.

“And it’s got net cash on the balance sheet, and I think at some stage, one of those big resource players will come sniffing for it.”

The post 5 ASX 200 shares I would buy if I was starting from scratch: expert appeared first on The Motley Fool Australia.

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More reading

• Forget term deposits! I’d listen to Warren Buffett and invest $250 a month to try to retire rich
• Brokers name 3 ASX shares to buy now
• Do Wesfarmers shares really offer 13% upside AND passive income?
• The top ASX 200 share on my watch list right now
• 4 top ASX 200 shares to pounce on for reporting season: Wilsons

Motley Fool contributor Tony Yoo has positions in CSL, Macquarie Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks, CSL, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks, Macquarie Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. 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 looking for ASX dividend shares to buy for passive income, then the two listed below could be worth looking at.

Both have been tipped as buys with meaningful upside potential and attractive future yields. Here’s what you need to know:

Baby Bunting Group Ltd (ASX: BBN)

The first ASX dividend share to look at is leading baby products retailer Baby Bunting.

Although the company has been having a very tough time in FY 2023 and its shares have been crushed, the team at Ord Minnett remains positive and sees its share price weakness as a buying opportunity.

The broker recently retained its buy rating with a $3.30 price target.

Its analysts expect the company’s performance to improve in the second half. After which, it is expecting a return to profit growth in FY 2024.

Ord Minnett believes this will lead to fully franked dividends per share of 11 cents in FY 2023 and then 15 cents in FY 2024. Based on the current Baby Bunting share price of $2.42, this will mean yields of 4.5% and 6.2%, respectively.

Rural Funds Group (ASX: RFF)

Another ASX dividend share that has been named as a buy is Rural Funds.

It is an agricultural focused real estate investment trust (REIT) with a portfolio of assets including orchards, vineyards, water entitlements, cropping, and cattle farms.

Bell Potter is a fan of the company and believes the current discount to adjusted NAV reflects what would historically be considered an attractive entry point for investors. It has a buy rating and $2.75 price target on Rural Funds shares.

As for dividends, the broker is expecting an 11.7 cents per share dividend in FY 2023 and then a 12.7 cents per share dividend in FY 2024. Based on the current Rural Funds share price of $2.40, this represents yields of 4.9% and 5.3%, respectively.

The post Supercharge your passive income with these buy-rated ASX dividend shares: analysts appeared first on The Motley Fool Australia.

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More reading

• Retirees: 2 steady eddies to provide ASX passive income on the cheap
• 1 oversold ASX dividend stock (yielding 6%) to buy in 2023
• Why I think these 2 ASX dividend shares offer great buying right now
• Buy NAB and this high yield ASX dividend share: experts
• Add these ASX shares to your retirement portfolio for growing income: analysts

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 Baby Bunting Group. The Motley Fool Australia has positions in and has recommended Rural Funds Group. The Motley Fool Australia has recommended Baby Bunting 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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On Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week on a disappointing note. The benchmark index fell 0.75% to 7,433.7 points.

Will the market be able to bounce back from this on Monday? Here are five things to watch:

ASX 200 futures flat

The Australian share market looks set to have a subdued session on Monday following a mixed finish to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day flat this morning. On Wall Street, the Dow Jones was up 0.5% and the S&P 500 rose 0.2%, but the NASDAQ dropped 0.6%.

Oil prices charge higher

ASX 200 energy shares including Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) could have a good start to the week after oil prices charged higher on Friday. According to Bloomberg, the WTI crude oil price was up 2.2% to US$79.76 a barrel and the Brent crude oil price rose 2.4% to US$86.52 a barrel. Traders were bidding oil prices higher after Russia announced plans to cut its production.

Endeavour results

The Endeavour Group Ltd (ASX: EDV) share price will be one to watch on Monday when the drinks giant releases its half year results. Analysts at Goldman Sachs have tipped Endeavour to surprise to the upside with its result. It commented: “Industry feedback from peers and favorable weather suggests that trading in 1H23 is likely to offer positive surprise vs. consensus.” Goldman expects sales of $6,509 million and underlying NPAT of $346 million.

IAG results

The Insurance Australia Group Ltd (ASX: IAG) share price will also be in focus today for the same reason. This insurance giant is scheduled to release its half year results this morning and, according to CommSec, the market is expecting IAG to report a net profit of $420.5 million and an interim dividend of 9.8 cents per share.

Gold price softens

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a subdued start to the week after the gold price softened on Friday. According to CNBC, the spot gold price edged 0.1% lower to $1,876.40 per ounce. Traders appears nervous ahead of a key US inflation reading next week.

The post 5 things to watch on the ASX 200 on Monday appeared first on The Motley Fool Australia.

