Most people don’t start investing until they’re in their 30s, 40s or even 50s. I think the best time to start investing is in your 20s (or earlier) when you have plenty of time on your side for compounding.
Hopefully in your 20s you have a full-time job, so you don’t necessarily need investments for income. The ASX shares with the best growth potential would probably be the best ones to consider. That approach would also mean you’re paying less income tax along the way.
With that in mind, these are three ASX shares that could be worth buying for investors in their 20s:
BetaShares NASDAQ 100 ETF (ASX: NDQ)
It’s hard to imagine a world where Facebook, Amazon, Microsoft, Alphabet and Apple continue to dominate our attention and the current & new services we regularly use.
This exchange-traded fund (ETF) gives us heavy exposure to these global tech businesses, the above five tech shares of Apple and so on make up more than 40% of the index. Then you also get smaller exposure to other tech companies like Intel and Netflix.
Technology is an integral part of our daily lives and it’s likely going to become even more integrated, leading to more dollars being spent with them through new services like virtual reality and automated cars. It’s easy to imagine existing services like online video site YouTube will attract more advertising revenue over time away from old media like TV advertising.
With the BetaShares NASDAQ 100 ETF share price down by 12% since the all-time high in early October, now could be a more advantageous time to buy.
MFF Capital Investments Ltd (ASX: MFF)
MFF Capital is a listed investment company (LIC) that targets shares listed internationally. It has been very successful with this strategy, according to Baillieu research its net tangible asset (NTA) had delivered an average of 18.4% per annum over five years to October 2018.
It is very ably led by Magellan Financial Group Ltd (ASX: MFG) co-founder Chris Mackay who has well over $150 million of his family’s wealth invested alongside regular shareholders.
With a commitment to higher dividends over time, but starting with a low yield, MFF Capital could be a good one to own for its strong total returns and relatively low operating costs for an actively managed portfolio, although MFF Capital does invest for the long-term.
REA Group Limited (ASX: REA)
REA Group is the owner of realestate.com.au. It has excellent brand & pricing power because it is able to regularly increase prices with little detrimental effect because it is the market leader. It has the most property buyers, which attracts the most sellers, which attracts more buyers and so on.
A lot of people in their 20s may be dismayed at Australian property prices, so it could be a good way to profit (and get ‘revenge’) by investing in a company that generates revenue with every property advertised on the market.
It has made investments in property sites in Asia and North America which could turn into much bigger businesses over time.
REA Group is currently trading at just under 30x FY19’s estimated earnings.
All three businesses have the potential to beat the market over the long-term. At the current prices I’d be happy to invest in both MFF Capital and the NASDAQ ETF.
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Motley Fool contributor Tristan Harrison owns shares of Magellan Flagship Fund Ltd. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended REA Group Limited. 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.