How I’d invest $20,000 in ASX shares today if I had to start from scratch

I believe that investing in (ASX) shares is one of the best ways to improve our finances and grow wealth over time. Starting from scratch may be a daunting prospect for a beginner investor, but I believe there are some names that could be good picks for the long term.

Shares have the ability to produce attractive compounding returns. In other words, growth on growth over multiple years. Of course, there’s always the chance that in any given year there could be a market slump. The current volatility we’re seeing is an example of that. The COVID-19 crash was another example of a market decline, but that also demonstrated how markets have typically recovered over time.

I view market declines as opportunities to buy businesses and assets at cheaper prices. When I go to the supermarket, I’d prefer the products priced at a discount rather than being fully priced. For me, it’s a similar thing to investing. I’d rather invest heavily when share prices are down.

In my opinion, the current market decline means it could be a good time to invest if I had to start a portfolio from scratch. With that in mind, if I were given $20,000 to invest in ASX shares, this is how I’d do it:

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

I would invest $4,000 into Soul Pattinson. For me, this investment house business can be an ultra-long-term investment (it’s already over a century old). It has a diverse portfolio across a range of industries like telecommunications, resources, property, building products, agriculture, and so on.

I’d make it my biggest allocation because I think it can provide stability, long-term growth and growing dividends.

Wesfarmers Ltd (ASX: WES)

Next, I would put $3,000 towards Wesfarmers shares. Wesfarmers is another conglomerate, but it has a more focused portfolio. Hardware business Bunnings is the key division, which makes big profit for Wesfarmers, but the ASX share also owns other quality businesses in retail (Kmart, Officeworks, and more), healthcare (Priceline), energy and fertilisers (WesCEF), and so on . I like that it can, and does, buy and sell businesses to improve its portfolio.

I’d like to put $2,500 into Airtasker shares. I believe that the local services marketplace business has a very promising future. It’s generating growth and making rapid gains in the large markets of the UK and US.

It’s one of my preferred ASX growth shares and I think it’s doing the right things to succeed in the long term. Nothing is guaranteed, but I think it could be a much bigger and more profitable business in a decade from now if it keeps growing its revenue at a double-digit rate.

VanEck Morningstar Wide Moat ETF (ASX: MOAT)

I think that the MOAT ETF is one of the best exchange-traded funds (ETFs) on the ASX. I’d put $3,500 into this choice.

It’s an actively managed portfolio focused on US businesses that have strong competitive advantages which are expected to endure for many years to come. Businesses are only added to the portfolio if they are viewed as good value. The ETF has performed well, with the MOAT ETF unit price almost doubling over five years. I also like the geographic diversification the ETF would add for Aussies as well.

Pilbara Minerals Ltd (ASX: PLS)

Pilbara Minerals is an ASX lithium mining share I’d put $2,000 towards.

While it’s not as cheap as it was in June 2022, I’m bullish about the long-term of Pilbara Minerals. Not only is it benefiting from very high lithium prices – which could stay relatively high as electric vehicle and battery demand grows – but it’s also working on being involved with more of the lithium value chain. I think this is very promising for the future profitability of the business.

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price has dropped around 50% in 2022. I’d want to put $1,500 towards it because I like how the business is investing in various ways to give great customer service, including its virtual reality and augmented reality technology. The online model can come with better profit margins and more rapid scaling than a brick-and-mortar business could achieve.

After its fall this year, I think it’s an opportunity. I like its expansion into other areas like home improvement. Scale should also help profit margins in the future. Year over year, it’s growing quickly.

Betashares Climate Change Innovation ETF (ASX: ERTH)

This ETF is about investing in a portfolio of global businesses that are aiming to help the world decarbonise or become greener and sustainable in some form.

I’d want to put $1,500 into this one because I believe the growing desire of societies to reach net zero in the coming decades will translate into growing revenue and earnings for the businesses making that greener future happen.

Bailador Technology Investments Ltd (ASX: BTI)

This is an investment company that purely invests in small (but rapidly growing) technology businesses. I’d want to invest $2,000 into this one.

It’s looking for private tech businesses that have plenty of growth potential, international revenue, and have good unit economics. The Bailador investment team has been effective in finding those opportunities. I’m backing them to continue to find good opportunities, while the introduction of a regular dividend is also attractive to me.

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