The Motley Fool

Where I would invest $10,000 in the share market

I think it is fair to say that FY 2018 was a successful year for Australian investors. During the 12 months the Australian share market provided investors with a return of 8.3% excluding dividends. If you add in the dividends the return stretches to approximately 12%.

This is vastly superior to anything that savings accounts, term deposits, and most property investments provided.

While the market is not guaranteed to deliver another strong return in FY 2019, I remain confident that the stage is set for further outperformance.

With that in mind, if I had $10,000 sitting in a bank account I would consider putting it to work in the share market in the following three shares:

Bellamy’s Australia Ltd (ASX: BAL)

A recent selloff has brought this infant formula company’s shares down to a very attractive level in my opinion. And it is worth pointing out that the catalyst for the selloff was a broker note out of Goldman Sachs which still maintained its buy rating and a price target well beyond today’s share price. I think it is worth being patient with Bellamy’s and expect it to be a market-beater again in the future once its CFDA accreditation to sell Chinese labelled products in China is finally in place.

NEXTDC Ltd (ASX: NXT)

NEXTDC operates a growing network of world class data centres in key strategic locations throughout Australia. Demand for data centre services has been rising at an incredible pace over the last few years due to the seismic shift to the cloud. And with almost all new software now being run through the cloud, I expect this trend to continue for some time. While I expect this to result in strong long-term earnings growth that justifies the significant premium its shares trade at, it is worth remembering that its shares could be sold off if it fails to deliver on the market’s lofty expectations.

Westpac Banking Corp (ASX: WBC)

If you want to invest that $10,000 in income shares you could do a lot worse than this banking giant. Thanks to a sharp share price decline over the last 12 months due to the Royal Commission and the Bank Levy, Westpac and the rest of the banks are trading on much lower than normal multiples. I think this makes it an opportune time to consider snapping up Westpac shares, especially when they provide a trailing fully franked 6.8% dividend.

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Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited and Westpac Banking. 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.

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