The best times to invest are times like these when the market is down and investors are nervous. If you can stay calm and take a long term view, you’ll likely achieve much better results over time.
You may not get the timing right, but don’t worry, nobody can do that consistently. What we can do though, is choose sensible investments which have a good chance of delivering solid returns. With this goal in mind, I think these are a couple of the best investment options on the ASX for long-term growth.
$10,000 – Washington H. Soul Pattinson & Co. Ltd (ASX: SOL)
Soul Patts is one of the lowest risk shares on the ASX, in my opinion. The company has a diversified portfolio of investments, including Brickworks Limited (ASX: BKW), TPG Telecom Limited (ASX: TPM) and New Hope Corporation Limited (ASX: NHC).
Over the years Soul Patts has delivered outstanding returns for shareholders – 16.7% per annum over the last 40 years to be precise. This means $1,000 invested in 1978 is now worth $484,310 if you’d reinvested your dividends.
Speaking of dividends, the company is a very reliable income provider and the dividend has increased every year since 2000. Management is well aligned with shareholders because it owns very large stakes in the company and continually looks for ways to increase shareholder value, like recently selling the iconic Pitt Street Mall headquarters that the company has owned for generations, for $100 million. Over the long term I think Soul Patts should continue to create wealth for shareholders.
$10,000 – Vanguard MSCI Index International Shares ETF (ASX: VGS)
This index ETF is managed by Vanguard and listed on the ASX. It tracks the performance of medium and large sized companies in the developed world outside Australia. Holding this ETF means you’ll continually hold most of the biggest international companies and therefore the biggest winners over time.
With this one holding, you’ll own a tiny piece of over 1500 companies, from the US, Japan, UK, France, and Germany. It doesn’t get much easier than that. Many of these companies reinvest heavily into their businesses, meaning this should translate into good growth over the long term.
Fees are very small at 0.18% per annum. This index fund has great diversification, with no sector representing more than 17% of the portfolio. Since listing in November 2014, VGS has had performance after fees of 12.13% per annum. The current dividend yield for the fund is 2.4%.
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*Returns as of 6/8/2020
Motley Fool contributor Dave Gow owns shares of Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Brickworks, TPG Telecom Limited, and Vanguard MSCI Index International Shares ETF. 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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