If you are in your 20's, why not try Blackmores Limited (ASX: BKL) shares, Macquarie Group Ltd (ASX: MQG) shares or a2 Milk Company Ltd (Australia) (ASX: A2M) shares.
The only investment strategy you will ever need
I believe the best thing about being a young investor is that you have lots of time on your side. Time affords you the opportunity to make mistakes and recover and compound your wealth.
Take, for example, this chart:
It shows what $500 at 9% per year (with profits reinvested) and a $200 per month contribution can become after 25 years. The value of the investment portfolio becomes $207,594. But, here's the kicker, you only make $60,000 of extra contributions — the other $147,094 is the 'interest on interest'!
A 9% per year return is the average of the Australian sharemarket, or S&P/ASX 300 (Index: ^AXKO) (ASX: XKO), over the past 40 years, according to Vanguard.
3 ASX shares
If you pick your own shares, there's every chance you could do better than the market average – you could also do worse. Picking your own shares is a good way to teach yourself about investing and kick-start the compounding machine.
Here are three share ideas:
- Blackmores: Blackmores is the popular vitamins and, more recently, infant formula producer. The company has an enviable track record of shareholder returns and is targeting Chinese consumers for growth.
- Macquarie Group: Macquarie is Australia's largest investment bank, with global operations. Its share price can be extremely volatile from one year to the next but it remains a promising long-term prospect, in my opinion.
- a2 Milk: Like Blackmores, an investment in a2 Milk plays into the theme of the rise of 'better for you' products. The company is distributing its dairy products in China but it also continues to gain traction in other markets.
Foolish Takeaway
If you — or someone you know — are in your twenties, it's the ideal time in your life to invest for the future. You may be starting to make savings, getting pay rises at work and are in between having children and an eye-watering mortgage bill. However, keep in mind that the share market is high-risk, so any money you invest should be there for the long-term (three years minimum).