2 investing approaches to help get you started on the ASX

Learning how to invest in shares can be complicated but the ASX is a fantastic place to grow your money. Here's how to do it strategically.

new tech shares represented by US dollars hatching out of golden egg

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

What do Warren Buffet and Jeff Bezos' fortunes have in common? They were both (largely) built on the stock market. But you don't have to have a brilliant eye for goldmine shares and excellent timing to make money on the ASX. The simple power of compounding interest is all it takes.

"Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it." – Albert Einstein (reputedly)

Let's take an example. Say you have $1000 in spare coin to invest, and you pop it into stocks that continue to increase in value by 10% each year.

Then, you find each week you have an additional $100 that you can afford to pop invest on top of your original amount, so you do.

If you continue this for 13 years, you'll have invested $67,600 in total, but your portfolio will be worth a whopping $141,428.

You've more than doubled your money!

However, there's never any guarantee that a share will go up in value, and no amount of compound interest can save a portfolio of poorly chosen shares.

That's why we've compiled 2 approaches to the ASX that might suit a newbie investor.

Advice for a beginner looking to strategically invest in ASX shares

The blue-chip approach

If you're wondering how to invest in shares without taking huge risks, shares in blue-chip companies might be a good place to start your research. 

While prior performance never guarantees future performance, blue-chip companies are usually recognisable and established. Generally, they have high market capitalisations and their share prices often show less volatility than others. These companies tend to show continuous and predictable growth, though that is never guaranteed. 

They may be great options for new investors who feel a bit apprehensive or who might want a solid foundation for their portfolio. There are many blue-chip companies listed on the ASX, most of which can be found on the S&P/ASX 50 Index (ASX: XFL). 

One such example is Rea Group Ltd (ASX: REA). If you don't recognise REA Group by name, you'll probably recognise its logo. This company is behind brands such as realestate.com and Flatmates.

It's a long-term ASX resident. The global digital advertising company has been listed on the ASX since 1999, weathering many a storm in its time.

REA Group has a large market capitalisation. It's worth around $18 billion, with approximately 132 million shares outstanding.

The exchange-traded fund approach 

Exchange-traded funds (ETF) are traded on the ASX like stocks, but rather than being a portion of a company, they are a share in a fund that holds a selection of ASX listed-companies. Some investors believe ETFs are a great way to diversify your portfolio without much fuss.

Once more, it's important you take a personal approach to investing, as ETFs won't suit every investor or portfolio. 

Often, ETFs will have a hold in all or most of the companies on a particular index, such as the S&P/ASX All Technology Index (ASX: XTX), the S&P/ASX 200 Index (ASX: XJO) or the All Ordinaries Index (ASX: XAO).

One example of an ETF is Betashares Nasdaq 100 ETF (ASX: NDQ). If the name doesn't give it away, Betashares Nasdaq 100 follows the US-based Nasdaq index.

The Nasdaq index is home to companies such as Amazon.com Inc (NASDAQ: AMZN), Apple Inc (NASDAQ: AAPL) and Tesla Inc (NASDAQ: TSLA).

Since these companies aren't listed in Australia, investors interested in this ETF might be looking for a way to get involved in the US market.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, and Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS and recommends the following options: short March 2023 $130 calls on Apple, long January 2022 $1920 calls on Amazon, long March 2023 $120 calls on Apple, and short January 2022 $1940 calls on Amazon. The Motley Fool Australia has recommended Amazon, Apple, BETANASDAQ ETF UNITS, and REA Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on How to invest

A businesswoman weighs up the stack of cash she receives, with the pile in one hand significantly more than the other hand.
How to invest

How I'd build a $20,000 annual passive income stream from these top ASX 200 shares

To earn $20,000 a year in passive income, I’d start with these three ASX 200 shares.

Read more »

a smiling picture of legendary US investment guru Warren Buffett.
How to invest

Life after Warren Buffett: other successful investors still in the game worth following

With Warren Buffett retiring it’s time to look at some other investors delivering solid returns.  

Read more »

An older woman gazes over the top of her glasses with a quizzical expression as if she is considering some information.
How to invest

How to build an ASX ETF portfolio to match your risk profile

Time for a portfolio review?

Read more »

A man sits cross-legged in a zen pose on top of his desk as papers fly around his head, keeping calm amid the volatility.
How to invest

Why market volatility is an ASX stock picker's best friend

Here's why you shouldn't fear market volatility.

Read more »

A businessman compares the growth trajectory of property versus shares.
How to invest

Why does Warren Buffett prefer shares over property?

Equities made Buffett the world's most successful investor.

Read more »

Person holding Australian dollar notes, symbolising dividends.
How to invest

Should I spend $5,000 on ASX 200 shares or ASX ETFs this month?

Where is the best place to invest these funds? Let's look at the options.

Read more »

a smiling picture of legendary US investment guru Warren Buffett.
How to invest

2 famous investors with even better track records than Warren Buffett

These two fellow Americans achieved mind blowing returns.

Read more »

A group of young ASX investors sitting around a laptop with an older lady standing behind them explaining how investing works.
How to invest

How a beginner investor could build a $250,000 ASX share portfolio

These easy steps could help you on your way to riches in the share market.

Read more »