So you've got $500 to invest, but maybe you're not sure where to start? Splendid, you've come to the right place. If you're new to ASX share investing, figuring out what to do can be an overwhelming experience. Especially with the hundreds of companies and other investments available to us on the ASX alone.
Today, let's discuss a few options for your first $500 investment.
3 options for someone new to ASX investing
Start simple and broad
When it comes to getting started with investing, I think most new investors should start simple with either an exchange-traded fund (ETF) or a listed investment company (LIC). An index fund like the iShares Core S&P/ASX 200 ETF (ASX: IOZ) or a LIC like Argo Investments Ltd (ASX: ARG) represents an investment in a broad basket of blue-chip ASX shares.
Thus, you are investing in the likes of Commonwealth Bank of Australia (ASX: CBA), Woolworths Group Ltd (ASX: WOW) and Telstra Group Ltd (ASX: TLS) all in one, plus many more shares. These kinds of bottom-drawer investments are perfect for those who want to invest their first $500 in shares but don't want to do the whole 'stock picking' thing.
Find your favourite company and learn everything about it
Perhaps you do fancy yourself as a future stock picker though. Well, if that's the case, then all you need is $500 (the usual minimum buy on the ASX). But that will get you shares in just one company. So why not make it a business you know and maybe even love. Perhaps you're a huge fan of JB Hi-Fi Ltd (ASX: JBH) or Lovisa Holdings Ltd (ASX: LOV). Or else Bunnings, owned by Wesfarmers Ltd (ASX: WES), or maybe Myer Holdings Ltd (ASX: MYR).
That's a great place to start. You'll need to read your favourite company's annual reports and start to understand how the company makes money, and what its plans are to make more money in the future. Then, if you are impressed with your favourite company, you need to come to a price you're willing to buy its shares at.
This all takes a lot of work and isn't for the faint-hearted. But it's what you need to master if you are to become a successful investor in individual ASX shares.
Explore ASX investing apps
You don't have to choose between buying an individual ASX share, or an ETF or LIC for your first investment these days. Over the past few years, a number of investing apps have sprung up in Australia that allow investors to get started with as little as $5.
For example, Raiz Invest Ltd (ASX: RZI) lets investors put their money into a portfolio of different ETFs that cover investment classes, such as international shares, property, cash investments and even Bitcoin (CRYPTO: BTC) if desired. You can add as little as $5 at a time.
Spaceship is another popular option, especially for investors that have a preference for growth stocks. It allows investors to pool their money and invest in one or more of several portfolio options consisting of different shares.
Spaceship has no minimum investment amount.
CBA's CommSec Pocket is another option in this space.
But remember, these investing apps typically charge you fees for using them. Nothing is free in the world of investing, after all, so keep in mind that you're paying for these services.