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More reading

• ASX 200 shares: How to invest $10,000 to get $910 per year in passive income
• Here are the top 10 ASX 200 shares today
• Why Appen, Endeavour, Imugene, and Treasury Wine shares are pushing higher
• 5 things to watch on the ASX 200 on Friday
• Expect big yields from these ASX 200 dividend shares in 2023: analysts

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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Generating a high level of ASX passive income sounds like a wonderful thing. Imagine seeing $500 flow into your bank account every month, or even $1,000.

So how much are people willing to sacrifice to make that happen? The price could be as little as a daily coffee.

Find those savings

When it comes to money, everyone’s finances are different. Someone earning $1 million a year has more financial flexibility to allocate to investing each month than the average income earner.

It’s likely household budgets are tighter these days after all the inflation and interest rate hikes.

If someone has only a little money to invest each month after paying for the bare essentials, then it comes down to choices. It’d be easy to say, “get a better-paying job”, but sometimes that’s not an option.

Working longer and longer hours may not be the best choice either – we aren’t robots. Having a break, taking care of yourself, and spending time with family and friends are usually good things for life and enjoyment.

For me, I’d rather avoid spending a certain amount each month than give up my time doing something that I enjoy.

It’s about the dollar amount saved rather than the activity or product itself. Everyone spends on different stuff. If we want to make ASX passive income, we need to come up with some savings. It could be the $5 or $10 daily coffee, it could be subscriptions like Netflix and Foxtel, or something else.

The idea is to cut out spending that isn’t truly making a difference to our happiness.

How much ASX passive income could we make?

Let’s say we cut $40 a week out of spending and start investing that into ASX shares. That translates into $2,080 per year if we save every single week.

Saving $2,000 doesn’t make us an instant millionaire. Investing $2,000 with a 6% dividend yield would create $120 of annual ASX passive income. That’s not a bad start, and the $120 would hopefully grow with organic business dividend increases over time.

But, the power of compounding can help us make that $40 a week grow much bigger.

If we invested $40 a week for 10 years, and the share portfolio achieved total returns of 10% per year, that would grow to $33,150. With a 6% dividend yield, this would generate around $2,000 of annual ASX passive income.

Doing that same exercise but running it for 20 years, the portfolio could grow to be worth $119,132. With a 6% dividend yield, that’d turn into around $7,150 of annual dividends or almost $600 per month.

That’s a lot of extra cash flow, right? Investors just need to decide what they’re willing to do to save while still enjoying life.

The post Would you trade your daily coffee for ASX passive income? appeared first on The Motley Fool Australia.

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More reading

• Get an income boost with these ASX dividend shares: broker
• How I’d generate a $30,000 retirement income from the Vanguard Australian Shares Index ETF
• 2 highly-rated ASX growth shares to buy according to experts
• How do I cash in my Newcrest shares if US giant Newmont takes over?
• Forget term deposits! I’d listen to Warren Buffett and invest $250 a month to try to retire rich

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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Wanting a passive income boost? If you are, then you may want to consider the two dividend shares listed below.

Both are rated as buys by Morgans and tipped to provide investors with attractive dividend yields in the near term. Here’s what you need to know about them:

Coles Group Ltd (ASX: COL)

The first ASX dividend share that Morgans has tipped as a buy is Coles.

Its analysts are positive on the supermarket giant due to its defensive qualities, favourable changes in consumer shopping trends, and its solid balance sheet. It commented:

We continue to see COL as offering good value with the company’s solid balance sheet and defensive characteristics putting it in a good position to navigate through a weaker economic environment. The unwinding of local shopping should also help further market share gains.

Morgans has an add rating and $19.50 price target on its shares.

As for dividends, the broker is expecting fully franked dividends per share of 64 cents in FY 2023 and 66 cents in FY 2024. Based on the current Coles share price of $17.93, this implies yields of 3.55% and 3.7%, respectively.

Mineral Resources Ltd (ASX: MIN)

Another ASX dividend share that Morgans rates as a buy is Mineral Resources.

Its analysts like the mining and mining services company due to its exposure to lithium and iron ore. It believes they are an ideal combination to benefit from the China re-opening. The broker said:

We see MIN’s lithium / iron ore market exposures as an ideal combination to benefit from the China re-opening increase in demand during 1H’CY23. We also see MIN as well placed to grow into its valuation, even if we see unexpected metal price volatility, given the magnitude of organic growth in the pipeline.

Morgans currently has an add rating and $99.40 price target on its shares.

In respect to dividends, Morgans is forecasting fully franked dividends of $4.04 per share in FY 2023 and $6.21 per share in FY 2024. Based on the current Mineral Resources share price of $89.65, this will mean 4.5% and 6.9% dividend yields, respectively.

The post Get an income boost with these ASX dividend shares: broker appeared first on The Motley Fool Australia.

