A funny thing happens when we see above average growth in the share market – you start hearing about it from more and more people. The classic anecdote is the taxi driver giving you investing advice on your ride home, which everyone who got even remotely close to the cryptocurrency bubble of 2017 would tell you all about.
But if you have heard about the ASX share market’s near 20% gain so far in 2019, you’ve come to the right place. Above average market gains are always nice for those already invested in the share market, but can be dangerous for beginner investors looking to cash in on the rising tide. After all, the top of the market is statistically the riskiest time to invest.
But here are 2 investments that I think would be great choices for those looking to start building wealth with a long-term portfolio today.
Magellan High Conviction Trust (ASX: MHH)
This listed investment trust is only a few weeks old, but has already returned 6.67% to its investors. I like this trust because it focuses on Magellan’s ‘highest conviction ideas” with 8–12 companies that it views as the best in the world. These currently include names like Apple, Facebook and Visa. The trust also targets an annual 3% cash distribution yield, which you can choose to reinvest with a 5% discount. I think this would be a great ‘set-and-forget’ first investment, with all the hard work of choosing investments outsourced to Magellan for you.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
I have long thought that the best way to prove the worthiness of investing is by demonstrating the joys of receiving dividends – passive income paid (usually) twice a year just for the privilege of owning shares. This exchange traded fund (ETF) from Vanguard is comprised of a basket of 60 ASX shares, all of which have been chosen for their juicy dividend yields. Just by buying one VHY share, you are getting exposure to the likes of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and Telstra Corporation Ltd (ASX: TLS). VHY currently offers a tailing yield of 5.3%.
I think these 2 ASX investments would be great first buys for anyone looking to get started in the share market. Both are actively managed, which means others are doing the hard work for you, while you can sit back and collect the passive income from dividends.
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Sebastian Bowen owns shares of Facebook, Magellan High Conviction Trust, and Telstra Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Facebook. 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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