If you have cash sitting idle in a bank account, you will likely be disappointed at the low interest rates that appear to be sticking around for some time to come. A better strategy could be to invest in ASX shares.
The ASX share market has consistently moved higher since the lows we saw in March when COVID-19 shut down economies all over the world. In spite of the setbacks, many companies are evolving with new ways of working and pushing forward with growth strategies.
Investor confidence appears to be returning amidst a range of government stimulus measures and hopes of a vaccine. I believe there is no time like the present to invest. So, how should you invest your money? If we take a hypothetical $10,000, here is how I would invest it right now:
How I'd invest $10,000 in ASX shares
$2,000 | Xero Limited (ASX: XRO)
Xero is a leading provider of cloud-based, business software. It essentially helps organisations to run their businesses. In an ever-changing world, more and more companies are relying on Xero to manage their operations. The Xero share price has a history of strong performance, rising a staggering 2,000% since listing on the ASX. In my view, investors thinking they have missed out on all the growth don't need to worry. The Xero share price is still currently growing strongly, increasing by more than 70% since the March bear market.
With more than 2 million subscribers, Xero maintains a substantial customer base by any measure. At its recent AGM, Xero announced an additional 96,000 subscribers were added to the platform from April to July. One thing I love about Xero is its mission to make life easier for business owners. In my experience, a business owner needs to focus on 'keeping the main thing, the main thing'. As such, relying on software that simplifies management and operations is essential to business growth.
Xero software integrates with many common business expenses, such as those generated by fuel providers Caltex and BP, and even transport providers such as Uber for Business. For banking integration, Xero accesses bank feeds daily to save time with cash flow and reconciliation. All major Australian banks are supported by the platform including National Australia Bank Ltd (ASX: NAB), Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group Limited (ASX: ANZ), Westpac Banking Corp (ASX: WBC) and also Bendigo and Adelaide Bank Ltd (ASX: BEN).
The business landscape is changing rapidly and often the only way to survive is to adapt. Xero enables businesses to do just that.
$5,000 | BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC)
This ASX ETF aims to track the performance of the S&P/ASX All Technology Index (ASX: XTX) (before fees and expenses). By investing your money here, you are effectively getting exposure to many leading Australian companies in the technology space. Sectors covered include information technology, consumer electronics, online retail, and medical technology.
The top ten holdings inside this ETF consists of
- Afterpay Ltd (ASX: APT) at 18.1%
- Xero Limited (ASX: XRO) at 10.8%
- Computershare Limited (ASX: CPU) at 7.4%
- Seek Limited (ASX: SEK) at 7.2%
- REA Group Limited (ASX: REA) at 6.0%
- Nextdc Ltd (ASX: NXT) at 5.8%
- Carsales.com Ltd (ASX: CAR) at 5.0%
- Altium Limited (ASX: ALU) at 4.5%
- Appen Ltd (ASX: APX) at 4.3%
- WiseTech Global Ltd (ASX: WTC) at 3.1%
Technology companies are thriving amidst the COVID-19 pandemic as the world goes through a digital evolution. Buying this ASX tech ETF can help to give your portfolio broad exposure, while maintaining your investment in Australian companies.
$3,000 | CSL Limited (ASX: CSL)
Who better to tackle the COVID-19 pandemic than a company with a 100 year history of successfully delivering biotherapies and vaccines? CSL is at the forefront of healthcare development. I feel it is one of the highest quality companies available on the ASX. If you're looking to invest in ASX shares, I definitely think it should feature in your portfolio.
The federal government is backing this biotech superstar to help produce COVID-19 vaccines for all of Australia. On top if this, CLS recently announced it had entered into a strategic partnership with the Coalition for Epidemic Preparedness Innovations (CEPI) and the University of Queensland to help with fast tracking of a vaccine.
The CSL share price is up more than 800% over the last decade, or around 80% per year. Currently it's trading at a 14% discount to its pre-COVID highs, representing a good buying opportunity.
Foolish takeaway
If I'm employing a common sense approach to investing, I'm looking for companies and funds that stand to gain the most from real world events. The economy is still suffering through the pandemic which can make you feel uneasy as an investor.
Despite this, I believe one thing is for sure; technology and healthcare are both going to be prominent growth industries moving forward. If we continue to struggle with this pandemic longer term, tech and health will continue to thrive. If we recover more quickly, these industries are still critical aspects of everyday life. Personally, if I was to invest $10,000 into ASX shares right now, it would definitely be in the tech and healthcare sectors.
