£1000 investments

tony_sian

Hi Guys,

I was wondering if the MSE community can help me. My question is simple, I have £1000 to invest. I know its not a lot but its something I can play around with. I am a medium - high risk investor and willing to try something. Any suggestions where I could get a fairly good return?

Regards,

Tony

Aegis

rambo_rai1987 wrote: »

invest 1k in cfm 2moro. double your money or lose half your money. risk/reward ratio worth taking.

code: CFM on london stock exchange

What on earth would you recommend that for? A penny share that has already shed over half its value in the last six months, and you're suggesting it for someone who says they have a medium-high risk profile without knowing the rest of their financial situation? Utterly reckless!

To the OP: if you want to take a diversified position with your £1000, a purchase of some units in collective funds might be a good idea. That way you can invest in a sector or two that matches your personal outlook on risk. If you want medium high, then you could, for example, put half into a UK equity fund and half in a BRIC fund to try and get a balance between relative stability and reliability and the potential for large growth but higher risk and volatility.

With £1000 you're options are going to be very limited, as share purchases will have very large costs if you want to buy in to more than one company. Fortunately the unit trust approach is almost fee-free if you go through a discount IFA, so you won't be losing out straight away because of charges if you pick the right funds.

There are all sorts of threads in this area and in the ISA subforum which deal with fund selection, though I doubt you'll be looking at more than a couple at most because of the comparatively low value of your investment.

Just out of interest, do you have savings already? I ask because it's quite important to have emergency savings before getting involved in investing. Otherwise you might need quick access to the money you have invested and might end up being forced to sell at a bad time.

Anyway, good luck!

Aegis

rambo_rai1987 wrote: »

the op wants to take a medium to high-risk he doesnt not want to make a silly 10% over a year. he has stated he wants to try something. there are many shares where he could make a large profit.

What you suggested was far beyond "medium to high risk" and right into pretty much the highest risk category other than spread betting on the same shares. Also, my suggestion wasn't one that would make "a silly 10% over a year"; my own portfolio with a similar risk level has made almost 10% in 3 months without the risk associated with single-share investing into a penny share. It's still risky, but the chances of me losing everything are very slim indeed, while with a penny stock it's pretty high.

Out of interest, how do you know how much growth the OP is looking for?

i realise i shouldnt give any tips its up the OP to make his own decisions and do his own research.

Very true.

fimonkey

Just to ressurect this thread a bit (or hijack? if so apologies to OP, I can restart this thread if you wish), I too have 1K to play around with (I have 34K in savings, 28K earning 6.3% Gross, I'm BR taxpayer and 6K earning 6.3% in a cash ISA, so I'm well covered and really do want to see what I can do with this 1K).

How would I even begin knowing where to start? Do I see an IFA and take his advice? Do I see many IFA's and take all their advice? Do I read a book? (which one)?

I do look at the business pages in the weekend papers (but I rarely understand what they're about) however some names of 'unit' trusts' and 'investment trusts' are beginnnig to sound familiar.

So where should I start please?

zzzLazyDaisy

A good place to start is to log onto the Hargreaves Lansdown website, and ask for an information pack. They discount a lot of the upfront fees and some of the annual management fees, so more of your money goes into the investment.

Aegis

You're very unlikely to get much out of an IFA with only 1k to invest. With a trail comission of probably about £10 and a maximum up front comission of £50, you're not even going to be covering his basic costs!

Best bet with just £1k is to do your own research and make a decision yourself, then go through the cheapest site available for achieving your goals.

Realistically you'll be able to buy into one company's shares or 2 unit trusts at most, so you don't really have to work too hard to decide what to do, with any luck!

fimonkey

Aegis wrote: »

Realistically you'll be able to buy into one company's shares or 2 unit trusts at most, so you don't really have to work too hard to decide what to do, with any luck!

Except there's SO MUCH choice out there!!

Trusts? Funds? OEICs? Individual shares????

Aegis

Now there's the fun of it

Essentially you have to quantify for yourself what "medium-high" risk is and attempt to achieve that. For me, medium-high risk would be someone happy with ~30-40% drops in their portfolio value (well, not happy, but not panic-selling either!). Once you quantify this for yourself, you can think about what sectors you'd like to invest in, research the options and make a decision.

Did you have any sectors in mind, or were you just wanting to find something with a little risk?

caliston

flmonkey, I started with a book: The Motley Fool UK Investment Guide. The most recent edition is 2002, but in true MoneySaving style I bought a secondhand copy of the 2000 edition for 19p (+£2.75 postage) from Amazon - I notice a few people have it at 1p+post now.

TMF very heavily lean towards trackers... I then came over here and heard people like dunstonh relate the other side of the story (basically: trackers are higher risk than people like TMF make out). However the book is still definitely worth reading. You have to remember than one size doesn't necessarily fit all, and it's 5-7 years old now (so ignore any advice about technology stocks ) but it's still quite readable, though you might find the style's a bit odd.

I'm interested in books from other points of view, if anyone can suggest any...

I wouldn't bother with an IFA - for your sort of money either they won't be interested or you'll lose a big chunk of your capital in fees. However by doing your own research (reading here, reading websites, looking up data on research sites) you can learn how it works - which might be handy in future if you want to invest more than your £1000. If you don't have the time there are easier options, but you'll pay for them in risk, charges and/or lack of performance.

Aegis

caliston wrote: »

TMF very heavily lean towards trackers... I then came over hear and heard people like dunstonh relate the other side of the story (basically: trackers are higher risk than people like TMF make out).

Equally important are the distortions they come out with about the relative performances. They will go on at great length about how half of all active funds perform under the index, but neglect to mention that most of the bottom half are bank funds which most sensible investors will avoid.

They also gloss over the fact that while half of active funds may underperform the index, close to 100% of tracker funds will underperform the very same index due to optimisation errors.

Additionally, they will then claim that the charges will cause a loss of performance, while in actual fact the performance statistics are inclusive of the maximum charges you will get. This basically means that performance graphs are representative of the worst case for investing in that fund, i.e. when you get no discounts at all.

Basically I read through their article comparing trackers to active funds and was appalled.

There's no need to distort statistics to promote trackers; they already have their place in some portfolios as low cost and low maintenance investments (you don't have to keep up to date with the management team's objectives, the internal asset allocation, the weighting of specific shares, etc), but this seems to be what they have been doing for some time now.

Anyway, rant over for now!

jamesd

fimonkey, see Ok then - How do I choose a S&S ISA to get an idea of what a sector allocation is and some of the mechanics of using stocks and shares ISAs and picking funds.

Don't put all of the money into say a China or Hong Kong fund. Those will bounce up and down by as much as 10% a day and are likely to put off a beginner.