Higher risk for £10k what would you do?

Linton

brasso wrote: »

5 years is the usual mantra.

2-3 years is no less arbitrary. Where will your 16% gain investment be in 3 years? Who knows. So 1 year is "way too short" but 2 years is just fine?

Disagree. A sensibly diversified portfolio would be expected to increase in value over time despite intervening falls. The longer time you give it the more likely that you will be in significant profit at the end. So if you set up a portfolio that barring Armageddon would be expected to lose 20% in a bad year 5 years would be a reasonable period to make it pretty likely that you will overall make a profit. Much less than that and you are into the gamble of losing out if you hit a bad year.

However 5 years isnt a hard a fast rule, its purpose is to set the punter's expectations on what is required for investment rather than gambling given some sort of fixed deadline. If anything in my view its a bit low.

trailingspouse

We did something similar a few years ago - we'd covered all the 'sensible' bases, so we decided to put £1000 into premium bonds, and £1000 each into shares. The premium bonds did zilch (but unlike the lottery, at least you get your money back). We bought the shares through Hargreaves Lansdowne, and we did it really just as a learning exercise. We made some spectacular gains (at one point Bank of Ireland had increased by 80%), but we also made spectacular losses. What we found out was that, yes, it's important to know when to buy - but it's even more important to know when to sell. And you have to watch what's happening. Every day. BOI shares fell through the floor the week we happened to be on holiday. We didn't look, we didn't know - if you're not prepared to keep your eye on the markets, and if you're not prepared to lose the money, then don't do it.

Jegersmart

Grouchy wrote: »

Having come into some money and placed most of it 'sensibly' I would also like to invest around £10k in higher risk (but not silly) options but for a maximum timeframe of 1 year. I have read the Tim Hale book as suggested on here to me in the past, found it useful, but find he is best at safe-ish investment advice.

The way I'm looking at it is this is a bit of money to dip my toe in the water of a potential higher return options and at the same time learn through experience of investiment money which is not just in 'normal' savings ways. I won't be relying on income from this money for the year. I am also thinking (perhaps wrongly?) that is might be fun/interesting.

What would you do in my situation or what are the best options for me to consider?

Thanks in advance.

If we look at the markets as a whole, one area which has been taking a pasting for a couple of years or more is gold miners' equities. This has led me to entering some positions in funds such as Investec Global Gold very recently, and if things go my way I will probably add as I think the poor performance of this sector is way overdone. This is my usual way of allocating funds, with an initial tranche to test the water and building a position from there. I am looking for 20% gain or so this year - although this would not be a long term holding for me necessarily - more for the next 3-6 months or so depending on how it goes.

In terms of other areas, it is hard to see any obvious areas of focus in the shorter term imho. I have been heavily into Japan for over 6-7 months now but have reduced my holding over the past month or so to under 5% of portfolio (from 25%) and I have been doing the same with China which was a tip in late Q3 last year - i.e. I have/am taking profits and not chasing these further although I do retain some allocation. I am not chasing US equities, and am light Europe but may look to add in Q2 (to Europe) if price action supports.

No one can give you advice per se, but I would rather tell you what I am doing and if this fits with your own view or risk profile then it may be of interest.

If you fancy another idea, I have recently taken a long position in XSPS.L which is a short S&P500 ETF. i.e. the value of one's position falls if the S&P rises. I am expecting some pullback on the S&P 500 in the next month or two, and ultimately more so towards the end of the year so this position speculates that the S&P500 will fall although I will probably hold for a 6-7% gain in the short term and re-enter later as I think we may see some new highs again over summer.

Feel free to ask any questions, as I said this is not advice just letting you know where my interest is at the moment in order to introduce some ideas to you.

J

Jegersmart

brasso wrote: »

My SIPP is very dull and 'safe' but I use my ISA to try different, riskier things.
.

Interesting approach, I personally go safer with ISA's as it is money I may well need at some point in the short to medium term - the SIPP's are where I take much more risk as there is a much longer timeframe to play with and for any bad decisions to recover.....

J

gkerr4

fun times and you are fortunate to be in this position.

I totally agree with Brasso - the whole "its only a year so stay in cash" is rubbish. of my current portfolio and the 27 stocks + 1 fund held within, i have only held 2 items (1 stock and the fund) for longer than a year.

The first thing i would do if you can do so, is open an S&S ISA account - i use iii.co.uk but there are many others and pay the full £10k into it. That way, if you do make some good gains, you can be assured they are tax free.

then i would read books and more books and go feel your way in the market - i recommend "the naked trader" by robbie burns as a good starting point.

