When it comes to getting started with investing – there are two main problems that investors usually run into. The first is misconceptions about investing that put off newbies all together. The idea that shares are for the rich or for professional stockbrokers, traders or gamblers is highly detrimental in general and also just plain untrue. The second is starting off with 'exciting' growth stocks that everyone's talking about (Afterpay Touch Group Ltd (ASX: APT) comes to mind). While this might be an exhilarating rise for a while, it will likely lead to a bad outcome in the long run.
So here are two ASX shares that I think would be a better bet for someone who's just starting off in shares.
Magellan Global Trust (ASX: MGG)
MGG is a listed trust run by the reputable Magellan Financial Group Ltd (ASX: MFG). I think this is a fantastic option for beginners because Magellan does the hard work and picks companies from around the world on your behalf. You can get some great exposure to companies like Alphabet (Google), Microsoft, Starbucks and Mastercard – all in one share and without you having to do any research or effort at all. Of course, this does come with a cost and MGG has a management fee of 1.35% – but with a performance of 17.5% since inception, this may well be worth it.
Wesfarmers Ltd (ASX: WES)
If you're ready to pick individual shares on your own, Wesfarmers would be a great candidate for a starter share. Wesfarmers is by far the most diversified large-cap stock on the ASX – the company owns household names like Bunnings, Kmart, Target and Kleenheat Gas as well as interests in mining, chemical manufacturing, clothing and real estate. On top of this, the company also retains a 15% stake in Coles Group Ltd (ASX: COL). Evidently, you couldn't ask for a more diversified portfolio of household brands to make up an earnings base. Wesfarmers also pays a 5.4% grossed-up forward dividend yield on current prices, so you get a nice stream of passive income to boot.
Foolish Takeaway
If you're thinking about starting to invest, I think the best advice is the old KISS – keep it simple, stupid! Not that I think anyone who wants to start investing is stupid, on the contrary, it may just be the smartest thing you ever do!