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More reading

• Why Morgans just added these ASX 200 shares to its best ideas list
• These ASX 200 shares are top picks in Macquarie’s growth portfolio
• With interest rates heading higher again, the risk is to the downside for these popular blue chip ASX shares
• 2 ASX stocks I’d buy in February for lifelong passive income
• Does the Coles dividend forecast make it a great buy for income?

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 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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As we covered here earlier today, there are plenty of exchange traded funds (ETFs) for investors to choose from on the Australian share market.

One of the most popular options out there is the Vanguard Australian Shares Index ETF (ASX: VAS).

It seeks to track the return of the S&P/ASX 300 Index before taking into account fees, expenses, and tax.

This index might not be as closely followed as the illustrious S&P/ASX 200 Index (ASX: XJO), but it isn’t short of quality.

It provides investors with quick and easy access to 300 of the largest companies on the Australian share market.

This means you’ll be buying a diverse group of shares such as mining giant BHP Group Ltd (ASX: BHP), banks like Commonwealth Bank of Australia (ASX: CBA), and retailers including Woolworths Group Ltd (ASX: WOW).

Another positive with the ETF is that it pays investors a quarterly dividend, with an annual yield currently sitting at 4.5%.

Overall, this could make it a great option for a retirement portfolio.

What would it take to generate $30,000 of retirement income?

If you’re in retirement and already have a large lump sum to invest, it would take a rather devilish investment of $666,666 into the ETF to yield $30,000 in dividend income each year at present.

But if you don’t have this level of money available to invest, then you could look at making it a long-term quest.

While past performance is no guarantee of future performance, the share market has historically provided investors with an average total return of 10% per annum.

If it were to do the same over the next 20 years, this ETF followed suit, and you reinvested your dividends, then a $10,000 annual investment would grow into the desired amount a few months after the end of the second decade.

At that point, you can sit back and reap the rewards of your investments. You will also be left with a portfolio that still has the potential to grow at a decent rate even after cashing out your dividends.

The post How I’d generate a $30,000 retirement income from the Vanguard Australian Shares Index ETF appeared first on The Motley Fool Australia.

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More reading

• 2 ASX stocks I’d buy in February for lifelong passive income
• How I’d invest $300 a month in ASX shares to target an extra income of $20,000 per year
• ASX shares: Is this my once-in-a-lifetime chance for mega returns?
• How to create a million-dollar ASX share portfolio in two decades
• Buying ASX shares as a beginner? Here are 3 things I wish I’d known

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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Are you a growth investor looking for new investments? Well, the good news is that the ASX growth shares listed below have been tipped as buys.

Here’s why experts rate them highly right now:

Allkem Ltd (ASX: AKE)

If you’re not averse to investing in the resources sector and have a higher than average tolerance for risk, then it could be worth considering Allkem.

It became one of the world’s largest lithium miners after Galaxy Resources and Orocobre merged in 2021. It has assets in Australia, South America, and North America.

And from these projects, Allkem has significant production capacity. In fact, management believes it can increase its production in a manner that allows it to maintain a 10% share of global lithium supply over the long term.

It is partly for this production growth, as well as its downstream optionality, that Goldman Sachs is bullish on Allkem at the same time it is bearish on the lithium industry.

Goldman has a buy rating and $15.50 price target on Allkem’s shares. This implies potential upside of 23% for investors from current levels.

WiseTech Global Ltd (ASX: WTC)

Another ASX growth share that has been tipped as a buy is WiseTech.

It is the technology company behind the industry-leading logistics solutions platform, CargoWise One. This platform allows users to execute complex logistics transactions and manage freight operations.

WiseTech has been growing at a strong rate for years and appears well-placed to continue this trend in the near term. For example, management is guiding to “20%-23% revenue growth and 21%-30% EBITDA growth.”

Morgan Stanley is confident on the company’s outlook. As a result, it has put an overweight rating and $64.00 price target on its shares. This suggests potential upside of almost 18% for investors.

The post 2 highly-rated ASX growth shares to buy according to experts appeared first on The Motley Fool Australia.

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More reading

• 2 explosive ASX growth shares to buy now according to analysts
• Which ASX 200 shares are rebounding fastest in 2023?
• Here are the top 10 ASX 200 shares today
• Happy days! 8 ASX 200 shares smashing new 52-week highs on Thursday
• 3 ASX 200 tech shares going gangbusters on Thursday

Motley Fool contributor James Mickleboro has positions in Allkem. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. 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 with shares in gold miner Newcrest Mining Ltd (ASX: NCM) had broad smiles on their faces this week after US giant Newmont Corporation (NYSE: NEM) proposed to acquire it.

The Newcrest share price jumped 14% immediately upon the news, although its board has not yet accepted nor rejected the $24 billion offer.

While there is some debate as to whether Newmont should be offering a bit more to Newcrest shareholders, what if eventually a deal is done?

