With just $500, anyone can make a good move for growing their wealth with ASX shares.
If I were starting to invest, I'd want to choose quality businesses that I am familiar with but also have the potential to deliver good returns.
The share market has returned an average of around 10% per annum, which is a good rate of compounding growth.
Many brokers in Australia require a minimum investment of $500 the first time we invest in an ASX share. So, let's see what we can do with that.
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Vanguard MSCI Index International Shares ETF (ASX: VGS)
It can be hard to choose one business to own when there are some many out there. So, why not (indirectly) own more than 1,400 in a single purchase? The VGS ETF held shares in 1,433 businesses in its portfolio at the end of January 2024. That's a lot of diversification!
We can own many of the world's leading technology businesses with an investment in this exchange-traded-fund (ETF), including Apple, Microsoft, Alphabet, Nvidia, Amazon.com, Meta Platforms and Tesla.
I believe this is the sort of investment that we can own forever because of how diversified it is, the quality of those businesses and the good returns it typically makes (though nothing is guaranteed). Over the years, the holdings are regularly updated, ensuring the ASX ETF is always invested in leading businesses.
It has an annual management fee of 0.18%, and it has achieved an average return per annum of 12.4% since it started in November 2014.
While US shares make up around 71% of the portfolio, there are numerous other countries with a noticeable weighting, including Japan, the United Kingdom, France, Canada, Switzerland, Germany and the Netherlands.
Wesfarmers Ltd (ASX: WES)
For investors wanting to own a specific ASX share, I think Wesfarmers Ltd (ASX: WES) is a great choice.
The ASX retail conglomerate operates Kmart, Bunnings, Officeworks, Priceline and many other businesses across the chemicals, energy, fertilisers, industrial and healthcare sectors.
The company has proven to be a solid performer. Bunnings and Kmart Group both earn strong returns on capital (ROC), while the overall business earns an impressive return on equity (ROE).
Wesfarmers aims to generate good total shareholder returns (TSR) for investors through a combination of capital growth and dividends.
According to CMC Markets, Wesfarmers shares have delivered an average TSR of 14% per annum over the past decade, though past performance is not a guarantee of future performance. Having said that, I think the ASX share is very capable of outperforming the S&P/ASX 200 Index (ASX: XJO) over the next five years.
