Motley Fool Australia

How to retire early in 2020 with this 3-stock ASX portfolio


Those of us who are not looking to slave away behind a desk for 60-odd years find the concept of financial independence to be an intriguing and attractive proposition.

That’s why it’s not surprising that the FIRE (financial independence, retire early) movement is growing in numbers, as Aussies look to save, invest and eventually retire with a sizeable nest egg.

For those Fools who have saved their hard-earned cash and are looking to make that next step, I’ve picked out three ASX stocks that can help you FIRE in 2020.

1. Vanguard MSCI Index International Shares ETF (ASX: VGS)

This Vanguard ETF can form the cornerstone of almost any ASX portfolio, as it gives investors an easy way to instantly diversify their holdings.

As a holder of this global Vanguard ETF, I like the significant exposure that it provides to markets outside of the ASX 200 – particularly given we are a drop in the ocean by market capitalisation.

The Vanguard International Shares ETF is up 18.9% so far this year, and 51.1% in the last 5 years.

While these growth figures are solid, they will never stack up against some of the hot ASX growth stocks such as Afterpay Touch Group Ltd (ASX: APT).

However, the ability to have AUD-hedged, international exposure makes for a good, stable addition to this FIRE portfolio with a management fee of just 0.18% p.a. meaning more returns go to your retirement nest egg.

2. Afterpay Touch Group Ltd (ASX: APT)

It’s hard to create a 2020 portfolio without allocating some capital towards Afterpay shares.

The Afterpay share price is leading the ASX 200 higher in 2019, having climbed 166.1% higher this year to a record high of more than $32 per share yesterday, and despite pulling back slightly today to $31.28, the share price looks like it could rocket even further in 2020.

While there are concerns around growth stocks in 2020 given the recent yield curve inversions, Afterpay’s strong earnings result in August suggests that there is further capital growth on offer for Fools willing to invest.

Even bullish estimates of Afterpay’s FY19 earnings were put to shame, with the Aussie “buy now, pay later” company reporting a 140% lift in underlying sales to $5.2 billion and an 86% increase in total income to $264.1 million.

While margins continued to grow for the group, the company’s volumes also look good with a 130% lift in active customers to 4.6 million during the year.

In my opinion, all of this bodes well for FY20 growth, particularly given its strong expansion into the US and the potential for the company to do the same in the United Kingdom.

3. Commonwealth Bank of Australia (ASX: CBA)

Commonwealth Bank was the only one of the “Big Four” group of banks to report its earnings in August, with the others to follow in late October or early November.

Despite a mildly disappointing statutory and underlying result, Australia’s biggest bank still reported an $8.6 billion net profit, down 8% on prior corresponding period (pcp), and an $8.5 billion cash profit.

While these missed estimates and saw the Commonwealth Bank share price slide lower in August, I think the October and November results could show that this is a solid result compared to its peers and see the CBA share price climb in 2020.

There are question marks surrounding the net interest margin (NIM) of Westpac Banking Corp (ASX: WBC), while all eyes will be on National Australia Bank Ltd. (ASX: NAB) and its dividend following a cut earlier this year.

Foolish takeaway

Overall, I think these 3 shares provide a mixture of stability, capital growth and income, which could boost your chances of achieving FIRE in 2020.

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 Kenneth Hall owns shares of Vanguard MSCI Index International Shares ETF. The Motley Fool Australia owns shares of AFTERPAY T FPO and National Australia Bank Limited. 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.

Related Articles…