If I had $500 spare to invest, I think the best approach would be to focus on broad diversification, low effort, and long-term growth.
And that is where ASX exchange-traded funds (ETFs) can be very useful.
Instead of trying to pick the perfect individual stock, an investor can use an ETF to buy a basket of shares in one trade. For me, that makes a lot of sense when investing a smaller amount.
Here are the ASX ETFs I would consider this month.
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Vanguard MSCI Index International Shares ETF (ASX: VGS)
If I could only choose one ETF with $500, I think this would be very high on the list.
The Vanguard MSCI Index International Shares ETF gives investors exposure to a broad mix of global shares across developed markets.
That means an investor is gaining exposure to major international companies across sectors like technology, healthcare, financials, consumer goods, and industrials.
I think this is important because the Australian share market is quite concentrated. Banks and miners make up a large part of the local market, which can be useful, but it also leaves gaps. The VGS ETF helps fill those gaps.
It gives exposure to businesses that are shaping the global economy, including many that Australians use every day but cannot easily access through the ASX.
For a $500 investment, I think that kind of instant global diversification is hard to beat.
Vanguard Australian Shares Index ETF (ASX: VAS)
I would also consider the Vanguard Australian Shares Index ETF.
This ETF provides exposure to a broad selection of Australian shares. That includes large blue chips, major banks, resources companies, healthcare names, retailers, and other listed businesses.
The appeal here is simplicity. Rather than trying to decide which Australian share to buy, the VAS ETF gives investors a slice of the local market in one go.
I also like that Australian shares can provide dividends and franking credits, which can be attractive for long-term investors. The income may not be huge from a $500 starting point, but it can build over time if investors keep adding.
For me, this fund would work well as the local foundation of a portfolio. It is not exciting, but it provides broad exposure without needing constant attention.
Betashares Nasdaq 100 ETF (ASX: NDQ)
For investors who are comfortable with a bit more volatility, I think the Betashares Nasdaq 100 ETF could also be worth considering.
This ETF gives exposure to 100 of the largest non-financial companies listed on the Nasdaq. In practice, that means a heavy tilt toward global technology and innovation.
I would not put all my money into it if I were trying to build a balanced portfolio from scratch. But I do think it can play a useful role for investors who want more exposure to long-term growth themes such as artificial intelligence, cloud computing, digital advertising, software, and semiconductors.
The key is being patient. The NDQ ETF can move around a lot in the short term, especially when sentiment toward growth stocks changes. But over a 10-year timeframe, I think technology is likely to remain one of the more powerful forces in global markets.
Foolish takeaway
By using the VGS, VAS, and NDQ ETFs, investors can gain exposure to thousands of companies, different regions, and long-term growth themes without needing to pick every stock themselves.
If I had $500 spare, I would happily invest the money into any or all of these ASX ETFs this week.
