There has been a big increase in passive investing in recent years. This is simply investing in a broad group of shares and not making any decision about which shares to buy.
The funny thing about investor returns is that a lot of regular and professional investors underperform the average share market return. With that in mind, that’s why achieving the average could provide excellent returns.
If you achieve average returns, then you want as little fees associated with that as possible.
Here are three of the cheapest ways to access the Australian share market:
Australian Foundation Investment Co. Ltd (ASX: AFI) (AFIC)
This is the largest listed investment company (LIC) on the ASX. It’s been running since 1928 and invests into shares on behalf of shareholders.
It makes long-term investment decisions and its holdings are very similar to the Australian index, with its largest holdings being shares like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC).
AFIC had an annualised management expensive ratio of 0.11% at 31 December 2017.
Vanguard Australian Share ETF (ASX: VAS)
Vanguard is a global leader in providing very low-cost index funds. This ETF provides investors to 300 of the biggest shares on the ASX.
Its top holdings include the same blue chips like Commonwealth Bank and BHP Billiton Limited (ASX: BHP).
It has a management fee of around 0.14% per annum.
BetaShares Australia 200 ETF (ASX: A20)
BetaShares is a leading ETF provider in Australia. It gives investors exposure to the largest 200 companies listed on the ASX.
This ETF is apparently has the lowest cost for an Australian shares ETF in the world. Its management fee is 0.07% per annum.
If you want to invest in the Australian stock market then the above three options look very attractive. If you want the lowest cost then the BetaShares is the best option, but I prefer AFIC due to its very dependable payment of dividends.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 Scott Phillips.