However, it's my view that these balanced options are not a great fit for everyone. As I've discussed before, Australians under the age of 40 might be better off investing in a more growth-oriented fund that forgoes the stability that cash and bonds provide for a higher potential return by going all in shares. As anyone under 40 probably isn't going to retire anytime soon, stability and capital protection arguably shouldn't be high priorities at this stage of life.

When it comes to my own superannuation, I've put my money where my mouth is. My superannuation provider offers the choice of selecting individual index funds that I can invest my super into. So today, let's talk about the three ASX ETFs that I use within my super fund to achieve the best returns possible. The funds themselves aren't publicly traded, but have ASX counterparts which are essentially the same offering.

Three ASX ETFs that I've built my super fund around

Australian and international stocks

First up, we have a good old-fashioned S&P/ASX 200 Index (ASX: XJO) fund. Roughly 40% of my super fund goes towards an ASX 200 index fund, one rather similar to the iShares Core S&P/ASX 200 ETF (ASX: IOZ) or the SPDR S&P/ASX 200 ETF (ASX: STW). This fund holds the largest 200 stocks on the ASX. That's everything from Westpac Banking Corp (ASX: WBC) and Woolworths Group Ltd (ASX: WOW) to JB Hi-Fi Ltd (ASX: JBH) and Suncorp Group Ltd (ASX: SUN).

This index fund represents the best of Australian business. As ASX shares have historically delivered meaningful growth and healthy dividend income, I am very happy for this fund to receive some of my retirement cash.

Next up, another 50% or so of my super capital goes towards an international shares ETF. This ETF holds hundreds of different stocks from dozens of advanced economies around the world. These include the United States of America, the United Kingdom, Japan, Germany and France, among many others. A listed equivalent might be the Vanguard MSCI Index International Shares ETF (ASX: VGS).

Australia is a wonderful place to invest, but its best companies simply don't have the firepower that international markets do. That's why I'm happy that this component of my super fund invests in world-dominating stocks like Apple, Amazon, NVIDIA, Mastercard, Alphabet, Toyota and Nestle.

Adding some diversity to my super fund

My super fund's final holding, making up that final 10% or so, provides even more diversification. It is an emerging markets fund, drawing thousands of holdings from emerging economies around the globe. An ASX equivalent might be the Vanguard FTSE Emerging Markets Shares ETF (ASX: VGE). It offers exposure to countries like China, India and Taiwan. I think these economies will offer a lot of growth over the next few decades, and, as such, I am happy to have part of my super fund invested there.

Foolish takeaway

As I am still a few decades away from the traditional retirement age, I am happy to have 100% of my super fund invested in shares. With the three ETFs mentioned above, I feel that I have adequate diversification across multiple markets and currencies, whilst still maintaining exposure to some of the world's best companies. Individually selecting these investments also keeps my super costs as low as possible, which is of vital importance for building wealth over decades.

The post Here are the 3 ASX ETFs I use for my super fund appeared first on The Motley Fool Australia.

Well, this is one of those situations where there are a few 'right' paths one can take. There are also a few wrong ones, which I would argue at least one of the above scenarios fall into.

Today, let's discuss one of the right paths, at least in my view. It's one that is relatively simple, and would suit all investors at any stage of life.

It's buying two Vanguard ASX exchange-traded funds (ETFs). You might have heard of ASX ETFs, or perhaps index funds (which are interchangeable terms in many cases).

They can be thought of as package investments, representing an investment in an underlying portfolio of shares. In an index fund's case, this portfolio tracks a particular index, made up of different stocks.

A popular index here in Australia is the S&P/ASX 300 Index (ASX: XKO). This represents the largest 300 companies listed on our share market, prioritising the larger companies. That's everything from Commonwealth Bank of Australia (ASX: CBA) and Telstra Group Ltd (ASX: TLS) to JB Hi-Fi Ltd (ASX: JBH) and Ampol Ltd (ASX: ALD).

This is what the Vanguard Australian Shares Index ETF (ASX: VAS) invests in. Buying this index fund is akin to buying a small slice of 300 different Australian stocks.

ASX ETFs for beginner investors to consider

If you follow this path, you don't have to worry about picking individual shares that may or may not do well. You are simply buying them all, and taking the market's average return. Studies show that this approach often gets results that beat most professional investors anyway.

