Investing in ASX shares can be very rewarding for Aussies if we avoid the duds. Beginners can do very well by just picking businesses that can grow over the long term.
One of the tricky things, when we start investing, is that our portfolios have no diversification. We don't want to have all of our eggs in one basket, even if Coles Group Ltd (ASX: COL) shares or Telstra Group Ltd (ASX: TLS) shares are a decent option.
With that in mind, these are the investments that I'd want in my portfolio as a new investor.
BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
I think many investors would benefit from having exposure to the global share market. Nearly all of the world's best and strongest businesses are listed outside of Australia. The ASX only accounts for around 2% of the global share market.
I'm a big fan of the Vanguard MSCI Index International Shares ETF (ASX: VGS) as a one-size-fits-all exchange-traded fund (ETF) investment, but I like the ETHI ETF because of the ethical element that a new investor might appreciate.
The BetaShares Global Sustainability Leaders ETF is invested in 200 businesses, including the biggest positions like Nvidia, Apple, Visa, Home Depot, Mastercard, Toyota, ASML, Salesforce and Adobe.
There are a number of different exclusions for this portfolio, such as no fossil fuels, no gambling stocks, no weapons manufacturing, no questionable supply chains (such as child labour), good board diversity and so on. This is what makes it more 'ethical' than other investments.
Past performance is not a reliable indicator of future results, but over the past five years, the ETHI ETF has delivered an average return per year of over 16%.
Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
Soul Pattinson is one of my favourite companies. It has been listed on the ASX for 120 years and it has paid a dividend every year. It has also grown its annual dividend every year since 2000. That's a great record, in my opinion.
It operates as an investment house. The ASX share invests in other ASX shares and also has a portfolio of privately-owned businesses.
It's invested in sectors like telecommunications, resources, industrial properties, building products, financial services, agriculture and swimming schools. Soul Pattinson has designed its portfolio to be defensive and generate good cash flow which it can use to pay dividends and re-invest in further opportunities.
Out of all of the S&P/ASX 200 Index (ASX: XJO) shares, I think Soul Pattinson is the one most likely to still be around in 50 years because of its ability to adjust its investment portfolio as it sees fit. It has outperformed the ASX 200 over the last 10 years and 20 years.
I expect to own this share in my own portfolio for the rest of my life.
Bailador Technology Investments Ltd (ASX: BTI)
New readers may be looking for opportunities that can deliver a lot of growth. However, I'd suggest it's a risky idea to try to identify those opportunities yourself, to start with, because finding the right businesses and investing at the right time can be tricky.
This ASX share pick could be a good way to get exposure to growth, without needing to make the actual investment choices.
Bailador is a tech investment company that finds unlisted businesses in the tech space that have "global addressable markets" – they're growing internationally. The investment team look for businesses that have a "huge market opportunity", a "proven business model with attractive unit economics" and the "ability to generate repeat revenue".
The investments have been going well, despite the uncertainty. It's selling its stake in both Rezdy and InstantScripts because of takeovers – these sales represented excellent returns on Bailador's original investments and were done at prices significantly higher than what Bailador valued those tech companies at.
Some of its biggest current investments include volunteer management platform Rosterfy and hotel management platform ASX share Siteminder Ltd (ASX: SDR) (which was unlisted when Bailador first invested).
The Bailador share price is currently at a 27% discount to the net tangible assets (NTA) per share as at 31 May 2023.
