With the constant short-term movements in the share market?
Miners and banks continuing a five-day climb? and the S&P/ASX 200 index up today, as ?inflation remains contained? according to a Macquarie Bank economist? and all the endless headlines?
There?s one fact you must keep front and centre in your mind. The share market is heavily stacked in your favour.
I repeat: The share market is heavily stacked in your favour. The game of investing is yours to win. Don?t believe me?
No less than Warren Buffett, the world?s greatest investor, has said so!
?American business will do fine over time,? Buffett wrote, in his most recent Berkshire…
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With the constant short-term movements in the share market…
Miners and banks continuing a five-day climb… and the S&P/ASX 200 index up today, as “inflation remains contained” according to a Macquarie Bank economist… and all the endless headlines…
There’s one fact you must keep front and centre in your mind. The share market is heavily stacked in your favour.
I repeat: The share market is heavily stacked in your favour. The game of investing is yours to win. Don’t believe me?
No less than Warren Buffett, the world’s greatest investor, has said so!
“American business will do fine over time,” Buffett wrote, in his most recent Berkshire Hathaway letter to shareholders. “And stocks will do well just as certainly, since their fate is tied to business performance.”
“Periodic setbacks will occur, yes, but investors… are in a game that is heavily stacked in their favour.”
Buffett might as well have been talking about Australian business and Australian investors… Here’s why.
Your $15,427 investment question answered
Our own share market was actually the world’s best-performing share market from 1900 to 2009, according to research conducted by Credit Suisse.
And it’s still true today that there’s no shortage of great Australian businesses to invest in. No shortage of attractive shares!
Buffett went on to point out that, “Since the basic game is so favourable… the risks of being out of the game are huge compared to the risks of being in it.”
Still, plenty of ASX investors are just sitting on their hands… and potentially on large cash positions.
The Australian savings rate is above 10% and, as of the first quarter of this year, the average household had $15,427 sitting in the bank.
So chances are plenty of us haven’t put all our investable dollars to work. We’re “taking the risks of being out of the game” as Buffett put it.
And it’s high time to remedy that! In just a moment, I’ll get you started with two stock ideas.
But first, let me share one of my own most compelling investment experiences…
2,379% returns are not a pipe dream
Speaking of the risks of staying out of the game…
Even more recently… from July 1982 to June 2012, investment firm Vanguard found the Australian share market averaged a 12% annual return, turning every $10,000 invested into over $299,000.
So just in case you needed a reminder…
There’s simply no better way to grow your money than by investing.
I started investing in ASX shares myself in 1993 — so 20 years ago. (My first ever investment was in a company called Yorkshire Water, in the UK, in 1989. That’s a story for another day…)
Now I’ll let you in on a secret. I didn’t buy an index fund back in 1993.
My family and I bought shares of a household name that was just then doing its IPO. If you guessed I’m referring to Woolworths (ASX: WOW), you’re spot on.
Woolies shares have risen 2,379% since that time, including dividends — almost 24 times my money in 20 years — an even better reminder!
It’s a solid fact that investing in the best Australian companies can help you build spectacular wealth. And that dividends matter… a lot.
Two dividend plays you can buy today
Of course, I’d never suggest you put money in the share market that you need to use immediately… say in the next three to five years.
But, inarguably, there’s no better place for your long-term funds… and no better way to get yourself on the road to financial security in the long term.
Courtesy of Fool.com.au analyst Catherine Baab-Muguira, here are two HEFTY dividend investment ideas for you.
If you favour income investing… and love a generous dividend payer… you’ll want to pay close attention.
Pick #1: Metcash (ASX: MTS)
The “third force” in the Australian grocery and liquor markets, distributor Metcash is caught between the powerful duopoly of Wesfarmer’s (ASX: WES) Coles and Woolworths.
Yet with shares trading for less than 12 times earnings, and offering a dividend yield of 7.6%, or over 10% when grossed up to include franking credits, Metcash looks to be a prime investable idea.
Pick #2: Myer (ASX: MYR)
Department store chain Myer might be no-one’s idea of an exciting stock, but the shares look to be undervalued today — trading for 11 times earnings — while sales are rising for this retailer.
And with a dividend yield of 7.2%, also over 10% when grossed up to include franking credits, investors will be well compensated for accepting fairly low growth in the core business.
The Australian Financial Review says “good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit.” Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!
Of the companies mentioned above, Bruce Jackson has an interest in Woolworths and Wesfarmers.