3 investing picks for first time investors

Balance risk and reward with companies like Xero FPO NZX (ASX: XRO) and ResMed Inc. (CHESS) (ASX: RMD)

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Buying your first shares in quality, growing businesses is incredibly exciting!

If you're starting out on your investment journey you have potentially decades ahead of you to grow and compound your wealth.

Time is a massive advantage when investing so even though you'll probably be starting off a small amount to invest, starting early, investing regularly, and learning from any mistakes will help drive you towards your goals.

Though not technically a company, buying units in an exchange traded index tracking fund can be an excellent way to start and gain exposure to a large number of companies. These funds have a long history of outperforming actively managed investment funds and reduce the firm specific risk which comes with owning individual companies.

A fund like iShares Global Healthcare (ASX: IXJ) for example offers exposure to big names like Johnson & Johnson and Pfizer Inc and the long growth run-way that healthcare offers.

But there is still something special about owning a piece of a company directly and participating in the business as an investor. If you're comfortable taking on the extra risk, here are two companies to consider buying today.

Ramsay Health Care Limited (ASX: RHC)

Ramsay Health Care is a big, geographically diverse hospital operator with operations in Australia, the UK and across Europe. This provides a level of diversification to the company's revenues which can reduce the risk to earnings if there is a sudden drop from one country.

Ramsay Health Care has a strong history of growing revenue and I think it will be a clear beneficiary of the long-term trend of increasing healthcare spending going forward. It offers a dividend yield of 2.3% which, sure, is not earth-shattering, but it is a good starting point, adds some cash-flow to your pocket and I would expect this to grow over the years to come.

ResMed Inc. (CHESS) (ASX: RMD)

ResMed manufactures breathing assistance products and should also benefit from the trend of aging populations over the next decade. The company has steadily grown revenues over the last 10 years, and although a reasonably mature business, has a good return-on-equity and low debt. These are good signs a company is well set up to compound earnings to produce considerable cash flows over time.

It's worth being aware that ResMed is primarily listed on the New York Stock Exchange, but is listed on the ASX as what is known as a Chess Depositary Instrument, or CDI. Ten CDIs on the ASX represent one share of common stock on the NYSE.

Motley Fool contributor Regan Pearson has no position in any of the stocks mentioned. You can follow him on Twitter @Regan_Invests. The Motley Fool Australia has recommended Ramsay Health Care Limited and ResMed Inc. 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.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »