Every other week, I’m asked: “What ASX shares should I buy?

It’s a simple and obvious question to ask. You have this idea that shares make money, so you want some.

But the answer is simple. And the correct one certainly isn’t what you’d expect.

Indeed, it’s not an easy question to answer.

What the advisor will say

Usually, when prompted, your financial advisor will ask you a bunch of arbitrary questions, such as:

“On a scale of 1 to 5, if your investment lost 30%, how would that make you feel?”

Umm…what?

Other advisors, likely paid BIG $$$ by the hour, might just run your multi-choice ‘risk profile’ through a machine which spits out a generic investment thesis or strategy.

Then, more often than not, you’ll get a list of what I like to call The Usual Suspects.

Just to name a few. After all, as the saying in the Australia’s stock-picking community goes ‘You never get fired for recommending the big banks’. There are many reasons why this works in their favour, but I won’t go into it here.

However, it’s important to recognise that Australia’s share market is heavily concentrated in the top 10 or so companies, so you may as well buy an index fund (see below) than pour all your money into the usual suspects.

The ‘professionals’ will recommend

Meanwhile, the stock-picking experts over at ‘ACE-XPERT stocks’r’us dotcom’ will scare you to death, may even mislead you, and suck you into one of their ‘millionaire’ strategies as the only cure to a market mood swing.

Promising quick riches, these ‘pros’ will likely rec some gangbusters penny stock because of some key catalyst which will make the share price ‘pop’.

Else, they may even put you into options, warrants, CFDs, gold, technical analysis or commodities.

But you name it, I’ve been there. I’ve tried them all. And believe me, it’s a (very) quick way to the poorhouse.

So what ASX shares should I buy?

“So then” I hear you ask, “what shares should I buy?”

In my opinion (there are many different opinions on the topic), you should start by asking yourself if you can live without the money you want to invest in the share market for AT LEAST 3 years. Why? Because I believe long-term investing is the only way to make sustainable amounts of money in the sharemarket. Three years is the minimum. So if you can’t invest and forget about touching it for three years, it shouldn’t be invested.

Then, ask yourself if you truly are committed to learning about shares and finance. If you are prepared to learn, good. Go ahead and read everything from Lynch, Buffett and Munger. Then — and only then — buy a small amount of shares in a company you know. Maybe it’s Wesfarmers Ltd (ASX: WES) – the owner of Coles, Bunnings Warehouse, Kmart, Officeworks and more.

If you aren’t prepared to learn or can’t commit to many hours of research, that’s good too – in fact, congratulations on being honest with yourself. You now have two options:

  1. Invest Passively

That means adding money to your super account, employing the services of a reputable fund manager, or buying into an Exchange Traded Fund (ETF) or index fund. ETFs and index funds invest the money on your behalf, at a cost of (hopefully) less than 1% per year. I think the ISHARES CORE S&P 500 ETF is good – found Google Finance as ISCS&P500 CDI 1:1 (ASX: IVV).

If you go with a managed fund or fund manager, avoid funds that focus on ‘Quant’, ‘hedge’ or ‘technical’ strategies. Instead, focus on the funds with a ‘value’, ‘fundamental’ or ‘absolute return’ strategy, they use time-tested strategies in my opinion. However, MOST importantly: Avoid selling out if the market crashes.

  1. Outsource

Get on to a trusted and transparent source of stock-picking advice. Look at their disclosures, check the ASIC website to verify your advisor has a financial services licence (AFSL) to provide you with the advice, and read forums to get candid reviews on your advisor or investment firm.

Foolish Takeaway

“What shares should I buy?”

I could sit here and tell you what you WANT to hear by giving you a hot tip like ‘buy Bellamy’s Australia Ltd (ASX: BAL) now because it’s a great growth stock’, or ‘invest in Telstra Corporation Ltd (ASX: TLS) for its massive dividend’, but that would be nearsighted.

Instead, I’ll tell you what I never got told when I first started and give you what you NEED to hear:

First, ask yourself if you’re prepared to invest in yourself. It’s the most important and rewarding investment you’ll ever make. If you skip this step and jump straight to getting a brokerage account without understanding what’s required to be a successful investor – you’ll be burnt. I was.

Second, remember that there are gamblers on the sharemarket and there are those who consistently make money, but only over time. It’s about time in the market, not timing the market.

Here’s to the start of your investing.

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Motley Fool Contributor Owen Raszkiewicz has a financial interest in Bellamy’s Australia. Owen welcomes -- and encourages -- your feedback on Google+, LinkedIn or you can follow him on Twitter @ASXinvest.

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia owns shares of Bellamy's Australia. 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 Bruce Jackson.