Where the experts would invest $10,000

What would you do with $10,000? That's the question we posed to five of InvestSMART's experts - Ron Hodge, Alan Kohler, Paul Clitheroe, Nathan Bell and Effie Zahos. Here's what they had to say. Of course, these are not recommendations but more of a look into how the experts would invest their cash.

Ron Hodge: InvestSMART Balanced Portfolio 

I am a big believer in a 'core and satellite' approach to investing. The idea is to have most of your investments in a relatively diversified, less risky portfolio or fund, and the rest in something with a bit more spice - in other words, a greater risk versus reward trade-off. 

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We already have a fair bit of money allocated to direct Australian shares, especially through the companies my wife and I work for, so If I had $10,000 to invest, I would top up our existing investment into the InvestSMART Balanced Portfolio, because it's diversified across all asset classes. With little time to research individual stocks and other fund managers, I would rather invest in a portfolio of index-tracking ETFs that I know will do what they are supposed to do. 

Even though it's a boring option, for us it's the safest. We have been invested in this portfolio for more than five years now, and it continues to provide great returns (10% over the 12 months to 31 August 2024) with low fees. And, more importantly, coming into its 10th year it continues to beat the majority of other similar funds available in Australia. But, of course, these past returns are no guarantee of future performance. 

Ron Hodge is CEO of InvestSMART Group.

Alan Kohler: JB Hi-Fi

If I had $10,000 to invest, I would put it into a high-quality company and expect to hold it for the long term. The question of course is how do I identify a high-quality company?

Well, first it must be making a profit, and have a profit margin that's growing and is protected by a "moat" - that is, it's hard for other companies to compete with it and erode its margin. It should be making a return on equity - that is the money shareholders have invested in the business - of at least 15%, and it shouldn't have too much debt. And most of all, it shouldn't be too expensive.

Having established all that, it needs to be a company I like that I either use, buy its products, or know something about some other way. To me, investing is a bit like collecting paintings. You want to buy a picture that will hold its value, and preferably increase, but most of all you want a beautiful picture that makes you feel good when you look at it.

For example, and this is just an example, I really like JB Hi-Fi (ASX: JBH). It's a well-run business, with solid profit margins, a strong competitive position, and the shares aren't too expensive. But most of all, every time I shop there, the experience is terrific. The staff is helpful and they always have what I want.

Alan Kohler AM is the founder of Eureka Report.

Paul Clitheroe: Future Generations Global

Getting exposure to the world's markets is important and an interesting option is Future Generations Global. It is a listed investment company (ASX: FGG) in which I hold an investment.

The managers and board all donate their time and skills. In return, FGG donates 1% a year to organisations providing Australian youth with wellbeing and mental health support. This was a very substantial $5.9 million last year.

But, FGG also needs to be good for your money. As a listed fund, it will at times trade at a discount to its assets. This discount is currently around 14%. This is bad for investors needing to sell, but a nice discount for those who wish to buy. The Board has very publicly stated that it is "actively committed" to reducing this discount.

Performance has been solid, with total shareholder returns of around 19% over the 12 months to 30 June 2024. This includes a nice dividend of 5.6% fully franked. The company holds eight years of dividend coverage, a substantial 59.1 cents per share.   

Paul Clitheroe AM is Chairman of InvestSMART.

Nathan Bell: Split between 5 stocks

As someone who spends every waking moment thinking about the stock market, I'm always going to favour stocks. I would invest the $10,000 in five stocks. MA Financial (ASX: MAF) is a mini version of Macquarie Group that could be trading on 10x earnings in 2026. Mineral Resources (ASX: MIN) is only for those with strong hearts and stomachs, but could be worth multiples of its current price if it survives the lithium bust without raising capital. Amongst other assets, Infratil's (ASX: IFT) data centres are being undervalued compared to the recent AirTrunk sale. Eagers Automotive (ASX: APE) is a hidden gem with the longest track record of paying dividends on the ASX, and Visa is my international pick. It's trading on a similar valuation to Commonwealth Bank, which is ridiculous given its superior growth prospects.

Nathan Bell is Head of Research & Portfolio Management at Intelligent Investor. All four of these Australian companies are held in the Intelligent Investor Equity Growth Fund (ASX: IIGF) and we own Visa in the Intelligent Investor Select Value Fund (ASX: IISV). 

Effie Zahos: Superannuation

It's a no-brainer for me. I'd boost my super by $10,000 for a simple reason: tax perks! Despite all the tinkering, super (for now) is still one of the most tax-effective wealth strategies we have. 

When you invest in super, concessional contributions are taxed at just 15% - this is likely to be much lower than your marginal tax rate. It's like getting a tax discount on your future wealth. If you top up super with your after-tax money, you may be able to claim a tax deduction. Just make sure your contributions are under the concessional contributions cap which is currently $30,000.

But here's the real kicker: once your money is in super, the earnings - whether they're from shares, property, or other investments - are also taxed at just 15%. That's a sweet deal compared to paying your usual income tax rate.

And let's talk compounding - the longer your money sits in super, the more it can grow, and the more it earns, the less tax you pay. Over the years, that $10,000 could snowball into a serious asset for your future self. In my case, just another six years until I reach that preservation age.

Effie Zahos is InvestSMART's Chief Content Officer and Money Commentator.

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