Investing in ASX shares is a great way to build wealth for the long term.
Plenty of investments have delivered excellent long-term results for shareholders. The share market overall has managed to deliver gains over the decades, along with the occasional bear market bump.
We don't need to find the next Nvidia or Apple to achieve excellent results. ASX companies are doing their best to grow profit, and larger profit generation helps justify higher share prices.
If an investment grows by an average of just 8% per year, it'll double in value in nine years. No returns are guaranteed of course, but good businesses can continue reinvesting for more profit growth.
If I had just under $1,000 to start investing in ASX shares, I'd want to find a reputable shares broker that offers very low brokerage costs for an investment size under $1,000.
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Where I'd start investing
I think most beginner investors would benefit from choosing exchange-traded funds (ETFs).
Rather than buying dozens of individual ASX shares ourselves, ETFs enable us to buy a large group of businesses with a single investment. This sort of investing is good for diversification because it spreads the risk across many holdings.
Investing in ETFs doesn't take much time to analyse once you know what you want to invest in. In contrast, it can take a lot of time and effort to buy a property or even just to do deep research on an individual ASX growth share.
The ASX share market is a great place to find compelling companies, but it only accounts for 2% of the global share market.
Aussies are probably already getting a lot of exposure to the Australian economy and share market through their superannuation and possibly other forms of investments. I think it would be good to invest in globally focused ETFs for diversification, generally stronger capital growth potential, and bigger allocation to businesses with a large technology focus.
Some of my favourite ETFs for international exposure include VanEck MSCI International Quality ETF (ASX: QUAL), Betashares Global Quality Leaders ETF (ASX: QLTY) and VanEck Morningstar Wide Moat ETF (ASX: MOAT).
Those sorts of ETFs can make good investments for beginners, retirees and everyone in between.
Or, diversification in a single ASX share
For beginner investors who want exposure to an individual ASX share, I think it would be a good idea to start with a diversified business rather than one that's focused on one area, such as banking or mining.
That's why I like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares. The business is a diversified investment house with assets across various sectors, including telecommunications, resources, building products, property, swimming schools, agriculture, electrification, financial services, and many other investments.
It's one of the biggest positions in my portfolio, and I'm planning to continue investing in it for the long term.
