Building up an ASX share portfolio from scratch is no easy feat. For a beginner investor, there are so many shares to choose from, so many places to get advice, and so little time.

So let's make the whole process easier by discussing three ASX shares I would use to start a share portfolio from scratch today.

3 ASX shares I would use for a beginner portfolio

Vanguard Australian Shares Index ETF (ASX: VAS)

I think a beginner investor should start simple, and there are fewer investments simpler than this exchange-traded fund (ETF). Index funds like the Vanguard Australian Shares ETF hold multiple shares within them, making them very easy to get some healthy diversification right off the bat. In this ETF's case, it holds the 300 largest shares on the market.

That means an investment into this fund is an investment in everything from Commonwealth Bank of Australia (ASX: CB)A, BHP Group Ltd (ASX: BP) and Telstra Corporation Ltd (ASX: LS) to Woolworths Group Ltd (ASX: WOW), Ampol Ltd (ASX: ALD) and JB Hi-Fi Limited (ASX: JBH), all in one easy investment.

This ETF will give an investor the returns of the broad Australian share market, no more no less. It has returned an average of 8.79% per annum, including dividend returns, since its inception in 2009. That includes its competitive fee of 0.1% per annum.

iShares S&P 500 ETF (ASX: IVV)

ASX shares are great. But the reality is that most Australian investors don't bother looking beyond our shores, happy with the dividends and franking credits that shares like CBA, Telstra and Westpac Banking Corp (ASX: WBC) offer.

But the US markets are home to companies that are just on another level to our best businesses. Think Apple, Alphabet (owner of Google), Amazon, Mastercard, McDonald's, Tesla and Netflix.

These are some of the best companies on the planet and are all found in this index fund that tracks the 500 largest American companies. And again, you can get all of them in one, simple investment.

As such, this ETF can add even more diversification, geographic as well as currency, to a beginner portfolio. This ETF has averaged a return of 17.26% per annum over the past decade.

MFF Capital Investments Ltd (ASX: MFF)

Our last two investments have been simple index funds. But MFF Capital – a listed investment company (LIC) – adds some active management to our starter portfolio.

MFF, as a LIC, doesn't blindly track an index. Instead, the company owns a portfolio of other shares itself, which its management team runs on behalf of its investors. Its current boss is Chris Mackay, who is one of the co-founders of Magellan Financial Group Ltd (ASX: MFG).

MFF typically invests in a small portfolio of quality US shares. Some of its long-term top holdings include Mastercard, Amazon, Visa, American Express and Microsoft. I think this LIC is a great way of adding some investing expertise to a portfolio and compliments our two index funds nicely.

The post How I would use these 3 ASX shares to build a portfolio from scratch appeared first on The Motley Fool Australia.

Warren Buffett is perhaps the world's most famous and successful value investor. If like him, and the father of value investing, Benjamin Graham, you believe fear and greed often result in the mispricing of shares, you may already be a value investor.

But the value investing strategy is not without its pitfalls. Investors need to be able to sniff out genuine value shares they believe are trading below their intrinsic value, whilst at the same time avoiding the perils of value traps.

So, if you're keen for some insights into which ASX shares could potentially be trading at bargain prices right now, you're in luck! Because we asked our Foolish contributors which companies they believe could be flying well under the radar in the new year. Here is what the team came up with:

6 best ASX value shares for 2023 (smallest to largest)

Shaver Shop Group Ltd (ASX: SSG), $150.66 million

Michael Hill International Ltd (ASX: MHJ), $419.56 million

Universal Store Holdings Ltd (ASX: UNI), $435.01 million

Adairs Ltd (ASX: ADH), $497.5 million

MFF Capital Investments Ltd (ASX: MFF), $1.42 billion

JB Hi-Fi Limited (ASX: JBH), $5.15 billion

(Market capitalisations as at market close on 17 January 2023)

Why our Foolish writers love these ASX value shares

Shaver Shop Group Ltd

What it does: Shaver Shop operates in Australia and New Zealand. It has been operating since 1986 and now has more than 120 stores selling male and female hair removal products such as electric shavers, clippers and trimmers, and wet shave items. It also sells a wide range of products across oral care, hair care, massage, air treatment, and beauty categories.

By Tristan Harrison: Starting with how good value Shaver Shop is, this ASX share is currently priced at around eight times FY24's estimated earnings and less than 10 times FY23's estimated earnings, according to Commsec data. As such, the dividend income alone could amount to a dividend yield of around 12.6% in 2023.

The beauty and personal care market is growing, and Shaver Shop's sales have steadily grown over the past decade. Reopened stores after lockdowns are generating good sales levels (up 13% year over year) to 6 November 2022, with a higher gross profit margin.

Growth of exclusive products generates around 60% of gross profit for Shaver Shop. The company is looking to grow these sales, as well as expand its store network in New Zealand. Plus, it's expanding the range of products it's selling.

For these reasons, I believe Shaver Shop would make a top buy for ASX value investors right now.

Motley Fool contributor Tristan Harrison does not own shares of Shaver Shop Group Ltd.

Michael Hill International Ltd

What it does: Founded in 1979, Michael Hill is a jewellery retailer spanning Australia, New Zealand, and Canada with 280 stores. The company's brand has become synonymous with high-quality rings, earrings, necklaces, and more through its prominent advertising.

By Mitchell Lawler: Michael Hill does not have the hallmark traits of an ASX share I'd typically be interested in. It operates in a highly competitive market that is difficult to differentiate in, and the lack of meaningful revenue growth compared to five years ago leaves plenty to be desired.

However, management has done a great job of guiding the company through the pandemic. Where other retailers went boom and then bust – or simply went bust – Michael Hill has maintained a commendable earnings margin.

Furthermore, the company's balance sheet is now in impeccable condition. At the end of June 2022, Michael Hill held $95.8 million in cash and no debt – allowing the company to conduct a $10.2 million share buyback and pay 7.5 cents per share in dividends in FY22.

At a price-to-earnings (P/E) ratio of nine times, based on the current share price, I think there could be some decent upside to Michael Hill shares this year.

Motley Fool contributor Mitchell Lawler does not own shares of Michael Hill International Ltd.

Universal Store Holdings Ltd

What it does: Universal Store is the retail company behind the eponymous Universal Store brand. It also recently completed the acquisition of Byron Bay-based fashion brand Thrills.

By James Mickleboro: Although Universal Store's shares have rebounded strongly from their 52-week low, I don't believe it is too late to invest. Based on Goldman Sachs' earnings per share (EPS) forecast of 37.3 cents, at the time of writing, the company's shares are trading at around 15 times forward earnings.

I feel this is great value given that Goldman is forecasting a 22.4% earnings before interest and tax (EBIT) compound annual growth rate (CAGR) over the next three years (FY22-25). This is expected to be underpinned by the company's exposure to younger consumers, which should remain resilient relative to the broader population in the current environment, thanks to an increase in the minimum wage.

Goldman has a buy rating and $7.20 price target on Universal Store shares. 

Motley Fool contributor James MIckleboro does not own shares of Universal Store Holdings Ltd.

Adairs Ltd

What it does: Adairs retails home furnishings in Australia and New Zealand, boasting more than 170 stores. It also operates subsidiaries Mocka and the recently acquired Focus on Furniture.

By Brooke Cooper: The Adairs share price has suffered lately, falling by around 27% in 12 months. However, I believe it's now trading at a decent price.

The company posted earnings per share (EPS) of 26.4 cents for financial year 2022 (FY22) – leaving it with a price-to-earnings (P/E) ratio of 10.5.

Additionally, Adairs' paid loyalty program has more than a million members – a competitive advantage expected to grow by up to 10% annually in coming years. The company also has a five-year target of $1 billion in annual sales – up from $565 million in FY22.

Finally, Goldman Sachs says the company's business is more resilient than some may assume and tips its dividends to grow 11% by FY24.

Motley Fool contributor Brooke Cooper does not own shares of Adairs Ltd.

