Here's how I'd invest my next $5,000 on the ASX in 2025

These two investments could make a lot of sense this year.

| More on:
Cheerful boyfriend showing mobile phone to girlfriend in dining room. They are spending leisure time together at home and planning their financial future.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investing in ASX stocks is typically a great way to build wealth over the long term. However, with some uncertainty about what could happen in the foreseeable future with trade tariffs and so on and share markets close to record highs, I'd be somewhat selective about what to buy.

I think it's best not to try to predict how the economy or share market will perform over shorter periods of time. But we can still choose investments that we believe are best placed to succeed.

I'm focusing on quality businesses with a compelling future, whether the economy is booming or there are ongoing financial challenges. If I had $5,000 to invest, the two ASX investments below would appeal to me. In fact, I recently invested in both of them, and I'm planning to buy more this year.

VanEck MSCI International Quality ETF (ASX: QUAL)

This exchange-traded fund (ETF) focuses purely on owning the highest-quality businesses worldwide. This strategy means the fund has a lot of underlying diversification with its holdings from various countries.

I view these 300 companies in the portfolio as some of the best in the world because they tick multiple 'quality' boxes. The stocks in the QUAL ETF have a high return on equity (ROE), earnings stability and low financial leverage.

What this means is that the companies make a lot of profit for how much shareholder money is retained in the businesses, the profit generation is usually resilient and growing, and their balance sheets have pleasingly low levels of debt.

These seem to be some of the strongest and most reliable businesses. That doesn't mean their share prices won't fall, but they could perform better than 'riskier' businesses.

Over the past 10 years, the QUAL ETF has returned an average return per annum of 15.6%. I'm not expecting the next 10 years to be as good, but the underlying fundamentals are appealing with this ASX ETF's portfolio for future returns.

Brickworks Ltd (ASX: BKW)

It has been a rough period recently for ASX stocks related to construction because of the reduced activity and lower demand for building products.

Brickworks is the leading supplier of bricks in Australia and a major player in roofing, masonry, and other building products. I don't know when the construction industry will noticeably recover — it could take longer than this year — but it'd be a mistake to think conditions will stay this weak forever.

I'm also excited by the potential of the ASX share's industrial property assets. Brickworks owns half of an industrial property trust that owns multiple business estates in Australia's major cities. Large advanced warehouses have been built for major tenants like Amazon and Coles Group Ltd (ASX: COL).

The rental and capital value of that real estate is benefiting from tailwinds, including the growing adoption of e-commerce, data centre demand and a rising population.

Brickworks expects significant rental income growth in the coming years as more warehouses are completed, adding to the property trust's already impressive portfolio.

I believe Brickworks shares are undervalued and could significantly benefit from any RBA interest rate cuts this year.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has positions in Brickworks and VanEck Msci International Quality ETF. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon and Brickworks. The Motley Fool Australia has positions in and has recommended Brickworks and Coles Group. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Opinions

A man leans forward over his phone in his hands with a satisfied smirk on his face although he has just learned something pleasing or received some satisfying news.
Technology Shares

Life360 shares: A generational opportunity to get rich?

I think the Life360 share price could more than double again in the year ahead.

Read more »

A woman makes the task of vacuuming fun, leaping while she pretends it is an air guitar.
Opinions

Opinion: This is one of the best ASX growth shares to own for the next 5 years

This stock is rapidly growing, and I’m excited about it.

Read more »

Male and female workers at a steel factory.
Opinions

2 ASX 200 shares that could soar while Donald Trump is US President

These stocks may have a positive future.

Read more »

Smiling couple looking at a phone at a bargain opportunity.
Opinions

Prediction: These ASX 200 shares could be among 2025's big winners

These businesses have compelling tailwinds in 2025 and beyond.

Read more »

An older woman high fives an older man with big smiles after seeing good news on their laptop regarding their ASX tech shares
Opinions

If I were in my 50s I'd buy these compelling ASX stocks

I believe these options are appealing for people planning for retirement.

Read more »

A smiling woman at a hardware shop selects paint colours from a wall display.
Opinions

Where will Wesfarmers shares be in 3 years?

Can this business keep impressing the market?

Read more »

A young man goes over his finances and investment portfolio at home.
Dividend Investing

2 ASX dividend stocks I'm thinking about buying in February

I’m considering these shares for passive income.

Read more »

Nervous customer in discussions at a bank.
Bank Shares

Is the ANZ share price a buy? Here's my view

Can investors bank on further gains from ANZ?

Read more »