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How I would invest my first $10k into ASX shares

Investing can seem daunting if it’s your first time, especially if you don’t know anyone who currently invests to give you a hand (although this could also be a positive depending on their experience level).

Here are 3 stocks I would include in a simple starting portfolio for someone looking to begin their investment journey on the ASX.

Beta Australia 200 ETF (ASX: A200)

I would allocate $5,000 to this ETF, which is made up of the 200 largest stocks on the ASX. This fund offers a great base layer of diversification at a tiny management fee of just 0.07% p.a. It also provides a quarterly dividend with a grossed-up yield of 4.7% which, if not needed, can be chosen to be reinvested into the fund through its dividend reinvestment plan.

ResMed Inc (ASX: RMD)

Since nearly half of the Beta Australia 200 ETF is made from financial and materials companies, I would choose to allocate $2,000 to an ASX healthcare company like ResMed. ResMed is a global medical devices company focused on the treatment of sleeping disorders and therefore generates the vast majority of its income from outside of Australia.

ResMed is one of my favourite buy-and-hold stocks on the ASX and has provided a shareholder return of 200% over the past 5 years. The global prevalence of sleep apnoea is huge, continuing to grow and in a recent company report was noted as being more than 80% undiagnosed. Impressively, ResMed has also been increasing its gross margins and is spending ~7–8% of revenue on R&D to help future growth.

Bapcor Ltd (ASX: BAP)

Bapcor is Australia and New Zealand’s largest auto parts business and is also expanding further overseas into Asia. It is providing growth through acquisition and the expansion of its current chains, which include Autobarn, Burson and Autopro. This can sometimes be dangerous as some companies grow too quickly and the quality and integration of the business deteriorates. However, I have been impressed with Bapcor’s ability to grow same store sales while it expands.

I also like Bapcor due to its defensive attributes. Even in a recession people need to get their car fixed, and could be more likely to keep repairing an older car as opposed to buying a new one. Therefore, I would allocate $2,000 to Bapcor shares.

Propel Funeral Partners Ltd (ASX: PFP)

Propel owns funeral, cemetery and crematorium locations throughout both Australia and New Zealand, where it benefits from the ageing population as a strong tailwind. This adds great diversification of income to its portfolio. Additionally, Propel has been gaining market share recently, adding 17 new locations in FY19 and growing revenue at 17.6%. I would spend $1,000 on Propel shares.

Foolish takeaway 

This allocation provides a great base layer of diversification with the purchase of A200 while ResMed, Bapcor and Propel are 3 additions I think could help make the portfolio out-perform in the long run.

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Motley Fool contributor Michael Tonon owns shares in Bapcor, Propel Funeral Partners Ltd and ResMed Inc. The Motley Fool Australia owns shares of and has recommended Bapcor. The Motley Fool Australia has recommended Propel Funeral Partners Ltd 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.

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