Financial freedom… what could be better? It's the reason most of us invest in ASX shares in the first place – for a future where we are financially comfortable and work because we can, not because we must. But to gain financial freedom as effortlessly as possible, one needs to buy the right ASX shares to invest in. Preferably ones that offer both capital growth prospects, and the ability to fund consistent and rising dividends.
With that in mind, here are five ASX shares that I would personally buy for a path to financial freedom that is as effortless as possible.
5 ASX shares to buy for an effortless path to financial freedom
Vanguard Australian Shares Index ETF (ASX: VAS)
First up, we have an exchange-traded fund (ETF). The Vanguard Australian Shares ETF is a great way to put down a foundation for any ASX share portfolio in my view. It gives its investors instant diversification by investing in the largest 300 shares by market capitalisation on the ASX boards.
Historically, this ETF has delivered both capital growth and franked dividend income in a fairly even split. Given this index fund's relatively low cost, its diversification and past performance, I think it's a great stock to buy and hold for anyone seeking financial freedom. And indeed for anyone who has already achieved it.
Wesfarmers Ltd (ASX: WES)
Next up we have ASX 200 retail and industrial conglomerate Wesfarmers. Wesfarmers is most famous for running several of Australia's best retailers. Its crown jewel is undoubtedly Bunnings, but there's also Kmart, Target and OfficeWorks to consider. In addition, Wesfarmers also operates a plethora of other businesses, including a clothing line, lithium mines and a gas distribution company.
Wesfarmers has a long history of delivering both high growth and meaningful dividend income. It seems to have a knack for acquiring strategic bolt-ons to its business, as well as a good sense of when to exit a holding (Coles Group Ltd (ASX: COL) comes to mind).
I think Wesfarmers' decades-long track record of delivering for shareholders won't end anytime soon. As such, this is another ASX share I'd be happy to hold on a journey towards financial independence.
MFF Capital Ltd (ASX: MFF)
MFF Capital is a listed investment company (LIC) that most readers probably aren't too familiar with. Saying that, this LIC is one of my favourite investments, and gives us some much-needed international diversification in our quest towards financial freedom.
This LIC is run by Magellan Financial Group Ltd (ASX: MFG) co-founder Chris MAckay, who tends to take a very Warren Buffett-esque approach to management. MFF seeks to hold the best stocks in the world within its underlying portfolio for long periods of time. These are usually US shares, but other countries are often thrown into the mix.
Its current top holdings include Amazon.com Inc (NASDAQ: AMZN), Mastercard Inc (NYSE: MA), American Express Co (NYSE: AXP) and Meta Platforms Inc (NASDAQ: META).
I think exposure to these best-in-the-world kinds of companies is imperative for an effortless path to financial freedom.
Washington H. Soul Pattinson and Co Ltd (ASX: SOL)
Our next freedom fighter stock is ASX 200 investment house Washington Soul Pattinson, or Soul Patts for short. Soul Patts has long been one of my favourite ASX shares. Similarly to MFF, it invests in a portfolio of underlying assets on behalf of its shareholders.
In Soul Patts' case, these mostly consist of large stakes in other ASX shares like Brickworks Ltd (ASX: BKW) and TPG Telecom Ltd (ASX: TPG). But the company also allocates some of its portfolio towards other asset classes like private credit and venture capital.
Another reason to like Soul Patts is its impeccable track record when it comes to shareholder returns. For one, investors have enjoyed market-beating returns from Soul Patts for decades. Late last month, we covered how the company's portfolio delivered an average of 12.5% per annum (including dividends) over the 20 years to 31 July 2023.
Speaking of dividends, Soul Patts is also the only ASX share that can boast an annual dividend pay rise every year since 2000. Enough said.
VanEck Morningstar Wide Moat ETF (ASX: MOAT)
To finish up, we have another ASX ETF. The VanEck Wide Moat ETF is another of my favourite investments. It's not an index fund like VAS. But rather an actively managed ETF that seeks out a small number of stocks that share similar characteristics. In this case, that would be US shares that display evidence of owning what's known as a wide economic moat.
A moat is a term coined by Warren Buffett and refers to a company's ability to fend off competition with a unique trait. This could be a strong brand, a cost advantage in its industry, or selling a good or service that customers find difficult not to continuously buy.
Think about the brand power of Walt Disney Co (NYSE: DIS) or Nike Inc (NYSE: NKE), the low-cost advantage of Campbell Soup Company (NYSE: CPB), or the switching cost of moving away from Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL)'s Google search engine. All four of those companies are currently in MOAT's portfolio, and you can now see why.
This ETF has also delivered some impressive returns for investors in recent years. As of 31 January, unitholders have enjoyed an average return of 16.52% per annum over the past five years.
As such, the VanEck Wide Moat ETF is an investment I would have no hesitation in recommending for anyone looking to reach financial freedom.
