For investors new to the ASX, the share market, or Australian stocks, the gap between wanting to invest and actually pulling the trigger to buy ASX shares can seem very wide.
It's true that investing is a complicated process, with strange apps or websites to navigate, unfamiliar jargon to get one's head around, and money to part with. However, the rewards are so compelling that I think it is essential that Australians who can invest do so, for the sake of their own financial futures.
So with that in mind, let's talk about three ASX shares that I think would make for a perfect pick for a beginner investor today. These ASX shares are all inherently diversified and have a decent track record of delivering real returns for investors over many years – two factors I think are essential for a first investment.
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3 ASX shares perfect for beginners
Vanguard Australian Shares Index ETF (ASX: VAS)
First up, we have the ASX's most popular index fund. Like all index funds, this ETF from Vanguard holds every share in an index. In this case, that's the S&P/ASX 300 Index (ASX: XKO). In effect, this means that VAS holds a small portion of all 300 of the largest companies listed on the Australian share market. That's everything from Commonwealth Bank of Australia (ASX: CBA) and Telstra Group Ltd (ASX: TLS) to Ampol Ltd (ASX: ALD) and JB Hi-Fi Ltd (ASX: JBH).
This makes the Vanguard Australian Shares ETF a bet of sorts on the future of the Australian economy as a whole. That has always worked out well for investors in the past.
Argo Investments Ltd (ASX: ARG)
Next up, we have a listed investment company (LIC) in Argo. LICs are companies that own and manage a portfolio of underlying investments on behalf of their investors. Argo has been doing this for decades, managing a collection of some of Australia's best blue-chip stocks. Those ASX shares include CBA and Telstra, as well as Woolworths Group Ltd (ASX: WOW), BHP Group Ltd (ASX: BHP), and Bunnings-owner Wesfarmers Ltd (ASX: WES).
Argo has delivered market-matching returns for decades, and also pays a decent dividend, which usually comes with full franking credits attached.
iShares S&P 500 ETF (ASX: IVV)
Our last stock for a beginner investor today is not really an ASX share. It is another index fund, but this one doesn't hold CBA, Woolies, or Telstra. Instead, it tracks the S&P 500 Index (SP: .INX). This index represents the largest 500 stocks listed on the American markets, just as VAS represents Australia's largest 300 companies. So instead of JB Hi-Fi and Wesfarmers, you are getting exposure to the likes of Apple, Microsoft, Amazon, Coca-Cola, and Netflix.
The US is unquestionably home to many of the world's best businesses. As such, I think it is a mistake for any Australian investor to just stick with our local companies. This index fund is an easy and effective way to add some of the world's best companies to your portfolio.
