One positive outcome I have seen out of the market turmoil on the S&P/ASX 200 Index (ASX: XJO) in 2020 so far has been the renewed interest in the share market from some first-time investors keen to take the plunge.
Investing is a hard game to master, but one that is equally rewarding if you have the patience and develop the right temperament. Whilst you are sharpening your game, I always think it’s best to go for investments that aren’t just one single company at first.
So with that in mind, here are two ASX shares I think would make a great choice for a first-time investor.
iShares Global Consumer Staples ETF (ASX: IXI)
This exchange-traded fund (ETF) works by holding a basket of underlying shares within one investing vehicle. In this way, you can reduce your risk by spreading your capital across many different companies. IXI holds only companies that are in the ‘consumer staples’ space. Consumer staples are the goods and services defined as ‘needs’ rather than ‘wants’. Think food, drinks and household essentials.
As such, the companies that make them are usually regarded as ‘safe’ investments as demand for their products is unlikely to ever go away. IXI’s top holdings include names like Nestle, Coca-Cola, Clorox and Unilever. As you can see, these companies hail from all over the world and not just Australia. This makes this ETF a great stock to hold for diversification in my view, and I think it would form a great foundation for the starter portfolio of a first-time investor.
Magellan Global Trust (ASX: MGG)
Magellan Global Trust is a listed investment trust (LIT), which works in a similar fashion to an ETF in that it holds a basket of shares rather than just one company. However, the main difference is that Magellan Global Trust has an active management team which aims to select a group of diverse companies which it believes are the best in the world.
Currently, these include Starbucks, Tencent, Alphabet (Google), Mastercard, Pepsico and Microsoft.
Magellan Global has a strong history of using this philosophy to generate market-beating returns for its investors. Since 2017, it has managed 12% per annum on average, which isn’t bad considering the massive crash in global share markets we have seen in 2020.
Again, the calibre, as well as the diverse range and global reach of these companies, makes Magellan Global Trust a great first share to build up from, in my view.