The latest ASX investor survey shows 1.3 million Australians plan to invest over the year ahead. If that sounds like you, check out our ideas on where to put your money.
Among would-be investors, Australian shares are the leading choice of investment. If you’re happy to wear the higher risk of equities, the reward can be impressive long-term returns backed by valuable tax savings on dividends and capital gains.
Bear in mind though, evolving technology is making it easier and cheaper to invest in overseas sharemarkets, giving Aussie investors a far wider choice of investments.
Where to invest with $500
$500 is the minimum order size for a first trade on the Aussie stock exchange (ASX), so you can start trading shares even with small sums of capital.
In terms of what to buy, an ASX survey found 46% of intending investors are looking for stable, reliable returns.
David Stanford, Fixed Income Advisor at Hallbar Group Capital, says that for these investors, commodity-backed shares can be attractive.
He explains, “Over the last five years commodity stocks have been the highest dividend payers in the world.”
An obvious choice here is BHP, which has a strong track record of paying healthy dividends. Though as Matthew points out, holding just one stock leaves investors vulnerable to share price volatility.
An alternative is a dividend-focused exchange traded fund (ETF), such as the Vanguard Australian Shares High Yield ETF, which tracks the FTSE Australia High Dividend Yield Index. It invests across companies like BHP, CBA, NAB, Woodside and Westpac, to name a few.
If you have more than $500 to invest
If your capital extends beyond $500 it’s possible to mix and match stocks to build a diversified portfolio spanning sectors and even different sharemarkets.
If you’re uncertain about which stocks or industries to select, David suggests following a theme. Here are a few examples.
Technology
The tech buzz right now is all about artificial intelligence (AI), driven by forecasts that global spending on AI chips will grow at a compound rate of over 30% annually by the end of this decade.
Matthew Turner says, “The big tech leaders – the so-called ‘magnificent seven’, which includes Amazon, Apple, Meta, Microsoft, Nvidia, Tesla and Google’s parent company Alphabet, all offer opportunities to investors.”
In August, US-listed Nvidia, a world leader in AI, reported an annual 101% increase in revenue, and Amir believes the company offers a once-in-a-generation opportunity for investors.
For more diverse exposure to the tech sector, Amir says the NASDAQ-listed Global X Artificial Intelligence ETF allows you to invest “in all the big names”.
Healthcare
The healthcare sector benefits from significant government spending. Across the OECD for example, healthcare spending accounts for almost 10% of GDP.
This level of financial support is why Amir describes healthcare as a ‘defensive’ sector.
“It’s a sector that shouldn’t be ignored,” he adds. “It will continue to receive funding, regardless of the state of the economy.”
Aussie investors have one of the world’s leading healthcare stars on our doorstep: CSL Limited, the world’s biggest blood therapy product business and the second-biggest maker of influenza vaccines.
Cybersecurity and defence
Like healthcare, the cybersecurity and defence sectors also enjoy the backing of government spending.
According to David Stanford, “This should see investors thinking ‘Why aren’t I putting money in these sectors, which can help my portfolio weather any storms?'”
It may not be everyone’s preferred investment, but Matthew says shares in Lockheed Martin can be worth thinking about as its stocks have outperformed the US share market over the long term, including the last 10 and 20 years.
He explains, “If you are looking for a company with cashflows guaranteed under government contracts, Lockheed Martin has this.”
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