Investors are always looking for a way to 'outperform' the S&P/ASX 200 (Index: ^AJXO) (ASX: XJO) or ALL ORDINARIES (Index: ^AXAO)(ASX: XAO) indices.
Some go to the extreme (read: crazy) levels and buy shares of speculative companies, like marijuana business Auscann Group Holdings Ltd (ASX: AC8). Other people introduce complex strategies like investing in derivatives, contracts for wealth destruction (CFDs) or the not-so-technical analysis.
The easiest way to supercharge your ASX share portfolio
I've met with companies that spent tens of millions of dollars trying to find a secret recipe that beats the sharemarket. They employ PhDs, 'quantitative specialists' or over-qualified analysts.
Ultimately, it comes down to this: The sharemarket is really just a business market.
It's a place for people to exchange a slice of the ownership of companies.
Is that the secret?
No.
My secret strategy to supercharge wealth is a two-part plan:
- Create a budget — today
- Invest in index funds and quality companies — regularly
No bells. And definitely no whistles.
Just buy to hold investing.
Which shares should I buy?
Start — and end — with companies that you know will be around in 10 years. Washington H. Soul Pattinson & Co. Ltd (ASX: SOL) buys and holds multiple companies under one roof, while the products made by health business CSL Limited (ASX: CSL) are a necessary fact of life for many people suffering from serious illnesses around the world.
But if you don't want to keep up with everything going on in the sharemarket. Find some good exchange traded funds (ETFs), or unlisted funds. They'll do the stock-picking for you. For example, iShares S&P 500 Index (ETF) (ASX: IVV) invests in the 500 largest companies on US sharemarkets.
How will my investment perform?
If we assume you start today with nothing and invest $250 per fortnight for the next 30 years, you'll have $613,995 if you earn 7% per year on your money.
However, if you wait another five years, you'll have just $411,119.
That's a BIG difference.
It's not rocket science. I'm not making money from telling you this. But the secret investing sauce contains only two ingredients.
- Regular contributions, and
- Time
