Stocks, P2P or Angel Investing

lcfcstephen

Im asking this question because its something I've been thinking about, not necessarily because I would do this. But we will use me as an example and case study as thats easiest.

I have a steady job, save into a pension,have enough money for a deposit when I earn enough to get a mortgage, but am also saving into a HISA too, I have savings spread over high interest current accounts, and other savings accounts. However I still have money at the end of the month which could be used better.

If someone in that position wanted to 'invest' in something else what would be best? From what I can see there are three options (ignoring the lottery for example) regular investing, angel investing and peer to peer lending.

So thinking about putting away lets say £50 a month what would be best.
Peer to peer gives 'guaranteed' returns of a decent interest but is risky as it is possible to lose it
Regular investing is risky too and is more 'skilled' in terms of picking which ones to invest in with respect to whether theyll go up and dividends too.
Angel investing probably gives the biggest returns but is also the riskiest as the comp at could go bust, but generally investments increase quite a bit, and there can be bonuses attached too.

So if you had a spare (say) £10-100 to invest where would you choose to invest it and how?

eskbanker

The starting point for many, including myself, looking to go beyond cash is multi-asset funds that offer a low-cost means of diversifying to minimise risk (when compared with trying to pick individual stocks or single sector funds). Vanguard LifeStrategy funds are often recommended on here but other equivalent options are available from the likes of L&G and Blackrock - read up on passive investing at sites like Monevator and Motley Fool.

Or go and ask Claudio Ranieri as everything he touches seems to turn to gold just now!

Dan83

I use P2P, I only have a small amount in it, I wouldn't bother unless you have a big sum. You can loose with P2P nothing is guaranteed.

Open a savings account, there is some out there pay 6% interest and save in that, your money is guaranteed in that.

Khrisjun

Hi,

Just checking - Are you already using Regular Savers such as from first direct or HSBC and getting the 6% interest?

Personally im currently utilising Peer-to-Peer via FC and propertypartner for part of buytolet investing, both are performing well but i have had a number of loans default on funding circle - This has reduced my actual return to ~7%. Property partner im using because there dividends and although only ~3-4% this will be tax free as i will hit the cap on tax free savings income next year.

Ive used Crowdcube for startup investing but ive drawn a line under that, im happy to accept slightly less potential returns for the ~5%+ after tax im achieving with my range.

bowlhead99

Of the three, forget "angel investing". Proper business angels are typically high net worth investors who have the time and inclination to evaluate businesses and provide them with capital to help them grow. It can be high risk, but lucrative if you get it right.

For a spare £50, rather than £50,000-500,000 it can't possibly be worth you investing your time in evaluating a business plan of the scant information that a business is willing to share with you.

It can only be a 'bit of fun' and is probably no more lucrative than visiting a casino where you might win some money, might lose some money, but overall if you play the game enough times you will generally lose.

In a casino the reason that overall you will lose is that the odds and rules of a roulette wheel favour the house. In angel investing the reason that overall you will lose is because you are not an expert in evaluating business models based on limited information and the return on £50 is not enough to make it worth your while to become one, even if it were possible to do so.

If you have "the long term" to play with, then picking a multi-asset investment fund on a cheap DIY fund supermarket platform, or joining a monthly investment plan of an investment trust with a good track record which lets you invest directly via the fund management company without needing a DIY investment platform, would seem to be a decent thing to do.

I am less of a fan of P2P but the concept is that it can give you a return better than actually-guaranteed bank savings accounts, but with lower volatility than equity investments because it's a fixed rate loan to someone (assuming you get paid it back) rather than ownership of a business

masonic

Of those options, most people who have a long investment horizon should prioritise investing in the stockmarket (e.g. through one of the multi-asset funds mentioned above). P2P can have a place in someone's portfolio, but it wouldn't normally be a very significant part - say 5-10% of their overall investments, perhaps a little more if they are comfortable with the risks.

BananaRepublic

Shares would not be worthwhile, dealing costs would reduce profits, and it is hard to diversify with such a small sum. And you need to do your research, not easy by all accounts. As said above, a unit trust is a better bet, they do the research, and spread the investments over many companies, thereby reducing risk. A passive (tracker) fund is the safest bet, but active funds can give higher returns, although most underperform trackers.