Want to invest 2k, where do I start?

steady5

Hello fellow spondooliesavingexperts. I come in search of advice. I'm a complete beginner when it comes to investing but now's as good a time as any to start learning.

I'm looking to invest 2-3k but need some pointers on where to start looking. Have a relaxed attitude to risk and in terms of timescale I'm thinking fairly long-term, i.e. 10-15 yrs. I've already got 35k safely tucked away in a fixed savings account plus a 15k ISA I don't want to touch. That's enough savings for me so I'm looking to invest the few thousand currently sitting around earning 0.1% in a poxy HSBC saver.

Everyone has to start somewhere but how exactly did you start off in the investing biz? Do most people start off paper trading or just get stuck in with fairly small amounts to start off with? Also, it's a bit of a 'how long's a piece of string' question but how much do people generally split between savings and investments? For me it'll be 5% investments and 95% savings to start with but is a 50/50 split the way forward?

DiggerUK

@ Steady5
At the time scale you are talking about I would recommend you look at gold bullion, or UK gold coins.
But do your homework first.
Even in today's economic climate it has proved a good investment.
I don't treat gold as a speculative commodity, it's a way to preserve your long term savings.
Good luck.

adambro

DiggerUK wrote: »

@ Steady5
At the time scale you are talking about I would recommend you look at gold bullion, or UK gold coins.
But do your homework first.
Even in today's economic climate it has proved a good investment.
I don't treat gold as a speculative commodity, it's a way to preserve your long term savings.
Good luck.

He's said he has a relaxed attitude to risk so I presume he's prepared to take a reasonable level of risk in return for a higher potential profit so I doubt gold is going to be what he is looking for.

Hatone

I recommend investing in Asia, particularly in China.

With a long term view of 10 years as you said, China has the best prospect of delivering high yield returns. It is a nation with plenty of growth left it in.

a7man

Open a Stocks & Shares ISA and invest in the various funds available. You will be looking at a mix of 2 or 3. If you want high risk then emerging markets might be a good basis for one of the funds.

If you are v relaxed and dont mind losing 50%+ of your value then you will be looking for funds with a high equity content for maximum returns (& minimal investment in cash, fixed interest, property etc).

a7man

In answer to you investment/ saving split, this varies hugely from person to person. A high cash % of a portfolio is generally for people with short term goals or extremely risk averse. If you are saving for something in particular over a longer period a larger inv % will probably be more beneficial.

dunstonh

Have a relaxed attitude to risk

What is that in actual loss figures. At what point do you get cold feet and pull out? 10%, 20%, 50%, 80% etc?

steady5

With a long-term view in mind I'm hoping to avoid the cold feet/pulling out stage(s). Having said that, if losses start to approach 50% you'd be a fool not to reassess. It goes without saying (although I'll say it anyway) that I won't be investing anything I can't afford to lose.

Thanks for the replies so far. I'm not that keen on gold but interested in China and emerging markets, will look further into those. Cheers Hatone and a7man

dunstonh

With a long-term view in mind I'm hoping to avoid the cold feet/pulling out stage(s). Having said that, if losses start to approach 50% you'd be a fool not to reassess.

That puts you at medium/high then. Twice in the last 10 years you would have seen near 50% losses on a typical medium/high spread.

I'm not that keen on gold but interested in China and emerging markets

China and emerging markets are above that medium/high risk position. Both in the potential 90% loss range. These are sectors that you typically have as a small part of your overall portfolio. Not a large chunk of. However, in your case, £2 is only a small part if you include your cash to counter it.

Hatone

dunstonh wrote: »

China and emerging markets are above that medium/high risk position. Both in the potential 90% loss range. These are sectors that you typically have as a small part of your overall portfolio. Not a large chunk of. However, in your case, £2 is only a small part if you include your cash to counter it.

Yet I don't buy with the whole ''small part of your portfolio'' or advocating wide diversification in order to spread the risk.

An investor will tell you, wide diversification is for investors who don't know what they're doing. The whole point of investing, is to selectively pick and allocate stocks that are likely to maximise returns through careful analysis and research.

A wide diversification portfolio doesn't do that, and you're likely to have stocks doing better than others when the whole point is to have ALL stocks doing well, no matter how small the diversification is or the state of the economy. A large part of my portfolio invests primarily in Asian equities - the balance sheets of many Asian companies are far stronger than those in the West and have better access to capital. Growth is also a priority, unlike developed countries.

An IFA will never tell you that and most average-Joe investors will stick to the ''common stocks'' and believe in ''wide diversification'' as the only way to prosper.

As of now, I wouldn't touch property, UK or European equities for at least 20 months and yet many typical wide diversification portfolios advocate all these kind of stocks. The only UK equity worth investing in is banks because they're undervalued and dirt cheap.

Bearing in mind, I monitor my funds/shares daily, so I can pull them if I suspect anything negative that could drive down the value of my stocks.

dunstonh

An IFA will never tell you that

Because the FSA has shown that it will take action against advisers that do not give suitable portfolio advice that is in keeping with the client ability to understand. Single sector investing is higher risk and a common mistake by newbie investors is to go into fashion investing or pick areas above their risk profile. If an IFA was to advise someone to do that then its just an upheld complaint waiting to happen.

Its also not the role of an IFA to be doing that sort of investment.