MFF Capital Investments Ltd

What it does: MFF Capital is a listed investment company (LIC) that invests in a portfolio of mostly US-listed shares.

By Sebastian Bowen: I think MFF Capital shares represent compelling value right now. This LIC invests in a concentrated portfolio of international shares. Some of its current holdings include Mastercard, Asahi Group, and Amazon.

By investing in top-quality names like these, MFF has been able to deliver double-digit returns, on average, for many years now.

However, as it stands today, this LIC is trading at a significant discount to the underlying value of its investment portfolio. As such, I think investors are getting a bargain at the current price, the equivalent of buying $1 worth of assets for 90 cents.

Motley Fool contributor Sebastian Bowen owns shares of MFF Capital Investments Ltd, Mastercard, and Amazon.

JB Hi-Fi Limited

What it does: JB Hi-Fi sells home entertainment and technology products through its eponymous stores, and home appliances through its Good Guys stores. It operates through a network of physical stores across Australia and New Zealand and its growing online platform.

By Bronwyn Allen: I like this business because it's simple to understand. JB Hi-Fi sells TVs, laptops, mobile phones, and loads of other electronic gadgets that people seem to love buying and endlessly upgrading. JB Hi-Fi also sells home appliances, which we all need to replace now and then.

Plus, Aussies are a property-mad bunch who love renovating, which means thousands of householders are buying a whole slew of appliances at once for every new kitchen, laundry, and living room created per year. So, I believe the ongoing demand for JB Hi-Fi's products is strong. It's no surprise to me that the company was among the top three best-performing ASX 200 retail shares in 2022.

While the JB Hi-Fi share price actually lost 13.2% in value last year, this followed a 99% surge from its COVID-crash trough through to the end of 2021. So, this pull-back looks like a buy-the-dip opportunity for 2023 to me.

From a value perspective, JB Hi-Fi shares are trading on a very low and, for me, extremely appealing price-to-earnings (P/E) ratio of 9.54, according to the ASX.

Motley Fool contributor Bronwyn Allen does not own shares of JB Hi-Fi Limited.

The post Top ASX value shares to buy in 2023 appeared first on The Motley Fool Australia.

But, far from despairing, this has only hardened my desire to spend 2023 buying even more dividend-paying shares.

We've all heard the maxim 'buy low, sell high'. This is a principle I try my best to stick to. The S&P/ASX 200 Index (ASX: XJO) is still lower today than it was a year ago. That tells me that there might still be opportunities out there to buy myself some cheap shares.

But on a broader note, I think buying shares is almost always a better choice than not buying. History shows that trying to time the markets is a very bad idea. None of us knows what's coming down the road.

If today ends up being the last time the ASX 200 is at its current level, and the index surges 10% higher in 2023, we're all going to feel a little silly if we decided today that it's better to try and wait for a cheaper entry point.

Shares beat cash, so I'm buying more ASX dividend shares in 2023

The historical returns from shares trump the returns of cash over any long stretch of time. Shares also go up more than they go down. Thus, investing in shares rather than leaving your money in the bank is usually the better choice, if the past is anything to go by.

Plus, having dividend cash flow means you can have extra cash to reinvest back into those dividend shares too.

So this is why I'll be putting any extra dollars I have at my disposal in 2023 into ASX dividend-paying shares.

But not just any shares will do. I try and seek out the best-performing shares on the market. So I'll be looking to the likes of Washington H. Soul Pattinson and Co Ltd (ASX: SOL), Brickworks Limited (ASX: BKW) and MFF Capital Investments Ltd (ASX: MFF) to add to my portfolio.

I try and end each calendar year that passes us by with more assets to my name than what I had at the start. 2023 is no different.

The post Why I'll be buying more ASX dividend shares for my portfolio in 2023 appeared first on The Motley Fool Australia.

The company may have some surprises. But we already know some of the things that the ASX share is going to say.

Magellan loses significant funds under management (FUM)

An important part of profit generation for funds management businesses is the amount of FUM it has. It may be obvious to say, but usually higher FUM means higher revenue and profit. Lower FUM can therefore translate into lower profitability.

At 30 November 2021, Magellan had total FUM of $116.4 billion.

On 20 December 2021, Magellan announced that it had lost the St James' Place investment mandate, representing 12% of annual revenue.

At 31 December 2021, the FUM had dropped to $95.5 billion.

The FUM had fallen to $93.5 billion at 31 January 2022.

Unusually, Magellan then released a mid-month FUM update. At 9 February 2022, FUM had dropped again to approximately $87.1 billion. This was a combination of market movements, cash distributions paid, net outflows and notifications since 1 January 2022. It has experienced net outflows of around $5.5 billion since 1 January 2022, including net institutional outflows of $5 billion.

Billions are flowing out of Magellan at the moment, which is hurting the Magellan share price.

Underperformance may be a key reason that investors are pulling out. As an example, over the year to 31 January 2022, the Magellan Global Fund has underperformed its benchmark by 10%. It's also showing underperformance over the last three, five and seven years.

Hamish Douglass steps down

Hamish Douglass was well-known as being the investment leader of Magellan.

But Mr Douglass has now taken a medical leave of absence to prioritise his health after intense pressure and focus on both his professional and personal life. The Magellan share price fell after the announcement of this news.

Mr Chris Mackay, Magellan's co-founder, inaugural chair and chief investment officer between 2006 to 2012, will oversee the portfolio management of Magellan's global equity retail funds and global equity institutional mandates.

Magellan noted that Mr Mackay is a highly experienced and respected global equity portfolio manager, with a "very strong" long-term record of managing global equities. He has been the portfolio manager of MFF Capital Investments Ltd (ASX: MFF) since 2013.

The funds management business also announced that Ms Nikki Thomas has rejoined the business as a co-portfolio manager. She originally joined Magellan in January 2008 and was involved in the global equity strategy since its inception in July 2007 to December 2017.

Is the Magellan share price a buy?

Despite the 60% drop of the Magellan share price over the last six months, analysts still don't think it represents good value.

For example, UBS rates Magellan as a sell, with a price target of just $17 with potential for further FUM declines and the possible need to reduce fees to stop FUM flowing out.

Morgan Stanley also thinks Magellan is a sell, with a price target of $17.20.

Credit Suisse is 'neutral' on the business, but the price target is $16.50. Retail FUM outflow is expected to pick up around the end of the financial year as financial advisors look at what's happened.

The post Is the Magellan (ASX:MFG) share price a smart contrarian buy? appeared first on The Motley Fool Australia.

It has certainly been a rough day so far for the Magellan Financial Group Ltd (ASX: MFG) share price this Monday. At the time of writing, Magellan shares are down a nasty 11.37% at $16.41. Although they dipped as low as $16.14 earlier this morning. Magellan hasn't seen these kinds of share prices since late 2014.

The fund manager is now down a depressing 78% from its all-time high of over $73 a share that we saw back in early 2020.

As we covered this morning, this dramatic slide seems to be the result of the announcement earlier today that Magellan's co-founder, chair and chief investment officer (CIO), Hamish Douglass, has "requested a period of medical leave to prioritise his health".

Mr Douglass has been under a lot of scrutiny over the past year or so as Magellan's flagship Magellan Global Fund (ASX: MGF) has struggled with chronic underperformance. The loss of the company's largest funds management mandate late last year, as well as news of Mr Douglass' divorce, hasn't helped matters.

But Magellan has brought in the big guns to account for the absence of Mr Douglass. Douglass' replacement, the company announced this morning, will be none other than Chris Mackay.

So who is Chris Mackay, and can he be the white knight that Magellan might need?

Magellan brings in Chris Mackay to fill Hamish Douglass' boots

Remember how we described Hamish Douglass as Magellan's co-founder? Well, Chris Mackay is his fellow Magellan co-founder. He also chaired Magellan, and acted as CIO, from its inception in 2006 until 2012.

