I think that the ASX share market is a very good way to build wealth. Not only can it be used to grow our wealth, but younger Australians have lots of options of how to invest.
There are numerous online brokers that don't charge much in fees. Investors can go with individual ASX shares, managed funds or exchange-traded funds (ETFs). There's the option of investing in internationally-listed shares as well, like Microsoft or Apple.
More millennials (born between 1981 to 1996) have bought shares than previous generations, according to research done by Motley Fool US. It asked 1,200 American adult investors to learn about people's investing choices.
According to the research, some of the areas of the market that millennials are focused on include ETFs, financial shares and technology shares. So, with that in mind, I'm going to pick one ASX share from each category for beginner investors that could be a good place to start.
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Vanguard MSCI Index International Shares ETF (ASX: VGS)
I think this is one of the best, diversified ETFs. An ETF is a fund that allows investors to buy a group of businesses in a fund, through a stock exchange (like the ASX).
This one is invested in well over 1,400 globally-listed businesses. Its holdings come from a range of different countries like the US, Japan, the UK, Germany, the Netherlands, France, Canada, Switzerland and so on.
It has holdings like Apple, Microsoft, Visa, Nvidia, Home Depot, Pfizer, Costco, Walmart, McDonald's, Walt Disney, ASML, LVMH, Salesforce and Toyota.
While ETFs can experience volatility too, I think the different industries and companies represented in the portfolio can lead to less volatility. For example, energy businesses have offset some of the declines of tech shares this year.
Macquarie Group Ltd (ASX: MQG)
Macquarie is one of the largest financial ASX shares. But, it's not just a domestic bank focused on lending.
This business is a global investment bank. At least two-thirds of its income is actually generated overseas. I like the geographic diversification that the business has. This also gives the business the ability to invest almost anywhere in the world that it wants to.
Macquarie is diversified across different operating segments as well. It has four divisions – banking and financial services, commodities and global markets, investment banking (Macquarie Capital) and asset management (Macquarie Asset Management).
The mix of divisions means some bits of the financial ASX share can be defensive and continue chugging along, while other parts experience (typically) cyclical economic effects.
I like the management team and the company's ability to keep delivering returns in tricky environments.
REA Group Limited (ASX: REA)
I like to think of REA Group as a way to benefit from the entire real estate market. It owns the real estate portal realestate.com.au. A lot of houses that are advertised for rent or sale are put up on realestate.com.au.
It's the clear market leader when it comes to viewing statistics on the website, which means it's likely indispensable for property owners. It gets 3.3 times more monthly visits on average than its nearest competitor. This enables the business to steadily increase its prices with little detrimental impact, while also unlocking more revenue from additional website features.
Not only is it doing well in Australia, but it's invested in property sites in a number of other countries including India and the US which could be good profit generators for the business in the future.