Do the research, find the companies and buy then through the isa platform.

One thing - and this is covered in books such as naked trader - exercise good financial management - i.e. exercise stop losses - you don't have time to wait for a "recovery" if one of your shares turns south.

best of luck and try to enjoy it.

Grouchy

Thank you for the replies, especially to those who took the time to give a reasoned response and shared a bit of their own experience and grasped my position better than others.
Good pros and cons so much to think over and investigate.

Cheers.

gkerr4

buy the book and make your own mind up. do some reading and see if you are motivated enough to do the hours of research a week. Jim cramer - a famous US hedge-fund manager turned CNBC's "mad money" presenter (good show btw - you can get the video podcast every night through itunes if you are interested) - claims it takes an hour per week per stock holding to monitor your investment + more time to research "new targets" if you a turning them over fairly often. A lot of work, but challenging and intellectually stimulating - sometimes frustrating, but rewarding in more ways than one - and you might even make a few quid!

best of luck.

brasso

Jegersmart wrote: »

If we look at the markets as a whole, one area which has been taking a pasting for a couple of years or more is gold miners' equities. This has led me to entering some positions in funds such as Investec Global Gold very recently, and if things go my way I will probably add as I think the poor performance of this sector is way overdone. This is my usual way of allocating funds, with an initial tranche to test the water and building a position from there. I am looking for 20% gain or so this year - although this would not be a long term holding for me necessarily - more for the next 3-6 months or so depending on how it goes.

In terms of other areas, it is hard to see any obvious areas of focus in the shorter term imho. I have been heavily into Japan for over 6-7 months now but have reduced my holding over the past month or so to under 5% of portfolio (from 25%) and I have been doing the same with China which was a tip in late Q3 last year - i.e. I have/am taking profits and not chasing these further although I do retain some allocation. I am not chasing US equities, and am light Europe but may look to add in Q2 (to Europe) if price action supports.

No one can give you advice per se, but I would rather tell you what I am doing and if this fits with your own view or risk profile then it may be of interest.

If you fancy another idea, I have recently taken a long position in XSPS.L which is a short S&P500 ETF. i.e. the value of one's position falls if the S&P rises. I am expecting some pullback on the S&P 500 in the next month or two, and ultimately more so towards the end of the year so this position speculates that the S&P500 will fall although I will probably hold for a 6-7% gain in the short term and re-enter later as I think we may see some new highs again over summer.

Feel free to ask any questions, as I said this is not advice just letting you know where my interest is at the moment in order to introduce some ideas to you.

J

Interesting -- thanks for taking the time to post the detail, and the rationale. Investec Global Gold looks interesting. I've invested previously in Randgold, and I've often had a position in Gold ETFs, and I recently bought some of the real heavy physical stuff. But the Investec fund looks like it might be a good choice to spread the risk a bit, and the recent price dip is appealing...

InvestmentIdeas

Here is my experience

ATSBullion
Great service and happy to deal with fractionals or big deals on the phone. No online ordering service so you need to call to get a lock in price based on spot. I found them expensive but probably due to their fancy place they at the Savoy in London. Might be worth a visit if you live in London.

Reflexecogroup

Quality service from UK postage from Germany. Lots of different coins and they buy back aswell and the service is great. VAT Silver is from 7% to nil on storage as you know so Silver is expensive regardless of where you get it. Min order £200 plus postage. Bank transfers only. Track order online. They now stock old US coins but I dont see the atraction of those living in the UK, no offence but silver or not ill find them difficult to trade.

bullionbypost
Amazing service, next day delivery if they receive funds by 3pm. No minimum orders. Prices updated online so you get true price plus their markup. Only deal with bank transfers.

bullionuk
Great service, I think their stock comes from the same place as coininvestdirect. Same packaging and warehouse stamps all in german. Accept Direct Debit and Credit Cards if you wish! No minimum order but they add a surcharge for anything under £200. Track order online

weightoncoin
Recently purchased a few specific items form here. Great service from a shop, personal Emails on location of your goods.

I have not found a bad dealer to be honest. Youll need to check online prices obviously and their markup does vary a little a bit.