Since then, he has chosen to concentrate his efforts towards managing MFF Capital Investments Ltd (ASX: MFF). MFF was the old Magellan Flagship Fund that has carved out its own path in recent years, despite the remaining links with Magellan. MFF Capital is a listed investment company (LIC) that invests in a similar fashion to some of Magellan's other funds. It also focuses primarily on the United States markets, and has companies like Amazon.com Inc (NASDAQ: AMZN) and Visa Inc (NYSE: V) among its largest holdings.

As my Fool colleague reported this morning, this won't be too difficult a transition considering Mackay's longstanding relationship with Magellan and since MFF and Magellan share office space.

Still, no doubt Magellan's shareholders will be hoping for an arguably much-needed fresh start.

At the current Magellan share price, the company has a market capitalisation of $3.43 billion, with a price-to-earnings (P/E) ratio of 12.7.

The post Who is Chris Mackay, Magellan's (ASX:MFG) new CIO? appeared first on The Motley Fool Australia.

At the time of writing, the Macquarie Group Ltd (ASX: MQG) share price is struggling after news of a $2 billion investment in the UK.

What has Macquarie done?

The investment bank announced that Macquarie Asset Management (MAM) has reached an agreement to acquire a majority stake in Southern Water Services in the UK.

The Southern Water Services plan

Macquarie outlined that this business provides water services to 2.6 million and wastewater services to 4.7 million customers in Kent, Sussex, Hampshire and the Isle of Wight.

MAM will invest, on behalf of its long-term investors including pension funds and insurance companies, over £1 billion in new equity (almost $2 billion) to recapitalise the business and implement a more sustainable financing strategy for Southern Water.

This money will allow Southern Water to invest "significantly" to upgrade its network. Over the next four years of the current regulatory period, Southern Water will invest £2 billion to fix pipes, pump stations and sewers. These infrastructure items are reportedly "underperforming" and are causing harm to the local environment.

MAM outlined the size of the investment, saying it equated to £1,000 for each property in Southern Water's catchment area. The capital will allow the business to improve its operational performance for stakeholders and increase the financial performance and resilience for shareholders.

Macquarie makes commitments

MAM has had long discussions with Ofwat, which is the regulator of water and wastewater services in England and Wales.

The investment bank noted that Southern Water has one of the worst track records in the UK water sector. It aims to reduce pollution incidents by more than 50% over the next four years. It is committed to significantly improving Southern Water's environmental track record with a zero-tolerance mindset.

Another part of the plan is to reduce leaks through the significant investment programme.

The next commitment was ensuring affordable customer bills. The commitment was that, in total, average water and wastewater customer bills don't rise by more than inflation. That's in addition to honouring an existing £123 million customer rebate due to historical incidents.

Finally, Southern Water wants to offer better customer service by fixing the issues that customers are complaining about, and increasing the capacity to handle complaints.

Macquarie commentary

Leigh Harrison, the boss of Macquarie Infrastructure and Real Assets, said:

Southern Water needs significant investment to improve its operational and environmental performance, and financial health. Without it, the business will be unable to fulfil the expectations of the millions of customers that rely on its services each day or reduce its negative impact on the local environment.

This major £1 billion equity investment by one of our long-term infrastructure funds will help put Southern Water back on a stable footing and enable an ambitious multi-year transformation plan to make essential water and wastewater services in the South East of England more sustainable and resilient.

While we expect Southern Water will have made substantial progress in addressing its issues by the end of 2025, we acknowledge the business' transformation will take time and that is why we intend to own our stake in Southern Water over multiple regulatory periods.

Macquarie share price snapshot

Whilst Macquarie shares haven't done much today, it's up 8% over the last six months and up more than 25% in the last year.

The post Macquarie (ASX:MQG) share price struggles following $2b UK investment news appeared first on The Motley Fool Australia.

Investing in the United States and its markets has become increasingly popular in recent years. It's easy to understand why. As technology and globalisation become ever more prevalent, we can't help noticing brands like Apple Inc (NASDAQ: AAPL) and Alphabet Inc's (NASDAQ: GOOG)(NASDAQ: GOOGL) Google pop up in the everyday household. Or cars made by Tesla Inc (NASDAQ: TSLA) or even Ford Motor Company (NYSE: F) appear on our roads, perhaps driven by an Uber Technologies Inc (NYSE: UBER) driver. Or apps that Netflix Inc (NASDAQ: NFLX), Walt Disney Co (NYSE: DIS), or Amazon.com Inc (NASDAQ: AMZN) supply on our TVs.

If you dig a little deeper in your own cupboard, you might find Kellogg Company (NYSE: K) cereal or razors made by Procter & Gamble Co's (NYSE: PG) Gillette.

American companies are everywhere in Australian life, often hiding under familiar brands. Take the popular ice creams Paddle Pop and Golden Gaytime. They are actually owned by the British-Dutch company Unilever UN (NYSE: UL), listed in the US.

So it's understandable that Aussie investors might want a slice of the pie. And they do. You can take a look at our coverage of some of the most popular US shares that Aussie are buying.

Recently, we covered how the rising Australian dollar was making investing in US shares more attractive. So if you've never taken the plunge across the Pacific, it might be a good time to have a think about it. There's nothing wrong with our own S&P/ASX 200 Index (ASX: XJO) of course. But the reality is that our market is a minnow in the ocean of global markets. The US markets are, by comparison, a pod of whales. I say a pod because the US has a few different markets you can invest in. Rather than just one major index, like our ASX 200, American investors have a few choices. There's the old-school Dow Jones Industrial Average (INDEXDJX: .DJI), the uber-popular S&P 500 Index (INDEXSP: .INX), and the tech-heavy NASDAQ-100 (INDEXNASDAQ: NDX).

Buying US shares on the ASX

You can always buy US shares directly through your ordinary broker. Many of the most popular Aussie share brokers, like Commonwealth Bank of Australia's (ASX: CBA) CommSec, or National Australia Bank Ltd's (ASX: NAB) NABtrade offer the opportunity to buy US shares like Apple or Netflix directly. There are also newer dedicated US brokers, like the popular Stake, which do the same.

However, if you don't want to buy these shares directly, there are other options. Various managed funds and Listed Investment Companies (LICs) that are listed on the ASX invest in US shares. Some popular examples include the Magellan Global Fund (ASX: MGF) and MFF Captial Investments Ltd (ASX: MFF).

Otherwise, there are always US market-tracking index funds available on the ASX as well. Some examples include the iShares S&P 500 ETF (ASX: IVV), the Vanguard US Total Market Shares Index ETF (ASX: VTS), and the BetaShares Nasdaq 100 ETF (ASX: NDQ). There's also a couple of currency-hedged options for the investor who wants to take currency fluctuations out of the equation. These include the iShares S&P 500 AUD Hedged ETF (ASX: IHVV) and the BetaShares NASDAQ 100 ETF – Currency Hedged (ASX: HNDQ).

Foolish takeaway

For the investor who wants to branch out and invest in US shares, there are more options available than ever. In the end, it just depends on your individual preferences as to which route you wish to take.

The post How to invest in US shares in 2021 appeared first on The Motley Fool Australia.

Buying ASX shares for both growth and dividend income can be a tricky game. Only the strongest companies can afford to invest in their business at the same time as paying out dividends. So if you find a company that can manage both of these difficult feats, you know you might be onto a winner. So here are 2 such shares that I think offer this duality to investors today:

2 ASX shares to buy for growth and dividends today

Telstra Corporation Ltd (ASX: TLS)

Telstra is our first growth and dividends share to buy today. This might be something of a controversial pick. Telstra is not a company known for its strong growth prospects in recent years. In fact, it's earnings have been going backwards for a while now due to the rollout of the national broadband network (nbn). However, I think there are a few strong growth avenues opening up for the telco, the best of which is 5G.

5G promises to offer superior speed and latency over the current 3G and 4G technology in use. It also offers the prospect of making the internet of things (IoT) into a reality. I fully expect Telstra to have the country's best 5G network for the foreseeable future due to the heavy investment the company has been making over the past few years. If all goes well, this should convert 5G into a lucrative earnings stream for Telstra over the next decade.

