Getting started on an investing journey into the Australian share market can be a daunting prospect. We all know that the ASX can be a risky place to invest your hard-earned dollars. And buying the first ASX shares on your investing journey is often where a prospective investor makes their first mistake.
That's fair enough of course. There are hundreds of different ASX shares to choose from on the ASX. With the varying opinions and recommendations one is often inundated with when first starting out in the share market, this can make it easy to follow the wrong advice and go for a company that may not be a wise choice for a long-term investment.
As such, today, I'll be discussing three ASX shares that I think would make great, lower-risk picks for a beginner investor. No ASX share is a risk-free investment, of course. But I think these three picks are about as safe as an ASX share can be.
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3 lower-risk ASX shares for a beginner investor
Coles Group Ltd (ASX: COL)
It's my view that the lowest-risk shares on the ASX are companies that provide goods or services that we need rather than want. Of life's basic needs, none come above food. That's why I think Coles is a great choice for investors looking for a safer entry point into the Australian stock market.
Coles has a nationwide network of supermarket grocers that many Australians go to to buy food, drinks, and household essentials. We can be reasonably sure that this isn't going to change anytime soon, as Coles is always under pressure to sell us these basics at the cheapest pricing it can.
This isn't an investment that will make anyone rich overnight, but I think Coles has the potential for some modest capital gains going forward. The company also offers a hefty (and fully-franked) dividend, which is currently yielding just under 4%.
Telstra Group Ltd (ASX: TLS)
In a similar vein, I also view Telstra as a good choice for beginner investors who are looking for a low-risk share to dip their toes into the stock market world. While food, drinks, and household essentials are at the top of our basic needs, reliable internet access is also a top priority in today's modern world.
Telstra is the gold standard stock to invest in if you want a slice of that action. It is the largest provider of both mobile and fixed-line internet services in Australia, and its mobile network is almost universally regarded as superior to those of its competitors.
Like Coles, Telstra's earnings are unlikely to be severely affected by any problems in our economy. Whether we are dealing with high inflation or an economic recession, Telstra's customers are probably not going to stop paying for phone usage or internet access. This inherent defensiveness makes this company another great choice for any beginner investor today.
Telstra shares also offer investors a decent, fully franked dividend yield. At inflation prices, this was just under 5%.
Argo Investments Ltd (ASX: ARG)
A final ASX share that I think any beginner can consider as a low-risk starter investment is Argo Investments. Argo is a listed investment company (LIC), which means it actually functions as something akin to a managed fund.
Rather than producing or selling goods or services itself, it runs a portfolio of other investments on behalf of its investors. Argo has been around for a very long time. It first opened its doors back in 1946. Since then, it has built up a reputation as a conservative and reliable steward of its investors' capital.
Argo's strength comes from its diversified portfolio of ASX shares. It consists of dozens of underlying ASX shares, which (as of 31 May) included everything from Commonwealth Bank of Australia (ASX: CBA) and Telstra Group Ltd (ASX: TLS) to Suncorp Group Ltd (ASX: SUN) and TechnologyOne Ltd (ASX: TNE).
Thanks to this huge, diversified portfolio of different ASX companies, I think Argo represents a very low-risk ASX share that any beginner investor can feel comfortable holding. Argo also pays out a regular, fully franked dividend, which was recently trading at a yield of around 4%.