VAS, in my view, would make a perfect first investment for an ASX beginner. However, I would also pair it with another ASX ETF and index fund from Vanguard – the Vanguard MSCI Index International Shares ETF (ASX: VGS).

Australian Shares are great and all. But the ASX represents around 2% of global stocks. It also doesn't include world-dominating companies like Apple, Amazon, Coca-Cola and Toyota.

The VGS ETF does. It invests in a range of countries' stock markets. The United States is the main contributor. But VGS also covers other advanced economies like Japan, the United Kingdom, France, Hong Kong and Singapore.

This not only gives a beginner investor exposure to many of the world's best companies, it also adds plenty of diversification to a stock portfolio.

Foolish takeaway

I think any beginner investor would be served well by building up a starter portfolio with these two ASX ETFs. They offer everything one would need to build out an effective and diversified investing portfolio.

The post Beginner investors: Start with these 2 ASX Vanguard ETFs appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Shares of auto leaders Tesla (NASDAQ: TSLA) and Toyota Motor (NYSE: TM), as well as auto-centered semiconductor stock Indie Semiconductor (NASDAQ: INDI) were rallying on Thursday, up 7.3%, 4.3%, and 3.5%, respectively, as of 2:14 p.m. ET.

The main driver for the rise in auto-related stocks today was the Federal Reserve's 50-basis-point cut to the federal funds rate late yesterday. Here's why that news was so important to autos, and why the sector is surging today -- especially electric vehicle (EV)-related stocks.

Autos are rate-sensitive, EVs especially

Auto-related stocks have been punished this year as high interest rates have depressed growth. A vehicle is a big-ticket item, so many autos are financed. Hence the sensitivity to interest rates. Electric vehicle stocks have been especially depressed as higher rates made EVs -- which are generally higher-priced than their internal combustion engine (ICE) competitors -- less affordable. Given that auto companies concentrated on EVs had come into this period with higher valuation multiples, it's no surprise many declined over the past two years.

EVs have also seen a downshift in their medium-term growth expectations. It was recently reported Toyota plans to cut EV production by 30% by 2026 relative to prior targets, in favor of its hybrid vehicles and other alternative lower-carbon technologies. While Toyota will still increase its absolute EV production by that time, it's clearly seeing weaker growth for pure battery-powered EVs than before.

Recent data has also been discouraging. August sales figures out of Europe showed a staggering 18.3% auto sales decline relative to last year, headlined by a 44% drop in EV sales, according to the European Automobile Manufacturers' Association (ACEA). The same report showed Tesla European sales in August down 43.2%. Of course, Europe has been the worst auto market this year, as its economy has lagged the U.S. and others. But industry group Cox Automotive has also predicted a tepid U.S. market, forecasting a mere 1.3% growth over 2023.

Therefore, yesterday's announcement by Federal Reserve Chair Jay Powell of a 50-basis-point rate cut, larger than the 25-basis-point cut many had been expecting, caused a big bounce for these depressed auto-related stocks and cyclical stocks in general. As long as the economy doesn't fall into recession, the big cut yesterday and forecasts for further cuts signal the recent period of high inflation may be coming to an end. Given that the market is forward-looking, auto-related stocks jumped on prospects for relieved consumers and higher auto sales.

Additionally, rate cuts may especially help Indie Semiconductor, which is currently unprofitable. Lower interest rates tend to boost valuations of low-profit or no-profit growth stocks, given that the bulk of their theoretical profits are well out into the future. But the further out profits and cash flows are, the more the present-day value of those profits are discounted by higher interest rates.

While the majority of today's move in Tesla and other auto stocks was likely due to the larger rate cut, Tesla also received some mildly positive company-specific news. Rival General Motors announced that it would allow its EV customers to charge their vehicles at Tesla superchargers, by developing and distributing adapters for its EVs. Although that change would perhaps open up more competition for would-be Tesla purchases, Tesla also stands to make money on increased charging revenue. Of course, charging revenue usually pales in comparison to selling more vehicles.

The outlook

The auto industry is widely known to be very cyclical, and given the high price tags of autos generally, it's especially rate-sensitive. And for EV or auto-related tech stocks with lower profits today but high hopes for the future, they are triply sensitive to interest rates.

This is why yesterday's bigger rate cut was such a big deal for auto stocks and especially those concentrated in EVs or auto tech. For holders of these stocks, this high sensitivity to interest rates is something to consider as you hold these stocks.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why the Tesla share price just rallied appeared first on The Motley Fool Australia.