If you’re a investor just starting your portfolio I think there are a number of ASX shares that could be good ideas.
I wouldn’t want one of your first investments to blow up in your face. That could put you off ASX shares, which would be very disappointing because I think shares are the best long-term wealth creation tool out there.
Here are three good investments that would be really good as long-term wealth building ideas for beginner investors:
WAM Microcap Limited (ASX: WMI)
WAM Microcap is a listed investment company (LIC) which invests in small ASX shares. It targets ones with a market capitalisation under $300 million. These smaller businesses can be very exciting growth ideas.
The investment team have proven to be very good investors. WAM Microcap reports its investment returns before expenses fees and taxes. Over the past three months its gross return was 26.9%, over the past year (including the COVID-19 crash) its gross return was 25.4% and since inception in June 2017 it has returned 21.7% per annum.
Since inception in June 2017, its gross performance outperformed the S&P/ASX Small Ordinaries Accumulation Index by 13.3% per annum.
It invests in exciting businesses like People Infrastructure Ltd (ASX: PPE), Citadel Group Ltd (ASX: CGL, Redbubble Ltd (ASX: RBL) and Selfwealth Ltd (ASX: SWF). It offers good diversification as it owns dozens of smaller ASX shares.
As a bonus, WAM Microcap is steadily increasing its ordinary dividend and it regularly pays a special dividend.
At the current WAM Microcap share price it’s trading at a slight discount to the August 2020 net tangible assets (NTA) per share. That you means you can buy a basket of ASX shares worth $1.49 per share for $1.46 per share.
Betashares Global Sustainability Leaders ETF (ASX: ETHI)
New investors may want to only invest in businesses that are doing good in the world. Or at least aren’t causing negative effects on the world.
This is an exchange-traded fund (ETF) which owns a portfolio of businesses that have been identified as climate leaders that have also passed screens to exclude companies with direct or significant exposure to fossil fuels or engaged in activities deemed inconsistent with responsible investing considerations.
In practice, that means excluding businesses with exposure to gambling, tobacco, armaments, alcohol, junk foods, pornography, the destruction of valuable environments, human rights and supply chain concerns and so on.
The Betashares Global Sustainability Leaders ETF has actually performed very well. Investing ‘ethically’ doesn’t have to come at the expense of returns. Over the past year it has returned 27.8%, over the past three years it has returned 23.5% per annum and since inception in January 2017 it has returned 21.6% per annum.
It’s invested in lots of great businesses like Apple, Nvidia, Mastercard, Visa, Home Depot, Adobe and PayPal. It doesn’t invest in ASX shares, as the ‘global’ name may suggest.
Its annual management fee is just 0.59% per annum, which is very cheap for an ethical option.
This is the type of investment you could own as your only investment because of its performance and global diversification. It’s invested in around 200 businesses.
A2 Milk Company Ltd (ASX: A2M)
If you want to invest in an ASX share with plenty of growth potential then I think A2 Milk is a great option today.
In the FY20 result, A2 Milk grew revenue by 32.8% to NZ$1.73 billion and net profit after tax (NPAT) rose by 34.1% to NZ$385.8 million.
There are two reasons why I think A2 Milk is a really good buy today. It continues to grow its distribution and market share in the US and China. Those are two huge markets that could support a much bigger A2 Milk business.
The other reason is that the A2 Milk share price has fallen by 16% since 18 August 2020. It’s trading at a more attractive valuation, it’s priced at 24x FY23’s estimated earnings.
I believe each of these ASX shares would be good picks to start a portfolio with. WAM Microcap is a really good option for dividend income, but Betashares Global Sustainability Leaders ETF offers attractive global diversification with (historically) good returns as well.