How I'd build a winning portfolio by investing in top ASX shares now

Let's see what steps you could take to build a winning portfolio.

| More on:
Happy young couple saving money in piggy bank.

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

Deciding which ASX shares deserve the title as best shares to buy is subjective, but certain traits can set businesses apart.

For example, companies with a sustainable competitive advantage and trading at fair valuations based on their financial prospects are often prime candidates.

By building a diversified portfolio of these high-quality shares, investors can position themselves for attractive long-term returns. And even with the recent rally in the stock market, there are still plenty of opportunities to snap up good valued shares, making now a great time to start taking advantage of top ASX stocks.

What are top ASX shares?

As mentioned above, top ASX shares are often those companies that possess a distinct competitive edge over their peers. For instance, they may offer a unique product or service that allows them to command higher margins. Alternatively, they could have a cost advantage or strong brand loyalty that gives them an edge in delivering consistent long-term performance.

Companies such as CSL Ltd (ASX: CSL), Goodman Group (ASX: GMG), and ResMed Inc. (ASX: RMD) immediately spring to mind.

Financial health is another important factor. Companies that have robust balance sheets and strong cash flow are particularly appealing in an uncertain economic environment. These types of businesses are more likely to weather challenges and emerge stronger, making them safer bets in volatile markets.

Importantly, even the best companies can be overlooked by the market at times, leading to undervalued stock prices. This might happen due to temporary setbacks in performance or negative sentiment toward their sector. These situations present opportunities for investors to acquire great businesses at discounted prices. CSL could be an example of this right now after post-COVID margin pressures weighed on its growth.

Building a balanced portfolio

Once you've identified potential top ASX shares, constructing a well-rounded portfolio is important. While it's tempting to concentrate investments in a handful of high-conviction ideas, doing so can expose you to significant company-specific risks.

A diversified portfolio spreads risk across multiple holdings, enhancing the likelihood of consistent returns.

Holding some cash on the sidelines can also be prudent. Having liquidity allows you to capture new opportunities during market pullbacks. And while this approach may slightly reduce short-term returns, it ensures you're ready to take advantage of the market's natural cycles.

Playing the long game

Even top ASX shares experience periods of underperformance. Patience and a long-term perspective are vital for any equity portfolio. History has shown that the stock market consistently delivers strong returns over time compared to other asset classes, making it an ideal choice for wealth building.

Overall, by focusing on quality, diversification, and a disciplined investment approach, you can identify top ASX shares and harness their potential to achieve your financial goals.

Should you invest $1,000 in CSL right now?

Before you buy CSL shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and CSL wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor James Mickleboro has positions in CSL and ResMed. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Goodman Group, and ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended CSL and Goodman Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on How to invest

A young couple hug each other and smile at the camera standing in front of their brand new luxury car
How to invest

How to turn $100 a week into $500,000 with ASX shares

You don't need to invest large sums to become rich in the share market.

Read more »

Warren Buffett
How to invest

Warren Buffett's favourite holding period is forever, but there's a catch

Buffett is clear about what he wants.

Read more »

$100 Australian notes on top of each other.
How to invest

How to turn a $50,000 ASX share portfolio into a passive income machine

Here's how you could make the share market your own personal ATM.

Read more »

Different Australian dollar notes in the palm of two hands, symbolising dividends.
How to invest

How cash can make or break an investor's track record

Buffett has mastered the art of holding cash.

Read more »

Suncorp share price Businessman cheering and smiling on smartphone
How to invest

Why buy and hold investing with ASX shares could be your smartest move yet

Wealth building takes time but sure could be worth it.

Read more »

Happy young couple saving money in piggy bank.
How to invest

How to earn $12,000 of passive income from ASX shares each year

Want your own personal ATM? Here's how you can get paid by the share market.

Read more »

Happy young man and woman throwing dividend cash into air in front of orange background.
How to invest

The 2025 stock market selloff could be a once-in-a-decade opportunity to build wealth

Now could be a great time to grow your wealth in the share market.

Read more »

Business people discussing project on digital tablet.
How to invest

Is now a good time to start buying ASX shares?

Let's see if recent market volatility has created a buying opportunity.

Read more »