As much as it pains this writer to say, ASX stock picking isn’t everyone’s cup of tea (cue violins). That said, I believe getting at least some involvement with shares is vitally important in our modern age (even if it’s just in your super fund). With our ageing population and our future tax base uncertain, blind faith in our aged pension being around for the next 5 decades (at least in its current form) may be misplaced.
That’s where shares come in. Both the ASX and the global share markets have proved to be some of the best wealth-generating mechanisms that have ever been invented, especially if you adopt a long-term approach. Exchange-traded funds (ETFs) are a great way of investing in shares, because you can get hundreds (or thousands) of quality companies in one stock. Here are two ASX ETFs – both easy, cheap and broad – that would suit anyone who just wants to build wealth slowly and with minimal effort.
Vanguard Australian Shares Index ETF (ASX: VAS)
VAS invests in the top 300 companies in the Australian share market (nice and simple). That means you’re getting everything from Commonwealth Bank of Australia (ASX: CBA) and Woolworths Group Ltd (ASX :WOW) to… Dacian Gold Ltd (ASX: DCN), which is a small gold miner if you were wondering. VAS also pays a healthy distribution (dividend) of 3.97%, so you can get some income on the side as well. VAS is a solid, diversified ETF that broadly reflects the Australian economy (one that hasn’t seen a recession for almost 30 years to boot). You could do a lot worse for a first investment!
iShares Global 100 ETF (ASX: IOO)
This ETF is even easier to get your head around! IOO invests in the largest 100 companies in the world. That’s it. With this ETF, you are getting names like Microsoft, Apple, Berkshire Hathaway, Nestle, Exxon Mobil, Toyota, McDonald’s and 93 others – most of which you probably know. It’s a simple ETF that gives you a slice of (pretty much) anything you buy that’s not Australian-owned. These are the companies that shape the global economy, so (personally) I think it makes a decent investment. IOO also pays a distribution, albeit lower than VAS, at 1.86%.
Both of these ETFs would be a great place to start (or even end) a hands-off portfolio. You are getting hundreds of quality companies at very low prices – VAS charges 0.10% per year and IOO 0.40%. A passive, dollar-cost averaged strategy would (in my opinion) serve most investors very well with these ETFs and get you a simple but very real investing portfolio.
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Motley Fool contributor Sebastian Bowen 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.