The Motley Fool

How to invest $10,000 in ASX 200 shares for growth and dividends

Growth and dividends. That’s the holy grail that most ASX 200 share investors are looking for.

It’s a rare combination, but one that can be an absolute gold mine if you can find it.

If you’re looking to invest $10,000 for both growth and dividends, here’s how I’d go about setting up a brand new ASX 200 share portfolio.

Where I’d invest $10,000 in ASX 200 shares

I’m going to assume I’m building a diversified portfolio from the ground up. I personally like the ‘satellite’ approach, which is underpinned by a diversified core with some smaller allocations to growth companies.

That means it’s good to start with a cornerstone investment that can underpin portfolio growth. With $10,000 to invest, allocating your first $5,000 to a diversified exchange-traded fund (ETF) like Vanguard Australian Shares Index ETF (ASX: VAS) could be a good move.

Vanguard Australian Shares Index ETF seeks to track the S&P/ASX 300 Index (ASX: XKO) and invests in 306 companies. With a management fee of just 0.10% p.a., this Vanguard fund could give your portfolio instant diversification with a high weighting towards ASX 200 shares.

Once you’ve got your $5,000 ETF investment, it’s time to build out the ‘satellite’. If you’re looking for growth in the next 10 years, it’s worth thinking about potential boom industries.

To me, that means I’m looking in the biotech and data management industries.

With the remaining $5,000, I wouldn’t want to spread my investment too thin across ASX 200 shares. That means shares like Polynovo Ltd (ASX: PNV) and NextDC Ltd (ASX: NXT) could be in my sights.

Polynovo continues to kick goals and make the most of its significant research and development capabilities. Polynovo shares are up 17.65% this year but further applications of its NovoSorb BTM product could see the ASX 200 biotech share climb higher, in my view. Specifically, Polynovo is eyeing off the lucrative breast augmentation and hernia repair markets right now.

I think the data management sector could also have a huge decade in the 2020s. NextDC is currently a leader in the data storage and security space. That leaves the ASX 200 tech share well-placed to climb higher if earnings continue at a strong pace in the next decade.

So… what’s the end result?

Putting $5,000 into Vanguard Australian Shares Index ETF should provide a handy dividend and franking credits for investors. Then, investing $2,500 in each of NextDC and Polynovo shares rounds out your ASX portfolio with a potential growth platform. If these 2 Aussie companies can continue their strong growth in the next 10 years, then that could be a solid mix of growth and dividends by 2030, in my opinion.

5 stocks under $5

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

Ken Hall owns shares of Vanguard Australian Shares Index. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of POLYNOVO FPO. The Motley Fool Australia has no position in any of the stocks mentioned. 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...