But Telstra is also known for its dividends. The company recently all but confirmed that its current 16 cents per share dividend payouts would be continuing into FY2021. That would give Telstra shares a forward dividend yield of 5.81% on current prices. That's a big fat tick in the income box as well.

MFF Capital Investments Ltd (ASX: MFF)

This is another share I would buy for both growth and income today. MFF is a Listed Investment Company (LIC) that invests mostly in a mid-sized portfolio of US shares. It's largest current holdings are US payments giants Visa Inc (NYSE: V) and Mastercard Inc (NYSE: MA). It's run by one of the best fund managers in the country in my view – Magellan Financial Group Ltd (ASX: MFG) co-founder Chris Mackay. I like MFF right now as it's more of a contrarian play.

AS of 16 October, the company still has around 23% of its assets in cash, which it could deploy effectively if global markets were to take a dive in the short to medium-term future. The company has a stellar track record of growth behind it, but is also working on building its dividend income chops. The company has paid out 6 cents per share in dividends over the past 12 months, giving it a trailing yield of 2.12% today. However, the company has told investors that it wants to increase this payout to 10 cents a share over the next few years. As such, I think MFF is another top ASX share to hold for both growth and dividends.

The post 2 ASX shares I would buy for growth and dividends appeared first on The Motley Fool Australia.

I believe there are a number of important rules that Aussies should follow to help their wealth grow over time.

Some of wealth-building is down to luck. But a lot of it is down to the process you use for your money and the systems you put in place.

I think these important rules are worth following to help you build wealth:

Spend less than you earn

I think one of the most important rules for building wealth is making sure that you spend less than you earn, that you live within your means.

It's easy to spend a lot of money. It's harder to earn more. The trick is to make sure that your spending isn't consistently more than your income. If you earn $100 a month more than you spend then you can build your wealth over time. If you always spend $100 a month more than you earn then your net worth is going to head downwards until interest and debt overwhelm you.

How are you supposed to know if you're spending less than you earn? By tracking of course! I'm sure whichever bank you're with would offer some personal finance tools whether it's Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) or another one.

Plenty of people use another tool to track their finances like Excel, Google Sheets or even Zip Co Ltd's (ASX: Z1P) Pocketbook. I use Excel. 

Budgeting can be a really powerful tool to help you save money.

Be intentional with your savings

Spending less than you earn is a good outcome of your hard work and financial choices. But I think it's important to come up with an intentional system for your money.

Some people like the idea of saving money first and spending what's left after that. If you're aiming for a long-term savings goal, such as a house deposit, you need to make sure you're actually putting that money aside into a savings account rather spending it.

Even if you just save $100 or $200 a month, it's important to classify money not spent that month as savings. Keeping it physically separate in a savings account is a good idea. Otherwise you could just end up spending it a month or two later.

You can really start building good savings habits if you just make it into a routine to save money (like a fitness routine). As Warren Buffett said: "Chains of habit are too light to be felt until they are too heavy to be broken."

Have an investment plan

No-one has a crystal ball to be able to tell you when share prices are going to fall or rise. It's impossible to predict. A year ago I don't think anyone would have seriously predicted that a global pandemic was about to happen.

I think it's important to regularly invest into your portfolio. It doesn't matter whether the market is up or down. It doesn't matter which side of politics is in power. Don't worry much about the latest GDP or house price statistics. Investing regularly will make sure your wealth-building plan stays on track. It could be once a month, once every two months or even once a quarter. Just commit to regularly investing.

What shares would make good regular investments? I think some exchange-traded funds (ETFs) would be good ideas like Betashares Global Quality Leaders ETF (ASX: QLTY), BetaShares Global Sustainability Leaders ETF (ASX: ETHI) or Vanguard Msci Index International Shares Etf (ASX: VGS).

I also think that listed investment companies (LICs) and trusts (LITs) can be good for regular investing. I like ideas such as MFF Capital Investments Ltd (ASX: MFF), Magellan Global Trust (ASX: MGG), WCM Global Growth Ltd (ASX: WQG) and Future Generation Global Invstmnt Co Ltd (ASX: FGG).

The post 3 important rules to help you build wealth appeared first on The Motley Fool Australia.

I think that the best time to invest may make you feel uncomfortable.

The best time to invest in a (good) share is when most other investors don't want to invest in it.

It might feel easy to invest today in a business that is riding high like Redbubble Ltd (ASX: RBL) which is reporting good growth numbers each quarter despite COVID-19. I'd still be happy to buy shares at almost $5 today.

But imagine if you'd bought Redbubble shares earlier this year. It was around $1.10 at the start of the year. You'd be up around 350%.

What about if you'd bought at the market bottom on 23 March 2020? Your Redbubble shares would be up by 975%.

There are plenty of examples of businesses that have risen strongly since the March 2020 lows. Kogan.com Ltd (ASX: KGN), Temple & Webster Group Ltd (ASX: TPW), JB Hi-Fi Limited (ASX: JBH) and Afterpay Ltd (ASX: APT) are just a few names that have rebounded strongly.

But you would only get to take advantage of buying at those market lows if you were willing to put money into the share market when everyone else was losing their minds.

About eight months ago I thought the COVID-19 period of falls represented a once-in-a-generation opportunity to buy shares. I invested quite heavily during March and April and thankfully quite a few of my investments from that period are up between 50% to 100%. I wish I could have invested more!

This year the best time to invest was during the market crash because that's when uncertainty was the highest.

Why March 2020 was so worrying..and such a good time to invest

Looking back seven months ago, things looked a lot different to today. There wasn't the government and central bank support that came into force soon after.

There was an accelerating number of COVID-19 cases across the world, particularly in New York and Europe. The number of deaths in Italy had almost reached a daily peak. Restrictions were tightening across the world and international borders were shutting.

It seemed as though many businesses could go to the wall. Things were looking dire for many discretionary businesses – it's why the Afterpay share price plunged to $8.90.

But it can be dangerous to extrapolate negativity for too long. Governments and central banks were likely to do something to support the economy like they did with the GFC. Though this level of support was unprecedented. The Australian government's stimulus was (and is) particularly supportive with jobkeeper.

Warren Buffett has a great quote for investing during uncertain times. He said investors should be "fearful when others are greedy, and greedy when others are fearful." It was an opportunistic time to be greedy. 

But now share markets have zoomed higher. Does that mean we should wait for the next crash?

Long-term returns are usually great whenever you invest

Who knows when the next crash is going to be? It could be a few weeks away with the US election. Or it could be over a decade away. There was an 11-year gap between March 2009 and March 2020.

I don't think it makes much sense to wait that long to invest. There are a lot of dividends that can be paid and a lot of compounding that can occur in a decade.

The share market has returned an average of 10% per annum over the long-term. That average includes all the crashes and difficult times.

The only time your investment may not show good long-term returns is if you invest just before a big crash like the GFC, or dot com crash 20 years ago. But most people regularly contribute throughout their life to their portfolio, it's unlikely that many people will have dumped $1 million from a lottery win in one go in October 2007.

The long-term returns of some investments over the past decade has been really good. You don't have to invest at the bottom to make good returns in you invest in good businesses.

For example, iShares S&P 500 ETF (ASX: IVV) reports that it made average returns of per annum 17.05% over the last 10 years.

One ASX share I own, a listed investment company (LIC) called MFF Capital Investments Ltd (ASX: MFF) has made total shareholder returns (TSR) of an average of around 17.5% per annum over the past decade.

The post The best time to invest may feel uncomfortable appeared first on The Motley Fool Australia.

I think there are a number of ASX shares that are worth buying at the current prices with $1,000 (or more).

In my opinion, each of the below picks could be really good long-term options:

Pushpay Holdings Ltd (ASX: PPH)

This ASX tech share is a donation payments business which services the large and medium US church sector. It's aiming for US$1 billion of annual revenue from this target market.

