It's never failed to astound me the number of people I have met in my working life who have yet to take the plunge and bought shares for themselves in publicly-listed companies.
My work colleagues (in my non-Foolish day job), both now and in the past, are clearly articulate, intelligent and well-educated people.
Yet, there's a disconnect when it comes to investing.
When the conversation at work, occasionally, comes round to the topic of investing, all I've received are blank looks.
Investing? Huh?
The usual responses I've heard are,
It's never really crossed my mind, or
Isn't the sharemarket risky? … and then this,
The sharemarket always crashes doesn't it?
Whilst the above may not be necessarily surprising from people who have yet to buy their first shares, I am somewhat surprised that some of the people who explain their lack of understanding of basic investing principles are people with undergraduate degrees in finance, accounting and commerce!
There are whole articles to be written on opportunity cost, market crashes and investment philosophy which I can't go into today, but what I'd like to suggest below are three stocks that would be a solid foundation for the novice investor's first steps into investing.
Before I get to that, assuming that the novice investor understands the concept of business ownership via the public markets (ie, focusing on businesses rather tickers), I'm hoping the new investor will start today with the following:
CSL Limited (ASX: CSL)
Originally floated by the Australian Government, CSL's record of wealth-generation for investors has been sensational over practically any timeframe you care to mention. Since listing in 1994 at a split and dividend-adjusted price of $0.40, the company has provided a total return of 28.79% pa over the last 22 years.
A leading, global biopharmaceutical company that develops, manufactures and markets biotherapy products designed to treat and prevent human conditions such as coagulation, bleeding disorders, and other bacterial diseases, CSL is well placed to continue its record of profitable growth. Despite its already meteoric rise, CSL still deserves a place in any new investor's portfolio due to its global reach, market opportunity, and consistent track record over many years.
Carsales.Com Ltd (ASX: CAR)
Who hasn't heard of Carsales.com? Either buying or selling a car, it's possible you've been to the company's website, or mobile app, at least once or twice.
Carsales.com's principal activities include online classifieds and display advertising here in Australia and overseas. The company has made a number of overseas acquisitions in recent years to diversify the business away from its home market in Australia, with its most recent being the purchase of 83% of Chileautos, the number one automotive classifieds site in Chile.
Whilst overseas acquisitions can be risky, management seems to have the nous and temperament to buy strategically with a long-term outlook, exactly what any investor should be doing with their own portfolio. With steady growth predicted for the remainder of the 2015-16 financial year, the shares in this company are definitely one for the long-run.
Scentre Group Ltd (ASX: SCG)
A product of the Lowy family's desire to restructure the Westfield businesses and split its global and Australian/New Zealand (NZ) operations back in 2014, Scentre Group could be excused as being perceived as an 'old economy dinosaur' in the new world of online retail.
However, I firmly believe that there will always be a place for well-positioned shopping centres in the Australian/NZ markets.
With an expected 5% increase in 'funds from operations' for the 12 months ending 31 December 2016, growth will be lower than other segments of the sharemarket, however with a stable dividend yield of 4.7%, Scentre Group is a good option to round out a portfolio due to the limited volatility of its share price.
Foolish takeaway
All of the above listed businesses offer a good trade-off between growth, stability and yield. I believe initial small positions in the above businesses would serve an inexperienced investor well.
