Serious Investor V Wannabe Millionaire

The_Hurricane

Hi All,

If 2 people one an aspiring millionaire and the other a serious investor - each wanting to maximse their money. Both are open to moderate risks and both have £5000, in today's climate how would each person use their money?

Lets say both individuals have fully used their ISA allowance for the year.

srcandas

Wannabe millionaires should go to Indonesia and change their £5000 to Rupiahs

Serious investors should consider their complete portfolio before placing the £5000

Seriously I assume you are suggesting that the 'Wannabe' is a gambling dreamer while a serious investor looks for an above average but achievable return?

If I had £5000 and if I didn't make a million my life would be over I'd go for a 3 horse 200 to one accumulator.

With an extra £5000 on top of my portfolio as an investor I put it into funds with Chinese exposure.

bowlhead99

Impossible to say how they would each use their money.

Some wannabe millionaires would have an entrepreneurial side and start up a small business. This would be more than moderate risk but may not stop them doing it.

Based on the information given, the only thing we can presumably say about the two characters is that one is a serious investor and one is not a serious investor.

The one that is not a serious investor would either

- spend the money on something non-investment-related;
- invest it in something above their moderate risk tolerance without realising it in the pursuit of higher returns; or
- fail to capitalise on an opportunity to make a decent contribution towards that million aspiration by putting it in a low yielding account well below his risk tolerance, while saving up for that flash car after 10 more years of getting 5000 spare cash.

Conversely the serious investor would consider his existing assets and invest in some sort of fund which either filled a hole in his portfolio or matched his views of the best risk-rewards currently out there in the global economy. The specific fund might be moderate risk or low risk or high risk but by the time he considered it at a high level with his other assets and life choices he would feel he had an overall risk level in line with his aspirations and goals.

If this question is another 'how shall i invest 5000', see the millions of other threads on this topic and understand the paragraph above which sheds some light on why we can't make a recommendation that will work for you.

Presumably the serious investor is more likely to put the 5000 into a pension to increase his current year's take home pay, whereas the WM really wants to get his hands on a million of cash which is accessible before 55, and so would prefer putting it in this year's stocks and shares ISA or next year's when available in April 2013. Once he got his million he might make a larger pension contribution that year instead and take the tax relief then (on a larger sum).

N1AK

The_Hurricane wrote: »

Hi All,

If 2 people one an aspiring millionaire and the other a serious investor - each wanting to maximse their money. Both are open to moderate risks and both have £5000, in today's climate how would each person use their money?

Lets say both individuals have fully used their ISA allowance for the year.

You won't become a millionaire by investing £5k so they'd to take substantial risk (use the money to start a business, invest in goods, high volatility share trading).

I can't answer for the serious investor because you defined them the same as the wannabe (same risk profile).

Jegersmart

The_Hurricane wrote: »

Hi All,

If 2 people one an aspiring millionaire and the other a serious investor - each wanting to maximse their money. Both are open to moderate risks and both have £5000, in today's climate how would each person use their money?

Lets say both individuals have fully used their ISA allowance for the year.

Don't feed troll.

imho

J

grey_gym_sock

N1AK wrote: »

You won't become a millionaire by investing £5k

oh, you might ... 10% return per year for 56 years would do it ... (the age of the aspiring millionaire wasn't specified).

you will say 10% is unrealistic for a long-term average return ... but it all depends on inflation ... if inflation averages 6% (which it could - not saying it will), then 10% nominal return might be achievable.

of course, a million would then only be worth about £40k in today's money ... but the aspiring millionaire would have learnt a valuable lesson about the illusory nature of nominal returns, which they could tell to their grandchildren, who would completely ignore it.

lvader

Someone in the US managed to turn 20k into 2 million in a few years.

http://www.bloomberg.com/video/this-guy-turned-20k-into-2-million-you-can-too-piX08ijaQ7WeFEyhxEau8g.html

grey_gym_sock

the url (-you-can-too-) was enough to put me off watching that, but if that's about riskier trading, then it's something that might work, but is much more likely to lose your initial stake. lot's of ppl try it, most lose money.

lvader

It's a Bloomberg video, not really a self promotion type of thing. He invested in stuff like Lionsgate after hearing about Hungergames.