I think the company has a compelling future for the rest of the decade with growth being brought forward by COVID-19. The rising profit margins are very attractive to me.

At the current Pushpay share price it's valued at 41x FY21's estimated earnings. 

I've written about Pushpay many times as an idea, here is the latest longer-form article.

Redbubble Ltd (ASX: RBL)

Redbubble is an artist product business that sells things like wall art, masks, phone cases, clothing and so on through an online marketplace.

The company is seeing enormous growth as consumers shift to online purchasing. In the first quarter of FY21 it saw marketplace revenue growth of 116% and gross profit growth of 149%. It's a very scalable business due to network effects. It is steadily adding new product lines which increases its total addressable market.

In my opinion, Redbubble has a very promising growth trajectory over the next five years.

I have covered Redbubble in a longer article here.

Temple & Webster Group Ltd (ASX: TPW)

This ASX share is another e-commerce business. It sells furniture and home furnishings online. It's another business benefiting from the big shift to online shopping.

The Temple & Webster share price has crashed 24% lower after giving its trading update this week. Was it bad? The year to date to 19 October 2020 revenue was up 138% and it generated earnings before interest, tax, depreciation and amortisation (EBITDA) of $8.6 million – more than the whole of FY20.

Looking out five years, I think this is a good opportunity to buy shares of a very fast-growing business.  

WAM Microcap Limited (ASX: WMI)

WAM Microcap is a listed investment company (LIC) which aims to invest in ASX shares with market capitalisations under $300 million.

I think the investment team at WAM Microcap is one of the best LIC teams out there. Its portfolio has generated strong results – since inception in June 2017 it has generated returns of 21.2% per annum (before fees, expenses and taxes).

It also offers a grossed-up dividend yield of 5.3%.

MFF Capital Investments Ltd (ASX: MFF)

MFF Capital is another LIC which has done well. The ASX share has been one of the best LICs over the past decade under the stewardship of Chris Mackay.

It owns a portfolio of high quality global shares with good growth prospects like Visa, Mastercard, Berkshire Hathaway, Home Depot and Microsoft.

I believe good long-term returns can continue, with a steadily rising dividend as a bonus.

Here's the latest longer article I wrote about MFF Capital.

Future Generation Global Invstmnt Co Ltd (ASX: FGG)

Future Generation Global is another LIC that gives exposure to global shares. However, it invests in the funds of fund managers that invest in global shares. Those managers work for free so that Future Generation Global can donate 1% of its net assets to youth mental health charities. It's a great setup. 

Its portfolio has outperformed the global share market over the short-term and longer-term. It's trading at a discount to its net tangible assets (NTA) per share and it's starting to grow its (small) dividend.

This is a longer article I wrote about Future Generation Global.

A2 Milk Company Ltd (ASX: A2M)

I think A2 Milk could be the best value ASX growth share in the ASX 200.

The infant formula business is certainly going through a tough time at the moment due to COVID-19 impacts on domestic customer demand and logistics.

However, I believe it still has a very strong future – particularly in North America. I think short-term difficulties give us an opportunity to buy shares cheaper of this attractive global growth business.

At the current A2 Milk share price it's valued at 23x FY23's estimated earnings.

I made a bull case for the A2 Milk share price in a longer article here.

Bubs Australia Ltd (ASX: BUB)

Bubs is also an infant formula ASX share that's suffering due to COVID-19 at the moment.

There are a few moving parts to Bubs, with the Chinese element worrying some investors.

However, there are two key areas of Bubs that make me bullish about its long-term future when you look out five years. First, its gross profit margin is steadily rising as more of its revenue comes from infant formula. Second, its growth prospects in markets outside of China, such as Vietnam, look very promising and could help drive revenue and profit much higher in FY22 and beyond.

I wrote about Bubs in a longer article here.

The post Got $1,000? You should buy one of these 8 ASX shares appeared first on The Motley Fool Australia.

I just invested in an ASX share for my portfolio for the long-term. I decided to go with listed investment company (LIC) MFF Capital Investments Ltd (ASX: MFF).

What is a LIC?

A LIC operates as a company just like any other operating company. LICs are particularly interesting because their job is to invest in other shares on behalf of investors.

Most LICs don't have as cheap operating costs as exchange-traded funds (ETFs) because ETFs don't have the active management element (or fees). But I think some LIC fees are worth it because they can provide outperformance after fees, or perhaps better sustainable income.

There some old LICs that are focused on providing reliable income such as Australian United Investment Company Ltd (ASX: AUI) and Whitefield Limited (ASX: WHF). There are also some LICs that focus on small caps like Naos Emerging Opportunities Company Ltd (ASX: NCC) and WAM Microcap Limited (ASX: WMI).

So, what's MFF Capital about?

MFF Capital is a ASX share operating as a LIC that targets international shares. It's being operated by the co-founder of Magellan Financial Group Ltd (ASX: MFG), Chris Mackay.

The investment objective of MFF Capital is to maximise compound risk adjusted after-tax returns identifying and investing in a minimum of 20 shares, focusing on ones that have attractive business characteristics, and buying at a good price.

MFF Capital aims to find businesses with competitive advantages, that earns high returns on invested capital, whether it can keep deploying money at a high rate of return, the scalability of the business, whether technology will impact the company, whether it will benefit from globalisation and if the business has management which are honest, capable and focused on long-term shareholder value.

What shares pass that stringent investment research process? Its largest holdings include Visa, MasterCard, Home Depot, CVS Health, Facebook, Berkshire Hathaway, Microsoft, CK Hutchison, Flutter Entertainment, L'Oreal and JP Morgan Chase. I think this is a high-quality portfolio list.

The ASX share has done very well over the past decade. Indeed, it has been one of the top-performing LICs. According to CMC, MFF Capital has delivered average total shareholder returns (TSR) per annum of 17.5% over the past 10 years.  

Mr Mackay actually owns around $200 million of MFF Capital shares. So that shows he's very aligned with regular shareholders and he continues to buy shares when he thinks there is value.

Why I bought the ASX share for my portfolio

I think MFF Capital is one of the best LICs and I think Mr Mackay is one of the best fund managers. It actually has much cheaper operating costs than many other actively-managed funds that target international shares. MFF Capital has fixed fees, so as it gets bigger the operating costs as a percentage will be lower. That's attractive scalability in my opinion.

Mr Mackay recently bought MFF Capital shares at around the current MFF share price, so I think it's a good time to be buying shares.

MFF Capital still has a sizeable cash position – 28.9% of the portfolio at 30 September 2020 – but it has been investing some of the cash recently. I like the places that MFF Capital has been putting money including a few Japanese shares, Berkshire Hathaway and Flutter Entertainment.

The commitment to steadily grow the dividend is also attractive to me. It's good to receive some of the investment gains in the form of a rising dividend and benefit from the generated franking credits. Once the annual dividend reaches 10 cents per share, that would represent a grossed-up dividend yield of 5.5% at the current MFF Capital share price. That's a solid yield in this COVID-19 era of capital preservation by companies. 

The post Why I just bought this ASX share for the long-term appeared first on The Motley Fool Australia.

Is it time to go all in on ASX shares right now? There are a lot of things that are going right at the moment in Australia.

Australia is in a really good position with regards to COVID-19. NSW is hardly seeing any new cases. Victoria is currently seeing single digit increases in daily cases with an outline of when retail and other sectors can finally start reopening.

This is in stark contrast to other areas around the world like the UK and Europe which are seeing rising numbers and tightening restrictions. The US is also seeing rising numbers again.

Getting in complete control of the virus will hopefully allow the Australian economy to operate much closer to normal than if Australia looked closer to the situation that's happening in the northern hemisphere.

So where does that leave ASX shares?

Not every business is going to thrive (or even survive) in this environment because of COVID-19 impacts. Just look at what's happening with businesses like Qantas Airways Limited (ASX: QAN) and Sydney Airport Holdings Pty Ltd (ASX: SYD), they have needed to raise capital to ensure stability.

