Do you have $1,000 to invest into the stock market? I believe you should pick one of the eight ASX shares I’m going to outline in this article.
The share market is recovering from the coronavirus selloff a few months ago. The ASX is still down compared to its mid-February level.
You don’t need to have $20,000 to start investing in ASX shares. You don’t even need to have $1,000. People can start with as little as $500.
It may be hard to know where to start investing with $1,000. I’ve got some ideas for you.
An exchange-traded fund (ETF)
iShares S&P Global 100 (ASX: IOO). The stronger Australian dollar puts Aussies in a good position to buy international shares.
This ETF invests in the biggest global businesses. I like that this ETF is invested in businesses from various countries like the US, France, Switzerland and so on. It’s not based on one country, region or industry.
ASX shares aren’t the only companies worth investing in. The ETF is currently invested in shares like Microsoft, Alphabet and LVMH.
A diversified ETF
Vanguard Diversified High Growth Index ETF (ASX: VDHG). It can be hard to know which ETF to go for. So why not choose a diversified ETF which invests in several other ETFs?
It’s invested in large cap ASX shares, international shares, smaller shares and bonds.
This ETF is the type of pick that could be your only investment and you’d do quite well with it. It doesn’t have the best growth credentials compared to some other ETFs, but it will be good enough with low costs.
Quality listed investment companies (LICs)
WAM Microcap invests in small cap ASX shares. PM Capital Global invests in international shares. WAM Microcap seems set up to perform well with its small cap hunting ground. Meanwhile, global shares can offer up many more opportunities than our domestic market.
Both of these LICs had made strong long-term returns before COVID-19. I believe this performance will return as the market recovers. They also both have pretty high dividend yields.
ASX small cap shares
The smaller shares on the ASX could be some of the best opportunities. Small caps are much earlier along in their growth journey.
I really like Pushpay Holdings Ltd (ASX: PPH) and Bubs Australia Ltd (ASX: BUB). Both of them are now cashflow positive and they’re still generating huge revenue growth. The horrible circumstances actually seem to be accelerating the growth of both businesses.
In five years they could be two of the best mid cap shares on the ASX.
A great investment conglomerate
There aren’t many conglomerates on the ASX. Some investors don’t like conglomerates because of all the moving parts and the complicated structure. But I really like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). It has been operating for over a century, it continues to grow and diversify its investment portfolio and pays an ever-growing dividend. The ASX share is still down more than 10% from the pre-coronavirus high.
A cheap construction
Brickworks Limited (ASX: BKW) is one of the best value ASX shares right now in my opinion. Brickworks construction company is a large shareholder in Soul Patts and it also owns a growing industrial property trust. The value of these two assets alone make Brickworks seem cheap.
The best time to buy a cyclical construction business is when confidence is low, such as this period. Construction will return to a more normal level at some point, so I think it could be opportunistic to buy Brickworks whilst things look uncertain. The US and Australian governments will be counting on construction for some of the economic recovery.
I believe each of these shares are great opportunities for the long-term. At the moment I think one of the LICs, Brickworks, Bubs and Pushpay are more likely to generate the stronger returns over the next three years. It depends whether you’re looking for income or capital growth.