When talking with friends and family I’ve noticed that there seems to be a lot of misconceptions and unfounded misgivings about investing in the share market. From what I can gather, most of this stems from a poor understanding of what buying shares actually means.
People hear a story about a friend losing money investing in ASX cannabis shares, for example, and based on this story, decide the entire share market is ‘risky’, or a ‘giant casino’ and just not worth bothering with.
This couldn’t be further from the truth – buying shares is simply investing in companies, nothing more or less. If you invest in a cannabis start-up, of course its going to be risky, whether it’s on the share market or not!
So, here are 2 ASX shares that I think would be perfect for a beginner investor.
Coles Group Ltd (ASX: COL)
Coles (as most of us would know) is Australia’s second largest supermarket chain. The reason I like Coles as a beginner stock is you can literally walk into most of your Coles stores and see how your business is running, what people are buying and all of the other things that a business owner can and should do.
It’s having this kind of attitude that I believe fosters long-term success in the share market – not finding the next big stock. Coles is also a highly defensive investment – which means there’s very little chance of it going broke in tough times (everyone has to eat, after all).
Telstra Corporation Ltd (ASX: TLS)
Another stock I think would be great for beginners is Telstra. Again, I like this stock as a starter share because everyone knows Telstra and a fair chunk of us use their services everyday – it’s not too hard to understand how they make money.
Like Coles, Telstra is also fairly defensive – how many of your friends and family would cut off their internet or smart phone if the economy took a hit? I’d wager it’s not many.
Receiving passive income in the form of dividends is also a great way to demonstrate the benefits of owning shares. On that front, Telstra pays out a decent dividend, which on todays’ prices is worth around a 4.5% annual yield. For all these reasons, I think Telstra would be a great starter stock.
Both of these companies are well-known Australian brands. Both are defensive stocks that I think would be pretty safe to hold through thick and thin. And finally, both pay a decent dividend yield to their shareholders every six months.
For these reasons, I think Coles and Telstra would be great stocks to buy as a first investment. Investing can be tricky, but if you start with the basics, you’ll do just fine over the long haul!
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Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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.
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019