But remember that ASX shares are among the best businesses in the country. Bapcor Ltd (ASX: BAP) isn't just any car parts business, it's the best auto parts company in Australia. JB Hi-Fi Limited (ASX: JBH) isn't just a computer shop, it's one of the best retailers in the country.

I think the share price strength of many leading ASX shares has been justified because of their resounding revenue and profit growth.

But there could be more strength to come. It could be worth going 'all in' with ASX shares for at least three reasons:

• Low interest rates – Australia's official rate is now extremely low at just 0.25%. It may be about to go even lower. Lower interest rates are here to stay for a few years. This is one of the key reasons why it's worth considering going 'all in' on ASX shares. There isn't really another option. 
• Government support – The Australian government is doing a lot to financially support the economy. Jobkeeper and other measures has kept things ticking over. Jobkeeper is still being paid for businesses that are still struggling and the government recently revealed backdated tax cuts. This could provide another period of good support for the economy.
• US election – The upcoming US election has caused a lot of uncertainty. If the result is challenged then that could have caused a lot of volatility. If Joe Biden wins, as the polls are suggesting, then the Democrats may win enough power to pass the larger stimulus package which could be a real boost for the US and global economy, which I think would help ASX shares.

Time to go all in?

There's always something to worry about with the share market. So you shouldn't let one particular issue stop you from completely investing.

I think the finalisation of the US election will be the moment for me to buy into ASX shares, though I have continued buying throughout the last few months. Aside from COVID-19 impacts, there are a lot of positives for the Australian share market for the next 12 months as I mentioned above.

There are quite a few ASX shares that I'd be happy to buy in the coming weeks (or months) if they stay around this value including: MFF Capital Investments Ltd (ASX: MFF), Australian Ethical Investment Limited (ASX: AEF), City Chic Collective Ltd (ASX:CCX), BWX Ltd (ASX:BWX), EML Payments Ltd (ASX: EML) and Brickworks Limited (ASX: BKW).

There are plenty of other ASX shares that I've also got my eyes on. 

The post Is it time to go all in on ASX shares? appeared first on The Motley Fool Australia.

I think listed investment companies (LIC) can be a really good way to make good long-termtotal returns if you find good investment managers.

The job of a LIC is to invest in other shares on behalf of shareholders. If they make good investment returns then it should lead to good growth of the share price and usually attractive dividends.

Fees are part of the picture. The higher the fees that the LIC charges, the more that detracts from the LIC's net returns.

There is a complication to consider with LICs. They sometimes trade at a premium to their net tangible asset (NTA) value and sometimes they trade at a discount. That means you can buy $1 of assets for $0.90 if the NTA discount was 10%. Sometimes LICs trade at a premium, so the $1 of assets could cost $1.10. But the best LICs could be worth paying a premium for. 

With that in mind, here are two LICs that could be good for strong total returns:

MFF Capital Investments Ltd (ASX: MFF)

MFF Capital is a LIC that focuses on international shares. It's run by Chris Mackay, the co-founder of Magellan Financial Group Ltd (ASX: MFG). He owns around $200 million of MFF Capital shares, so he's very aligned with the regular shareholders.

According to CMC, over the past decade it has delivered total shareholder returns (TSR) of an average of 17.5% per annum, making it one of the best-performing LICs out there.

I think that long-term performance could continue with some of its current holdings. Looking at its positions worth more than 1%, it owns businesses like Visa, MasterCard, Home Depot, CVS Health, Facebook, Berkshire Hathaway, Microsoft, CK Hutchison, Flutter Entertainment, L'Oreal and JP Morgan Chase.

Aside from investing in great businesses, another reason to like MFF Capital is that it has low costs. Its fees are fixed, which means as it gets bigger it will cost even less as a percentage of assets.

The board has provided guidance that MFF Capital is going to increase its half-yearly dividend to 5 cents per share. An annual dividend of 10 cents per share would equate to a grossed-up dividend yield of 5.5% at today's MFF Capital share price.

WAM Microcap Limited (ASX: WMI)

WAM Microcap is a LIC that targets ASX shares with market capitalisations under $300 million at the time of acquisition. This is the area of the market where investors can unearth some hidden gems if they look hard enough.

The Wilson Asset Management team have done very well at finding undervalued growth companies. Since inception in June 2017, WAM Microcap's portfolio has delivered average annual returns per annum of 21.2%, before fees, expenses and taxes. This has been a great performance, which includes the COVID-19 period.

The LIC has been rewarding shareholders with special dividends in each financial year since FY18. FY20 saw total dividends of 9 cents per share declared for investors. That represents a big dividend return in one year.

Some of the small caps that it owned at the end of September 2020 included Redbubble Ltd (ASX: RBL), Baby Bunting Group Ltd (ASX: BBN), Temple & Webster Group Ltd (ASX: TPW), Macquarie Telecom Group Ltd. (ASX: MAQ) and City Chic Collective Ltd (ASX: CCX).

At the current WAM Microcap share price it offers a grossed-up ordinary dividend yield of 5.4%. That's a solid starting yield and it could be boosted by regular special dividends if the strong performance keeps coming.

Foolish takeaway

I believe that both of these LICs are capable of continuing to produce strong returns over the coming years. At the current prices I'd probably go for MFF Capital for the international exposure and NTA discount.  

ASX small caps have had a really strong run over the last six months and the WAM Microcap share price now appears to be trading at a premium to its NTA. Though I must admit that WAM Microcap is one of the biggest positions in my portfolio, so it's not as though I'm pessimistic about it at this price.

But I'm also looking at other share opportunities at the moment.

The post 2 great LICs I'd buy for strong total returns appeared first on The Motley Fool Australia.

You might have heard an investor describe themselves as a contrarian, or perhaps an ASX share they're looking to buy as a 'contrarian play'. It's more common than you'd think. What is meant by this rather strange phrase is that the investor either views themselves or the investment idea they have come up with as running 'against the heard' or against the popular opinion of the time.

As an example, buying Afterpay Ltd (ASX: APT) shares today is certainly not a contrarian play. That's because we can confidently say, given the Afterpay share price has appreciated 160% year to date, 'the heard' had regarded this share as a buy in 2020. But if you were bullish on Afterpay back when it was $12 per share or less in 2018, this would have been a 'contrarian' position to make, as most other investors were giving Afterpay a wide berth at the time.

So does being a contrarian pay off? Well, sometimes. Going against the opinions of most other investors can be highly lucrative. But then again, if most investors aren't bullish on a particular share, it's probably for a reason. If the Afterpay growth story didn't work out, that contrarian position wouldn't have looked so prescient, for example.

So, after that long-winded introduction to contrarian shares, what's my favourite contrarian play today? It's MFF Capital Investments Ltd (ASX: MFF).

MFF – a contrarian bet today

MFF is a listed investment company (LIC) that normally invests in United States-listed growth shares. I say normally because, at the present time, MFF's largest position is actually cash. According to its most recent market update, MFF told investors that its two largest stock positions were in the US payments giants Visa Inc (NYSE: V) and Mastercard Inc (NYSE: MA). But those positions were only worth 18.1% and 17.3% of the entire portfolio respectively. That pales in comparison with MFF's cash position, currently sitting at close to 50% of the portfolio.

That in turn, means that MFF is taking a highly 'contrarian' position in today's market by sitting out of the recent gains the market has been making. By extension, this also means that anyone holding MFF shares (like yours truly) is also holding a contrarian position. I'm very comfortable with this right now, as I view holding MFF shares as partly a cash position in itself. I know that MFF's portfolio managers won't hesitate to deploy this cash if there's a market crash in the near future, which in turn gives me confidence in this position. It also balances nicely with my other share positions, which will (hopefully) thrive if the market doesn't crash.

I wouldn't call myself a fully contrarian investor, but I certainly like hedging my bets against 'the crowd' from time to time, and my position in MFF upholds this today, in my view.

The post This ASX share is my top contrarian play right now appeared first on The Motley Fool Australia.

