Actively investing in ASX shares can be quite the rollercoaster.
There are good days, bad days, and many days where you're better off not checking your brokerage account. But that's all part of the ride.
In no particular order, here are five reasons why I love investing in ASX shares.
Being a part-owner of everyday businesses
For me, one of the best parts of investing in ASX shares is being able to own stakes in companies that we regularly interact with in our daily lives.
Walking down the street or browsing the internet and being greeted with brands that belong to publicly-traded companies we can own a slice of.
Think Wesfarmers Ltd (ASX: WOW), Telstra Corporation Ltd (ASX: TLS), and REA Group Limited (ASX: REA).
As someone who's constantly Googling the parent company of brands I come across and wondering if they're public, I love that I'm able to easily invest in a vast range of well-known companies around the globe.
Wealth-building potential
For many, investing is often seen as a means to an end. Personally, I love the process and journey itself. But there's no denying that my overarching goal is, of course, to build wealth.
And history has shown that the ASX share market is one of the best places to do just that.
Vanguard data shows that over the past 10 years, the S&P/ASX All Ordinaries Total Return Index (ASX: XAOA) has achieved an average return of 9.4% per annum. Compounded over decades, this can spin up a sizeable amount of money.
The magic of compound interest
Speaking of compounding, the magic of compound interest never ceases to amaze me.
Albert Einstein famously called it the eighth wonder of the world. Play around with a compound interest calculator and you'll start to see where he was coming from.
The basic premise is that you're earning interest on interest (or returns on returns), which helps your money to grow at an accelerated rate.
Compounding investment returns can see your portfolio experience exponential growth.
Take a $50,000 portfolio, for example, achieving average returns of 5% per year. In the first year, this portfolio generates $2,500, which is 5% of $50,000. But in year two, we're now generating 5% returns on a larger balance of $52,500.
And so on and so forth, to the point where after 30 years, this hypothetical portfolio would have turned into $216,000. All without adding an extra cent.
Ongoing learning
It's a bit nerdy, I know, but I love the aspect of learning that comes with investing in ASX shares. Learning about the ins and outs of individual businesses, business models, industries, you name it.
As someone who's always been fascinated by businesses and brands, I enjoy getting into the weeds of a potential investment idea and discovering what makes a business tick.
With thousands of public companies operating in dynamic industries that are constantly evolving, the learning never stops.
It's always interesting
Investing is always interesting, and no day is ever the same. Whether it be a takeover offer, a big contract win, a poor trading update, or a management reshuffle, there's never a dull moment.
Plus, given that there are two sides to every transaction – a buyer and a seller – there are always bound to be people camping on either side of the bullish and bearish fences.
With this comes the opportunity to make money, but so too the opportunity to be humbled.
