ASX top 20 or ETFs? Where I'd invest $10k right now
The Trump tariffs saw a disastrous start to 2025, as the All-Ordinaries Index fell from February, causing many investors to become nervous, with the market down 12% by April and looking weak. Smart investors, realising
that the sky was not falling, saw this as an opportunity.
They responded strongly, taking the Australian market to new highs, in a 26% turnaround.
Currently, the All-Ordinaries Index is up more than 8% for the year and looking bullish.
The rise has been driven mostly by the top 50 stocks, with communication services being the best sector, rising more than 16%, closely followed by consumer discretionary up more than 15%. Industrials, utilities and financials have also performed well this year, all up more than 11%.
Retail investors have come out in force chasing returns, as the standout indices have been emerging companies, up more than 18% and small ordinaries up more than 17%.
As a stockmarket educator, I regularly see mistakes being made by investors getting into these more speculative areas. I understand it, because cost-of-living pressures have caused these greed-fuelled rises to occur.
Investors are acting through FOMO and herd mentality, as they falsely believe they will make more from lower priced stocks. Sadly, we see many achieve the opposite as they fail to properly understand what they are investing in and how to manage risk.
Sectors to watch for growth over the next six months are materials, energy, consumer staples and IT.
For those chasing dividends, financials will continue to be a steady performer, as will real estate.
Where I would invest $10k
Investors with a little capital often tell me that they don't have enough to make investing worthwhile. This short-term thinking is detrimental to their success, as history proves it is not where you start that matters, but where you end up.
Investing $10,000 is simple and can reap good rewards if some basic rules are followed.
When doing research for my first book, I found that investors could easily beat index-tracking funds over 10 years by directly purchasing 10 stocks from the top 20 ASX stocks by market capitalisation.
My research included a stockmarket crash and showed that it did not really matter which 10 of those stocks you had, just that you held them for 10 years.
My suggestion is to forget about index funds or ETFs and invest $1000 directly in 10 different ASX stocks within the top 20. You will have fewer fees and make more profits.
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