There are a few ASX shares out there that could make very smart buys with $2,000.

Here are my two top long-term ideas:

MFF Capital Investments Ltd (ASX: MFF)

I think that MFF Capital is one of the most promising ASX shares. I think it's a very promising listed investment company (LIC) which is operated by Chris Mackay, one of the best Australian fund managers in my opinion.

MFF Capital invests in global shares. I believe MFF Capital is a good way to diversify your portfolio and hopefully get strong returns. According to CMC, it has delivered average total shareholder returns per annum of 17.4%.

The strong return has been down to good picks by MFF Capital, namely Visa and Mastercard which are the biggest positions and have been long-term positions. These two payment giants are benefiting from very powerful tailwinds as more transactions go cashless and there's more online shopping.

Visa and Mastercard are still the biggest positions for MFF Capital – combined, they amount to just over 35% of the portfolio at the end of September 2020.

The ASX share has a really good portfolio in my opinion, it's more than just Visa and Mastercard. Its other portfolio holdings include: Home Depot, CVS Health, Facebook, Berkshire Hathaway, Microsoft, CK Hutchison, Flutter Entertainment, L'Oreal, JP Morgan Chase, Prosus, Itochu, Mitsubishi, Asahi, Intercontinental Exchange, Lloyds Banking, Lowe's, US Bancorp, Mitsui & Co, Sumitomo and Schroders.

MFF Capital has been steadily investing its large cash pile into shares over the past few months. It still has a fairly high cash position of 28.9% at the end of September 2020 which could be useful for buying opportunities over the coming weeks.

The ASX share is looking to grow its half-yearly dividend to 5 cents per share over the next few years. At the current MFF Capital share price that would be a future grossed-up dividend yield of 5.5%. It's priced at a 9% discount to the net tangible assets (NTA) at 30 September 2020.

Pushpay Holdings Ltd (ASX: PPH)

Pushpay is one of my highest-conviction ASX share ideas at the moment.

The electronic donation business has done very well to try to help US churches during this difficult COVID-19 period. It is helping large and medium US churches to receive digital donations – in FY20 it grew total processing volume by 39% to US$5 billion.

One of the attractive features about Pushpay's technology is that it allows the church to livestream the service to its congregation and stay connected.

Total revenue increased by 32% to US$129.8 million, which helped grow the gross profit margin by five percentage points from 60% to 65%. It's the rapid increase in the gross margin that is one of the main reasons I'm interested in Pushpay. More gross profit should mean fast growth of the net profit as well.

Over the long-term, the ASX share is aiming for US$1 billion of annual revenue. Pushpay should be able to materially increase its margins as it gets closer to that target.

I like the optionality that Pushpay has in the future. At the moment it's aiming for large and medium US churches. Other religions in the US could be a future target. There are other churches in other countries it could aim for. There are plenty of non-religious donation sectors that Pushpay could try to expand into in the future.

The ASX share's core product has a long growth runway and it seems it has very strong economies of scale. In FY21 alone it's looking to at least double its earnings before interest, tax, depreciation, amortisation and foreign currency (EBITDAF) to between US$50 million to US$54 million.

At the current Pushpay share price it's trading at 38x FY21's estimated earnings.

Foolish takeaway

I really like both of these ASX shares at the current prices. MFF Capital offers a lot of global diversification, low fees and a promising future dividend yield. However, Pushpay would be my first pick because of how much profit margin improvement it could achieve in the coming years.

The post The smartest ASX shares to buy if you have $2,000 appeared first on The Motley Fool Australia.

There are some ASX shares that would make good ideas to invest $1,000 into every month.

Plenty of ASX shares can be quite volatile and it would hard to commit to buy them every month. Some of those businesses names like Afterpay Ltd (ASX: APT) and Mesoblast Limited (ASX: MSB).

Instead, there are some ASX shares that would be good for a regular investment plan such as these picks:

MFF Capital Investments Ltd (ASX: MFF)

This is a LIC run by the co-founder of Magellan Financial Group Ltd (ASX: MFG), Chris Mackay. I think Mr Mackay is one of the best fund managers in Australia. 

Over the past decade the LIC has been a very strong performer. According to CMC, MFF Capital has delivered total shareholder returns per annum of 17.5% over the past 10 years.

COVID-19 has detracted from returns, but I think MFF Capital is well placed to deliver good returns over the long-term. For starters, its fees are attractively low. Unlike most active fund managers, MFF's management expenses are fixed at a fairly low level – cheaper than most other LICs – and as a percentage those fees will become smaller as the LIC's assets grow in value.

I like its assets. Some of its largest positions include Visa, Mastercard, Home Depot, CVS Health, Berkshire Hathaway, Facebook and Microsoft. These businesses have solid long term prospects. 

The ASX share has announced its intention to continue to grow its ordinary dividend for shareholders and it is usually priced cheaper than its pre-tax net tangible assets (NTA). Indeed, at the time of writing the MFF Capital share price is valued at a 9% discount to the 30 September 2020 NTA.

Betashares Global Quality Leaders ETF (ASX: QLTY)

This is an exchange-traded fund (ETF) which invests in high-quality global businesses.

What counts as quality? To make it into the ETF's holdings, companies need to rank well on return on equity (ROE), debt to capital, cash flow generation ability and earning stability.

It has an annual management fee of just 0.35% per annum, which is a lot cheaper than you'd probably pay for an active manager to put together a 'quality' portfolio.

The ETF doesn't invest in ASX shares, just global businesses – as the ETF's name might suggest.

It has 150 holdings. I won't list them all, but here are the ones that made it into the top 10 positions: Keyence, Nike, Nvidia, Intel, Texas Instruments, Apple, Adobe, Intuit, Intuitive Surgical and Johnson & Johnson.

The ETF has only been around since November 2018, though obviously the underlying companies have been operating for many more years than that. Since inception its net returns have been an average of 19.6% per annum.

WAM Leaders Ltd (ASX: WLE)

This is another LIC. It aims to invest actively in large cap ASX shares. It's operated by Wilson Asset Management (WAM), with lead portfolio manager Matthew Haupt at the helm.

It has done very well since inception in May 2016. At 31 August 2020, it had outperformed the S&P/ASX 200 Accumulation Index by 3.5% per annum, and over the prior 12 months it had outperformed the index by 10.7%.

I believe that WAM Leaders could be one of the best ways to invest in large cap ASX shares. Some of its 'active' picks in its top 20 holdings include Downer EDI Limited (ASX: DOW) and Star Entertainment Group Ltd (ASX: SGR).

Not only does WAM Leaders provide portfolio outperformance, but it also has a really attractive dividend. At the time of writing, WAM Leaders has a grossed-up dividend yield of 7.9%.

ASX blue chip shares can provide fairly reliable returns if you pick the right ones. I think WAM Leaders is a solid pick and is usually trading at a discount to its NTA.

The post 3 ASX shares that I'd invest $1,000 into EVERY month appeared first on The Motley Fool Australia.

I think the MFF Capital Investments Ltd (ASX: MFF) share price is a buy at the current level. The listed investment company (LIC) seems well positioned to me.

What is a LIC?

The job of a LIC is to invest in other assets on behalf of shareholders. Most of the time LICs invest in shares, but investment businesses can invest in other assets like bonds, property or anything else a company can invest in.

There are some very old LICs out there which manage billions of dollars such as Argo Investments Limited (ASX: ARG) and Australian Foundation Investment Co.Ltd. (ASX: AFI).

What about MFF Capital?

MFF Capital is reasonably old when it comes to the LIC sector, it has been going for well over a decade.

These days it is managed by Magellan Financial Group Ltd (ASX: MFG) co-founder Chris Mackay. I think Mr Mackay was one of the best fund managers in the 2010s. He was right to heavily allocate money to the US market as the share market there performed strongly and the Australian dollar weakened compared to the US dollar (which improved returns for Australian investors).

MFF Capital aims to invest in businesses which are competitively advantaged and are priced attractively.