I suggest you fill your boots before Jan when VAT is 20% as some one else mentioned

if you are consider investing in gold or silver here is a help full guild
Precious Metals Investing For Dummies

From Precious Metals Investing For Dummies by Paul Mladjenovic
Before you invest in precious metals, ask yourself some questions to understand what kind of trading style you have and define your trading objectives. Use proven investment strategies to manage your risk and understand the types of investing you can do in precious metals based on risk. Also ask your potential investment broker some key questions during an interview.
Questions Before You Begin Precious Metals Investing

Some investing questions can only be answered by your own preferences and trading objectives, not by research or professional guidance. Before you begin trading in precious metals to meet your financial goals, address the following issues:

• How much “risk” capital will you be “playing the trading game” with?
• What is your outlook on the asset in question (bullish, bearish or neutral)?
• Will you be focused in a single specialty or diversified in different assets (such as stocks, options, futures or in different industries or commodities)?
• At what point will you enter a trade? What signals will you use (such as technical indicators) as your entry points?
• How long will you stay in your position? Will it be a fixed time period or until a particular event occurs (such as when it hits a certain price)?
• Will you be doing any hedging (a way to reduce risk by having positions in your account that go up if your main positions go down.)? If so, what kind of hedge?
• What will you do if the position goes down in price during your time period? Buy more or get out?
• If you buy more at the lower price, what will you do if the asset’s price goes down even further? What price level or loss percentage will you tolerate before you decide to cut losses?
• At what point do you cash out profitable trades? Is there a specific amount or is it based on market events (such as technical indicators or news from the industry)? Will your advisory service or software tell you?
• At what point will you say “I can’t take it anymore! I’m getting a job!”

Investing Risk-Management Tools

Risk is necessary for investment success and knowing how to manage risk when investing precious metals is something that you can profit from. Try these proven strategies when investing:

• Buy the dips. If you bought what you think is a great stock and its price drops, if possible buy some more. If your research and logic tell you it’s still a solid investment, buy some more. Ultimately time will pass and the odds are good that will rise, and you'll profit from having bought more.
• Keep cash on the sidelines. Have some money sitting somewhere safe, liquid, and earning interest waiting for an opportunity. If you have a chunk of cash you're reading to invest, don't plunge it in all at once. Invest half now and stagger the rest in over a few weeks or a few months.
• Utilize stop-loss orders. The most commonly used tool for keeping your portfolio’s value intact is the stop-loss order.
• Utilize put options. Put options are a great way to protect your investment during corrections or bear markets.

Managing Risk when Investing in Precious Metals

All types of investing involve risk, including precious metals. This chart shows some of the major choices you have for investing in precious metals based on risk:
Type Relative risk level Most common direct type of risk Bullion coins and bars Low Market, physical Numismatic and collectible Medium Fraud, physical Major mining companies Low-medium Market, political Midsize mining companies Medium-high Market, political Junior mining companies High Market, political Mutual funds Low Market, political Exchange traded funds Low-medium Market, political Futures Highest Market, exchange Options: covered call writing Low Market Options: buying calls and puts High Market
Interviewing a Futures Broker

Unless a family or close friend refers someone you can trust to do your investing, you’re going to have to research some investment brokers. Ask these questions which merit some answers:

• How many years of experience do you have working futures? You would like three or more years (but not 87).
• Do you have an area of futures that you specialize in? Some brokers specialize in metals, for others it is currencies or grains. Make sure they have proficient knowledge in your desired markets.
• Does your approach embrace fundamental analysis, technical analysis or a mix of both? You should know something about their knowledge of these areas and what they favor as an approach.
• Do you have references such as satisfied clients?
• What size account are you comfortable working with?
• What are your firm’s requirements for margin? Can you give me some examples of how margin would work with my account?
• What are the commissions and fees and what services are provided?
• What is your track record (provided they have done discretionary trading for clients)?
• How are disputes or concerns handled at this firm?

you could also consider investing in Africa
Ghana was among the top-ten best economic performers in Africa between 2008 and 2012, according to the 2013 Economic Report on Africa released March 25, 2013.
With an annual gross domestic product (GDP) growth rate of 7.4%, Ghana was number two in West Africa after Sierra Leone whose annual growth rate was over 9%, figures in the report showed.

JohnRo

InvestmentIdeas wrote: »

you could also consider investing in Africa
Ghana was among the top-ten best economic performers in Africa between 2008 and 2012, according to the 2013 Economic Report on Africa released March 25, 2013.
With an annual gross domestic product (GDP) growth rate of 7.4%, Ghana was number two in West Africa after Sierra Leone whose annual growth rate was over 9%, figures in the report showed.

The positive correlation between GDP growth and equity return is practically none existent, sketchy at best.