Getting started in the share market can feel overwhelming. With thousands of shares to choose from, it is easy to fall into analysis paralysis before you even begin!
One simple way to cut through the noise is to build a diversified portfolio using a small number of broad-based exchange traded funds (ETFs). This approach can provide instant exposure to hundreds, or even thousands, of shares, while keeping costs, effort, and complexity low.
If you are new to investing and looking for a straightforward place to start, here is how a three-ETF ASX portfolio could do most of the heavy lifting.
Image source: Getty Images
Vanguard Australian Shares ETF (ASX: VAS)
The first building block is exposure to the Australian share market.
To achieve this, the Vanguard Australian Shares ETF would be a natural choice. The hugely popular fund tracks the performance of the largest listed shares on the ASX.
This means investors gain easy access to household names across banking, resources, healthcare, and consumer staples. This includes well-known businesses like Telstra Group Ltd (ASX: TLS), Westpac Banking Corp (ASX: WBC), Woolworths Group Ltd (ASX: WOW), and Ramsay Health Care Ltd (ASX: RHC).
Vanguard MSCI International Shares ETF (ASX: VGS)
While Australian shares can form a strong foundation, relying solely on the local market can leave portfolios overly concentrated.
The Vanguard MSCI International Shares ETF helps solve this problem by providing exposure to global markets, including the United States, Europe, and parts of Asia. It holds many of the world's largest and most successful companies across technology, healthcare, consumer goods, and industrials. In fact, at the last count, there were over 1,200 shares in the fund.
For new investors, this ETF adds geographic diversification and reduces reliance on the Australian economy. It also provides access to global growth opportunities that are not well represented on the ASX.
Betashares Diversified All Growth ETF (ASX: DHHF)
This third ASX ETF could act as a simple way to broaden portfolio diversification even further with a single click of the button.
The Betashares Diversified All Growth ETF is an all-in-one growth ETF that invests across Australian shares, international shares, and emerging markets.
While it does overlap somewhat with the first two ETFs, it adds additional exposure to regions and companies that may otherwise be underrepresented. Betashares highlights that it provides exposure to approximately 8,000 shares that are listed on over 60 global exchanges.
For beginners, this type of ETF can help smooth out returns over time and reduce the need to constantly rebalance a portfolio. It was recently recommended by analysts at Betashares.