The MFF Capital share price has done very well over the past decade. According to CMC, its total shareholder return over the past 10 years has been an average of 17.6% per annum.

What type of shares is MFF Capital invested in?

Two of MFF Capital's best investments have also been two of its largest and longest-held. At the end of August 2020, 18.7% of its portfolio was invested in Visa shares and 17.9% was invested in Mastercard shares.

More than a third of the portfolio is invested in those two payment businesses. I think that's a good call with the rise of e-commerce and cashless transactions.

Home Depot is the only other 'high' conviction idea with a 9.6% weighting.

Other investments with an investment of more than 0.5% of the portfolio at the end of last month were: CVS Health, Berkshire Hathaway, Microsoft, Flutter Entertainment, CK Hutchison, JP Morgan Chase, Lloyds Banking, Lowe's and US Bancorp.

I think the above names could help the MFF Capital share price continue its good long-term performance.

Why I think MFF Capital is worth buying today

MFF Capital has been a great investment over the past decade. It currently has a very large cash position – at 31 August 2020, 37.9% of its portfolio was net cash. That's very defensively positioned and most of that cash is in US dollars.

The Australian dollar is weakening compared to the US dollar. It's being speculated that the Reserve Bank of Australia (RBA) may cut the interest rate a little further than the already low rate of 0.25%. That may increase MFF Capital's value in Australian dollar terms.

I also think that as the US election gets closer, and in the short-term after the election, there could be some market volatility. MFF Capital could be mostly protected from the volatility with its cash position and it could snap up share opportunities with that same cash pile.

Mr Mackay has expertly steered MFF Capital through the last decade and I think a prudent approach for the next six months to twelve months is the right thing considering all of the uncertainty relating to COVID-19 (and the election). It's not guaranteed that the global economy will bounce back as some people are hoping it will.

I do believe you need to be positive about the long-term, but being cautious in the short-term could be the right thing to do.

At the current MFF Capital share price it's trading at a 7% discount to the pre-tax net tangible assets (NTA) at 18 September 2020. I think that's an attractive price to buy shares today.

The post I'd buy MFF Capital (ASX:MFF) shares this week appeared first on The Motley Fool Australia.

There are a number of ASX dividend shares that could be worth buying for income with 2021.

It's pretty difficult for income investors to get enough income at the moment. Australia's official interest rate has been cut to just 0.25%. That makes it hard to make decent money from your bank account.

I think ASX dividend shares are the answer for the income predicament. Businesses can generate good profits and pay out attractive dividends to shareholders. Some ASX shares have cut their dividends significantly, such as Westpac Banking Corp (ASX: WBC), there are better ideas out there.

Here are three great examples:

Brickworks Limited (ASX: BKW)

Brickworks is a diversified property business. It sells a variety of products in Australia like precast, roofing, bricks, paving and masonry. The construction industry could see a resurgence as Australia emerges from the impacts of COVID-19.

Some banks like Westpac are predicting that property prices could bounce over the next couple of years. I think that could be good news for demand for Brickworks products.

One of the great things about Brickworks is its dividend reliability. The ASX dividend share hasn't cut its dividend for over 40 years. That's a very impressive record in my opinion.

Brickworks has diversified assets including a large holding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares as well as a 50% stake of an industrial property trust along with Goodman Group (ASX: GMG).

In 2021 the giant warehouses for Amazon and Coles Group Limited (ASX: COL) will be close to be completed. This would be a big boost for the value of the property trust.

At the current Brickworks share price it has a grossed-up dividend yield of 4.5%. It's trading at under 11x FY21's estimated earnings.

WAM Microcap Limited (ASX: WMI)

WAM Microcap is a listed investment company (LIC) which invests in businesses with market capitalisations under $300 million.

ASX shares can be great opportunities if you can fund those hidden gems that are about to go on to make big returns. WAM Microcap's investment team have been very good at finding those opportunities.

The LIC can use the investment returns it makes to pay large ordinary and special dividends. WAM Microcap has paid a special dividend in each of the last three financial years.

Since inception in June 2017, WAM Microcap portfolio's gross return before fees, expenses and taxes has been 21.7% per annum. That's a very strong return. Over the past year, which includes COVID-19, the gross portfolio return has been 25.4%.

At the current WAM Microcap share price it has a grossed-up ordinary dividend yield of 5.7%. Including this FY20's special dividend, at today's WAM Microcap share price shareholders received a grossed-up dividend of 8.5% in FY20.

MFF Capital Investments Ltd (ASX: MFF)

MFF Capital is another LIC ASX share. It has been one of the best performers over the past decade (in total return terms) and I think the next decade could be very good under the stewardship of Chris Mackay.

It targets quality international shares which have strong competitive advantages. When you look at its current holdings, there is a clear bet on the payment giants Visa and Mastercard. Those two investments make up about a third of the portfolio. They have a long growth runway as more transactions turn cashless and there's also the rise in e-commerce.

The MFF Capital board is looking to increase the six-monthly dividend payment to 5 cents per share in the medium-term. That translates to a grossed-up dividend yield of 5.5% at the current MFF Capital share price.

The ASX share has a lot of cash at the moment to protect against market volatility whilst it looks for new investment opportunities. At the current MFF Capital share price it's trading at a 7% discount to the net tangible assets (NTA) per share at 18 September 2020.

Foolish takeaway

I think all three of these ASX dividend shares could be good options for income over the coming years. I believe Brickworks will continue to be very reliable, whilst WAM Microcap could continue its large dividend payments.

The post 3 ASX dividend shares to buy for 2021 appeared first on The Motley Fool Australia.

I love ASX shares that offer investors both growth and income prospects. Both are equally important when it comes to total shareholder returns. Yet some investors prefer growth over income or vice versa. I'm not so picky, and as such if a company is offering good growth prospects with a growing income stream on the side, I'll be interested. So here are 2 ASX shares that I believe offer just that this week.

MFF Capital Investments Ltd (ASX: MFF)

MFF is a Listed Investment Company (LIC) and one of my favourite companies on the ASX. As a LIC, MFF invests in a portfolio of other shares on behalf of its owners. In MFF's case, these shares are usually located in the United States. It currently holds a portfolio of growth-orientated companies, the largest of which are US payments giants Visa Inc (NYSE: V) and Mastercard Inc (NYSE: MA). Other holdings (as of 31 August) include Home Depot Inc (NYSE: HD), Berkshire Hathaway Inc (NYSE: BRK.B) and Microsoft Corporation (NASDAQ: MSFT).

MFF is a growth-focused LIC at its core. But it has also recently beefed up its income chops. MFF has been paying a small but growing dividend over the past few years. It will be paying a 3 cents per share dividend in November, up from the 2.5 cents per share that was paid out in MFF's 2020 interim dividend. If MFF pays out 6 cents per share in dividends in FY21, it gives MFF shares a forward dividend yield of 2.32% on current pricing. But it gets better. In its 2020 earnings report, MFF' management declared that they intend to increase MFF's annual dividend to 10 cents per share over the next few years. That would equate to a forward yield of 3.86%. As such, I think this is a top share for both growth and income today.

iShares Global 100 ETF (ASX: IOO)

Our second ASX share for growth and income is this exchange-traded fund (ETF) from BlackRock's iShares. IOO holds 100 of the largest companies across the advanced economies of the world. You'll find all of the big American companies here like Apple Inc. (NASDAQ: AAPL), Facebook, Inc. (NASDAQ: FB) and Amazon.com, Inc. (NASDAQ: AMZN), as well as some other names like Nestle and Toyota that you might be familiar with.

IOO has been a solid performer over the past decade, delivering an average return of 13.1% per annum. But IOO is also a solid income share. It currently offers a trailing yield of 1.56%, which should rise next year when the worst of the pandemic is behind us, in my opinion. As a rock-solid investment that offers growth, income and stability, I think IOO is a great option to consider.

The post 2 ASX shares I would buy for growth and income this week appeared first on The Motley Fool Australia.