c. £100k funds, Investment Advice

Jonobo92

Hi there,

I recently posted in the 'Property' section of the forum (unable to link as I'm a new member), and was essentially advised to come here to ask for more general investment advice.

Basically, I'm graduating university in July and have £90,000 to invest, I'll be living with my brother all expenses paid and, fortunately, am also in a situation where I don't need a regular job. Also, buying my own property outright isn't necessary or needed right now, I'd really like to invest all £90k in a bid to return as much as possible, with minimal risk (naturally!).

My question, then, is really quite general: how should I invest this £90k to see the best returns?

Initially, I thought property would make sense as my brother currently owns two properties he lets out, however having had my wild price estimations (see in the original thread) debunked by those who know what they're talking about, I've begun to think more broadly about where to invest.

I'm really not very educated in business, finance and investment, and so I apologise if what I say/suggest is blatantly wrong, or if my figures are wildly inaccurate, but I'm keen to make this money grow.

I have read briefly about REITs, and with them being in the property sector, I thought they could be quite good?

All advice welcome, thanks.

londonlydia

I'm no expert, and I'm sure people who are on these pages will chip in on fuller details, but I have a similar amount invested. My personal advice would be to have a diverse set of investment and saving types, so you spread the risk. Think about savings accounts, ISAs, bonds, funds, stocks & shares, P2P, asset investments (so goods), and yes, property.

On a personal note, I've chosen to avoid property invesment myself for a couple of reasons. Firstly, I'm convinced that we will either see a property bubble burst, or a stagnation in the next ten years as Brexit occurs. Secondly, if you ever want to get hold of your cash, you have to sell your property which can take months (if at all) and the selling costs are a fair amount. So I guess I see it as too risky for my own money, even if others disagree.

Jonobo92

Hey, thanks for the personal insight, as my brother already owns two houses perhaps it would make sense to broaden our scope a bit.

I have it in my head (however misinformed it may be) that property is the best market to see returns; are there any articles/facts etc. in particular that anyone can share to persuade me otherwise?

Also, you mentioned asset investments, I'll google it myself, but can you share any examples of good ones/what they fully are?

Thanks again

eskbanker

You'll need to think about when you might need the money, as the answers will be very different between, say, keeping a large sum available for the near future versus keeping it back for retirement.

Starting off in adult life with no need for a job or a property is quite unusual and you should consider how long that's likely to last, what happens if you fall out with your brother for example?

In general, the usual advice on here is to retain an emergency fund of 3-6 months worth of outgoings in readily-accessible cash form (i.e. savings accounts) and that getting a pension started is worthwhile (may be difficult to see that at your age!). Starting a Help To Buy or Lifetime ISA is likely to give a decent return for if/when you buy a home.

Investing is worth considering for other money and diversification is key to minimise risk, so sticking it all in property is quite a gamble. Many starting out on the investment journey will use global multi-asset funds to benefit from the number of different baskets your eggs are thereby in. Typical examples include the Vanguard LifeStrategy, L&G Multi-Index, HSBC Global Strategy and Blackrock Consensus.

dunstonh

I have it in my head (however misinformed it may be) that property is the best market to see returns; are there any articles/facts etc. in particular that anyone can share to persuade me otherwise?

In some periods it is but historically it is not.

Borrowing money started to be deregulated back in the 70s. Very slowly but that is when it began. In the 90s deregulation was almost non-existent and money started to become easy and in the 2000s it went totally crazy until the credit crunch.

Property prices boomed for two reasons. Easy money and supply and demand. Easy money has gone. Supply and demand is expected to fall if free movement ends with Brexit.

The Govt has been targeting landlords with multiple tax changes as they are harming the ratio of rented to owned and are pushing house prices up quicker than is desirable. Expect that tax trend to continue.

I have read briefly about REITs, and with them being in the property sector, I thought they could be quite good?

For up to around 10% of a balanced portfolio using single sector investments and run professionally or by an experienced investor, then yes. They can be viable for that segment. However, this is jumping in at the deep end without knowing if you can swim territory.

Jonobo92

The rainy day/emergency money is away in another account, this £90k is entirely for investment however we see best.

I've been looking at the Vanguard and BlackRock asset funds, would it be wise to pick a few of these low cost options and put say £10k into each, or pick one and put all £90k in?

Also, I've been seeing all these Google adverts for 'Guaranteed 8% returns each year', are they actually as good as they seem, or is there genuine risk I won't get the returns? I'm not as interested in these as they seem fake, but out of curiosity alone I would like to know how viable/trusted they are.

bostonerimus

Firstly I would offer your brother a little towards the rent or pay some utilities bills.
Put enough in the bank to cover 6 months spending as an emergency fund. Then decide what you want to do with your money. If you are going to need it in a couple of years for a mortgage down payment put that in a help to buy cash ISA. Put the rest in a low cost multi-asset fund......maybe 100% to 80% equities as you are so young.

bostonerimus

Jonobo92 wrote: »

The rainy day/emergency money is away in another account, this £90k is entirely for investment however we see best.

I've been looking at the Vanguard and BlackRock asset funds, would it be wise to pick a few of these low cost options and put say £10k into each, or pick one and put all £90k in?

There's no point duplicating an asset mix in two funds, I'd start with a single low cost multiasset fund from either Vanguard, Blackrock, HSBC etc to keep things simple. If you feel you want a different allocation at some time buy other funds to adjust it. Obviously use an ISA as much as possible.

Also, I've been seeing all these Google adverts for 'Guaranteed 8% returns each year', are they actually as good as they seem, or is there genuine risk I won't get the returns? I'm not as interested in these as they seem fake, but out of curiosity alone I would like to know how viable/trusted they are.

If anyone guarantees you 8% return just walk away.......no one can guarantee that.

ViolaLass

OP, how would you feel if you invested in something and the value went down by 5%? 10%? 25%?

All the options you've mentioned pose some risk to capital but you've talked about wanting 'minimal' risk.

bigadaj

Jonobo92 wrote: »

The rainy day/emergency money is away in another account, this £90k is entirely for investment however we see best.

I've been looking at the Vanguard and BlackRock asset funds, would it be wise to pick a few of these low cost options and put say £10k into each, or pick one and put all £90k in?

Also, I've been seeing all these Google adverts for 'Guaranteed 8% returns each year', are they actually as good as they seem, or is there genuine risk I won't get the returns? I'm not as interested in these as they seem fake, but out of curiosity alone I would like to know how viable/trusted they are.

Ignore teh 8% return ads, they are targeted at a high but not unfeasible return. The irony is that 10-12% is achievable with risk in p2p and many equity heavy portfolios will have returned 25-30% over the last year or eighteen months. That doesn't mean that those assets will continue to return that, and may well fall over the next period.

Probably best if you do some reading to gain understanding, the monevator website and smarter investing by Tim hale are often referenced as good starting points. Both are passively biased but guve a good summary of the principles behind investing.

Audaxer

bostonerimus wrote: »

There's no point duplicating an asset mix in two funds, I'd start with a single low cost multiasset fund from either Vanguard, Blackrock, HSBC etc to keep things simple.

I don't see a problem in splitting an investment between 2 different passive multi asset funds. Forinstance Vanguard LifeStrategy and HSBC Global Strategy have a different mix of funds and weightings. In my opinion its better not to put it all, especially a large investment like £90k, into the one fund.