Motley Fool Australia

Where I’d be happy to invest my first $500

First time buyer of shares represented by child in suit reading asx share price charts
Image source: Getty Images

If you’re just starting out investing, perhaps with $500, you want to make sure your first investment goes quite well. You don’t want to be put off shares with a painful beginning experience!

It’s better to learn from other people’s mistakes rather than your own. One of the hardest things when starting out is what to invest in. There are literally thousands of options on the ASX.

I’m not going to suggest a speculative option. And in the past I have suggested for quality, diversified ideas for beginners like Future Generation Investment Company Ltd (ASX: FGX) and MFF Capital Investments Ltd (ASX: MFF).

Today I’m going to highlight an even simpler option called Vanguard MSCI Index International Shares ETF (ASX: VGS). It’s an exchange-traded fund (ETF) which allows you to invest in, essentially, most of the global share market.

By just buying this one investment your underlying $500 is spread across around 1,600 businesses in all of the major share markets in the US, Japan, the UK, France, Canada, Switzerland, Germany and so on.

Its holdings are varied with businesses like Microsoft, Apple, Amazon, Facebook, Alphabet, Nestle, Visa, Berkshire Hathaway, Walt Disney, Intel, Boeing, HSBC, Toyota and so on. I think you can get great diversification with this ETF.

Its annual management fee is only 0.18% per annum, which is cheap compared to most investment products and leaves more of the net returns in your hands.

It’s certainly capable of producing decent returns when the global share market does well – over the past three years it has delivered an average return of 14.1% per annum.

It also has a decent dividend yield of 2.3%, which is better than a number of popular globally-focused ETFs.

Foolish takeaway

With how diverse this ETF is I certainly think it’s possible this could be your only investment for a whole lifetime. However, for now I’d say it would just be a very good starting investment.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

Motley Fool contributor Tristan Harrison owns shares of FUTURE GEN FPO and Magellan Flagship Fund Ltd. The Motley Fool Australia has recommended 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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