What could a $500 investment in ASX shares be worth in years to come?
Let's take a look at some examples of how much $500 invested in specific ASX shares just a few years ago would now be worth today.
$500 ploughed into popular buy now, pay later (BNPL) stock Zip Co Ltd (ASX: ZIP) just a year ago would now be worth around $4,000.
A five-year-old investment of the same amount in ASX 200 healthcare stock Pro Medicus Limited (ASX: PME) would now be valued at $3,970.
Despite the stock's recent woes, $500 of lithium miner Pilbara Minerals Ltd (ASX: PLS) shares bought five years ago would now be worth $5,642.
Of course, for every success story, there is an equally unhappy ending. Take Core Lithium Ltd (ASX: CXO), for example. The $500 invested in this lithium hopeful two years ago has now been whittled away to around $30.
But invested wisely, the wealth-building power of the Aussie share market is undeniable.
Based on historical average returns of 9.3%, and with the power of compounding, the ASX turned a broad-based $500 investment 30 years ago into around $7,200 today!
The key is to get started early, continue investing, focus on the long term, and maintain a diversified portfolio.
So, if you're looking for a solid stock to park a few hundred bucks in this November, you're in luck!
We asked our Foolish writers to give us their top picks of ASX shares to buy with $500.
Here is what the team came up with:
5 ASX shares that would make great homes for a $500 investment (smallest to largest)
- Smartgroup Corporation Ltd (ASX: SIQ), $1.04 billion
- Temple & Webster Group Ltd (ASX: TPW), $1.40 billion
- Paladin Energy Ltd (ASX: PDN), $2.18 billion
- Life360 Inc (ASX: 360), $4.18 billion
- Australian Foundation Investment Co Ltd (ASX: AFI), $9.39 billion
(Market capitalisations as of market close 15 November 2024)
Why our Fool writers love these ASX stocks right now
Smartgroup Corporation Ltd
What it does: Smartgroup administers employment management services to customers across not-for-profits, hospitals, government, and education. The company manages services such as novated leasing, salary packaging, and fleet management.
By Mitchell Lawler: I started with a $500 investment in an ASX stock almost eight years ago. Thinking back, watching the value of that stock rise over the next 12 months was probably instrumental in feeding my appetite to stick with the compounding machine.
If I was just starting out now or only had $500 to spare, I'd invest it in Smartgroup. By my rough estimates, the company is significantly undervalued at its current price, offering a potential upside of approximately 65%.
The business boasts a large net profit margin and is achieving a solid pace of growth. Moreover, at a forward price-to-earnings (P/E) ratio of about 14 times, I wouldn't be surprised to see another takeover bid lobbed its way.
Motley Fool contributor Mitchell Lawler owns shares of Smartgroup Corporation Ltd.
Temple & Webster Group Ltd
What it does: This business claims to be Australia's largest pure-play online retailer of furniture and homewares. It has 200,000 products on sale from hundreds of suppliers.
By Tristan Harrison: I think this company can grow significantly in the coming years. In FY24, it made $498 million in revenue, and it's on track to reach a goal of at least $1 billion in annual sales within the next four years.
Temple & Webster has an impressive, asset-light business model, allowing it to generate good cash flow. In FY24, the business generated $25 million of free cash flow.
I think future profitable growth looks promising. For example, Temple & Webster is using generative artificial intelligence (AI) to help increase its sales conversion and lower the cost of doing business (CODB). As the company grows, its customer proposition can improve with a larger product range, better pricing, improved data and personalisation for customers, better service, and a stronger delivery offering.
In my view, Temple & Webster looks capable of capturing more market share in Australia. The homewares and furniture segment is seeing a steady increase in e-commerce adoption, which could bode well for future revenue growth. From FY25 to 24 October 2024, the company's revenue increased by an impressive 21%.
It also has a strong balance sheet, with $116 million of cash at 30 June 2024, which allows it to fund growth plans and an occasional share buyback.
There's a lot to like about this business for the long term, in my eyes.
Motley Fool contributor Tristan Harrison owns shares of Temple & Webster Group Ltd.
Paladin Energy Ltd
What it does: Paladin Energy is a Western Australian-based uranium company with a 75% interest in the Langer Heinrich Mine (LHM) in Namibia. Paladin also holds a diversified global exploration and development uranium portfolio in Canada and Australia.
By Bernd Struben: Paladin Energy shares closed on Friday trading for $7.29 apiece, down 55% since 14 May when shares were worth $16.37 each. That's rough for investors who bought the ASX 200 uranium stock six months ago. But it means you can now buy 71 Paladin Energy shares for $500, rather than just 30 shares at the mid-May prices.
Now, the stock could still retrace in the short term. But I believe, longer term, Paladin Energy shares could soar well past their early May levels.
First, I think the decline in global uranium prices this year will be short-lived as a cadre of nations (including the United States and China) and global companies (including Microsoft) increasingly embrace nuclear energy for reliable, low-emissions baseload power.
Second, much of the sell-down in Paladin Energy shares was driven by commissioning issues at LHM. While uranium production has ramped up, this hasn't happened as fast as management forecast. But Paladin is shutting LHM down during the last two weeks of November to address these issues. And if production picks back up in the second half as forecast, so too could the Paladin Energy share price.
Motley Fool contributor Bernd Struben does not own shares of Paladin Energy Ltd.
Life360 Inc
What it does: Life360 calls itself a family connection and safety company, keeping people close to the ones they love.
By James Mickleboro: I think Life360 shares would be a great option for a $500 investment right now. I believe the technology company has a high-quality business model with a wide moat and very strong long-term growth potential.
This week, the company revealed it has a whopping 76.9 million monthly active users on its eponymous Life360 app. This was up 6.6 million from just three months ago, which demonstrates just how quickly the company is growing. And given it is still in the very early days of monetising its vast user base, the future looks very bright.
Bell Potter agrees and responded very positively to this week's quarterly update. So much so, the broker has reaffirmed its buy rating and lifted its price target to $26.75 from $22.50. This suggests there's still plenty more upside for investors despite Life360 shares rocketing over the past 12 months.
Motley Fool contributor James Mickleboro owns shares of Life360 Inc.
Australian Foundation Investment Co Ltd
What it does: Australian Foundation Investment Co, or AFIC for short, is a listed investment company (LIC) that has been around for decades. It specialises in managing a diversified and conservative portfolio of other shares on behalf of its investors.
By Sebastian Bowen: If you have $500 to invest this November, chances are you're either starting out on your investing journey, or else are looking for sturdy stocks that you can periodically invest in. AFIC fits the bill well for both of these scenarios in my view.
This listed investment company has a well-earned reputation for providing investors with a diversified and conservatively managed portfolio that pays out regular (and generous) fully franked dividend payments.
You'll typically find the bluest of blue chip stocks in AFIC's portfolio, including banks, miners, consumer staples stocks and healthcare shares.
AFIC offers a decent starting dividend yield and a long track record of healthy returns. According to a recent update, its investors have enjoyed an average return of 9.9% per annum over the five years to 31 October 2024.
Putting all of this together, I think AFIC is a great choice for a $500 investment this November.
Motley Fool contributor Sebastian Bowen does not own shares of Australian Foundation Investment Co Ltd.
The post Top ASX shares to buy with $500 in November 2024 appeared first on The Motley Fool Australia.
The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Microsoft, Temple & Webster Group, and Zip Co. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Pro Medicus and has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended Smartgroup. The Motley Fool Australia has recommended Microsoft, Pro Medicus, and Temple & Webster Group. 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. 2024