As an all-scrip deal, Newcrest investors will receive Newmont stock upon acquisition.

But what if you don’t want to own US stocks? How do you cash out?

Shaw and Partners portfolio manager James Gerrish, in a Market Matters Q&A, explained how one could do that:

Newmont could do a Resmed

According to Gerrish, Newmont will likely list on the ASX once the acquisition completes. 

“We would assume if Newmont [is] successful, they would create a dual listing structure, so the merged entity would remain listed on the ASX.”

The merged entity could do this by listing in Australia as a chess depository interest, which is a stock that allows investors to simulate owning Newmont shares on the NYSE.

Some current examples of this are US healthcare device maker Resmed CDI (ASX: RMD) and UK banking group Virgin Money UK CDI (ASX: VUK).

Once the CDI is created, it’s easy to cash in.

“Holders could then sell their stock if they wanted to as normal.”

So that’s all well and good for Newcrest shareholders, but what’s in it for Newmont? Why would it go to the expense of listing in a foreign country?

Gerrish explained there is good incentive for overseas businesses to also list on the ASX.

“One of the reasons why they would do this deal is to tap into the funding pool in Australia,” he said.

“So a listing here makes total sense.”

Newcrest shares are up 9% over the past 12 months while paying a dividend yield of 1.6%.

Meanwhile, the Newmont stock price is down 21.4% for the same period while returning a dividend yield of 4.6%. 

The post How do I cash in my Newcrest shares if US giant Newmont takes over? appeared first on The Motley Fool Australia.

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More reading

• Buy NAB and this ASX 200 blue chip share: brokers
• 5 things to watch on the ASX 200 on Friday
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• Here’s why analysts rate these blue chip ASX 200 shares as buys

Motley Fool contributor Tony Yoo has positions in ResMed. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. 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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While term deposit rates are improving as the cash rate rises and offer a safe source of income, they will never be the best asset for growing your wealth.

That’s because the returns on offer with term deposits pale in comparison to historical share market returns.

For example, at present, Commonwealth Bank of Australia (ASX: CBA) is offering 3.75% per annum on 12-month term deposits. Whereas the share market has historically provided investors with a 10% per annum return.

And while term deposit rates could still rise a touch more in the coming months if the RBA takes rates higher, I believe they are close to peaking given how inflation is now easing.

Term deposits versus ASX shares

Let’s say we invest $100,000 into a term deposit that yields 4% per annum. In 10 years, you would have grown your investment to $148,000 if you reinvested the proceeds each year.

Whereas, if you generated a 10% per annum return from the share market, your $100,000 investment would have become $259,000 in a decade.

That’s a $100,000+ difference!

And while there are risks to investing in the share market, unlike term deposits, and past performance is not a guarantee of future returns, I believe the risk/reward on offer is compelling enough to choose ASX shares over term deposits.

Buy shares like Warren Buffett

Consider taking the Warren Buffett approach if you choose to invest in ASX shares instead of term deposits.

Over several decades, the Oracle of Omaha has delivered market-beating returns for his company Berkshire Hathaway thanks to his focus on buying high-quality companies with competitive advantages, strong business models, and fair valuations.

The good news is that there’s no shortage of quality in the Australian share market. ASX shares such as Macquarie Group Ltd (ASX: MQG), REA Group Ltd (ASX: REA), and TechnologyOne Ltd (ASX: TNE) tick a lot of these boxes and could be worth further investigation.

Alternatively, the popular VanEck Morningstar Wide Moat ETF (ASX: MOAT) enable investors to buy a collection of Buffett-type stocks through a single investment.

Investing $250 a month in ASX shares or term deposits

You don’t just have to start with a large lump sum of money to grow your wealth Buffett-style.

By investing $250 a month, you have the potential to retire rich if you start early enough.

For example, thanks to compounding, if you were to invest $250 a month for 30 years and average a 10% per annum return, you would grow your wealth to approximately $520,000. Whereas doing the same with term deposits would yield approximately $172,000 at a 4% interest rate.

If you have a longer investment horizon of 40 years, your returns would be $1.4 million and $291,000, respectively, all else equal.

All in all, I believe this demonstrates why ASX shares are the superior option for investors looking to retire rich.

The post Forget term deposits! I’d listen to Warren Buffett and invest $250 a month to try to retire rich appeared first on The Motley Fool Australia.

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More reading

• Top ASX ETFs to buy in February 2023
• Why AGL, New Hope, News Corp, and REA shares are dropping today
• REA share price tumbles on half year earnings miss
• 5 things to watch on the ASX 200 on Friday
• Macquarie has these ASX 200 dividend shares in its income portfolio

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 Berkshire Hathaway. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Berkshire Hathaway, REA Group, Technology One, and VanEck Morningstar Wide Moat ETF. 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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