Wondering how to invest in ASX shares? Fair enough. Investing in the stock market may give us a path to building massive wealth over time. But it is not an easy place to feel comfortable in.
There are so many shares to choose from, not to mention the volatility of the markets to mentally overcome, and the boatload of jargon that comes with ASX share investing.
So today, we're going to try and make the process a lot easier by discussing which ASX shares I'd buy with my first $1,000 today.
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Wonder how to invest? Start with these ASX shares
Vanguard Australian Shares Index ETF (ASX: VAS)
For someone starting out with investing, I think index funds like this one from Vanguard are a perfect fit. An index fund works by holding a huge basket of different ASX shares, all in one investment. In this case, the Vanguard Australian Shares ETF allows investors to track the 300 largest companies listed on the ASX by market capitalisation (size).
That means you are getting everything from Telstra Group Ltd (ASX: TLS) and Commonwealth Bank of Australia (ASX: CBA) to Woolworths Group Ltd (ASX: WOW) and Harvey Norman Holdings Limited (ASX: HVN).
Because there are 300 different shares within this fund, there is almost zero risk of your investment going bankrupt or losing 100% of its value. There are risks you have to deal with if you buy individual companies' shares.
The VAS ETF also pays out quarterly dividend distributions, which is nice from a passive income standpoint.
So for someone who is learning how to invest, I would certainly feel comfortable recommending putting $500 into this ETF.
iShares S&P 500 ETF (ASX: IVV)
This is another exchange-traded fund (ETF) for new investors to consider. The Australian share market is great. But it does not allow investors to have their money in truly world-dominating companies. The lies of Woolworths and CBA's influence wanes considerably beyond our shores. But that's where this US-based ETF comes in.
The iShares S&P 500 ETF works in a similar way to the Vanguard fund we just discussed. But instead of investing in the largest 300 companies in Australia, you are getting exposure to the 500 largest shares in the United States.
The US is home to companies that dominate the global economy. From Apple, Microsoft, Mastercard, Amazon, Exxon Mobil and Coca-Cola, the power and reach of these sorts of companies is unparalleled. And this one ETF allows you a small slice of all of them, and more.
Thus, I think this fund is a great place for our beginner investors to put the other $500 they have to get started.
