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I strongly believe that the best place for anyone’s money over the ultra-long-term is (ASX) shares. You don’t need to take on debt to buy shares and they have proven to deliver the strongest returns over time. ETFs can create wealth for investors through simple investing.
Most investors reading this article will have a good understanding of the businesses on the ASX, but it’s much harder to be knowledgeable about the other 98% of the shares listed around the world.
The easiest way to get exposure to overseas investments could be through an exchanged-traded fund (ETF). These funds can give diversification to a whole range of good quality shares, with a low management fee.
These are two of the leading ETF options on the ASX:
iShares S&P 500 ETF (ASX: IVV)
Some of the best ETF options in the world are based on the S&P 500 index. Warren Buffet himself has said most people should stick to investing in the S&P 500.
There’s a number of great reasons to consider the iShares S&P 500 ETF, which is offered by Blackrock – one of the world’s largest asset managers.
This ETF has a management fee of only 0.04% per annum. This is one of the lowest ETF costs in Australia. Lower costs mean higher net returns for us as investors.
As the name suggests, the S&P 500 has hundreds of holdings which provides excellent diversification spread across many industries. Those businesses aren’t just giants in the USA where they are listed, they earn revenue from all across the globe.
The largest holdings in this ETF are instantly recognisable, such as: Microsoft, Apple, Amazon, Berkshire Hathaway, Alphabet, Facebook, Johnson & Johnson and JPMorgan Chase.
Past performance is not a guarantee of future results, but this ETF has returned an average of 10.93% per annum over the past decade.
Vanguard US Total Market Shares Index ETF (ASX: VTS)
This ETF gives investors exposure to a broad collection of listed US businesses. Most of the positives that I described about the S&P 500 ETF could be said about this Vanguard ETF.
Its holdings are spread across various industries and its top holdings are Microsoft, Apple, Amazon, Alphabet, Berkshire Hathaway and so on.
It also comes with an extremely low annual management fee of 0.04%.
However, the Vanguard US Total Market Shares Index ETF has over 3,500 holdings, seven times more than the S&P 500. You are essentially investing across the entire US share market, which may give a little more exposure to the domestic US economy.
Over the past five years it has delivered an average return per annum of 13.2%.
Some investors may prefer to just use Vanguard for their ETF investments due to its commitment to low costs.
Foolish takeaway
Both of these ETFs are high-quality, diverse choices. If I were going to pick one it would probably be the Vanguard US ETF for the higher exposure to the US economy.
However, neither of these ETFs offer a high level of income, so if you want capital growth and a good dividend yield you should consider these growing ASX shares.
Top 3 ASX Blue Chips To Buy For 2019
For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..
But knowing which blue chips to buy, and when, can be fraught with danger.
The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of “The Motley Fool’s Top 3 Blue Chip Stocks for 2019.“
Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.
Click here to claim your free report.
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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