I have about £4k that I would like to invest. What's the best way to go about it here please?
I understand that passive investment is the way to go and I'm interested in that but I'm not sure where to start from.
I started reading the book 'Investment Demystified' but I got busy about half way through and I'm not sure that I want to continue it. I also understand that 'Smarter Investment' is a good book to read. The issue is that the sooner I can get this money out of my account, the better for me. I would love to invest it as soon as I can without having to read 300 pages.
Any quick guides or recommended articles/blogs that you can point me to please?
Thanks!
**I do plan to read those books later, just not right now.
Posted Dec 28, 2018, 8:50 PM UTC
112
It’s probably not a good idea to invest the cash, unless you understand fully what you’re getting yourself into. Educating yourself will save you from making costly mistakes that could wipe out a significant portion your investment. If you don’t have the time to educate yourself, maybe you need to pay for the help of an adviser to hold your hand, but for £4,000, this wouldn’t make sense.
There are a lot of unanswered questions, like why would you like to invest? what’s your timeframe? What would you like to invest in? Do you have any debts? Do you have an emergency fund? What’s your risk appetite? etc
However, there is a lot of useful information in the sidebar which you can use as a starting point.
Hmm, thanks.
I just don't want my money to be idle. I want it to maximize it as much as I can.
I have no debts.
Ideally, I don't want it to drop below that 4k whenever I need it.
Thanks a lot for your time!
You’d need to be comfortable with not accessing this cash for 5+ years to give yourself a decent chance of making a return on your capital. You should consider investing in a globally diversified index fund with extremely low fees, such as the Vanguard global all cap directly with Vanguard for the low brokerage fees.
Hmm, how much of a return am I looking at?
Looking at the FAQ, I think I might just have to put my head down and read a book(or books).
A book is certainly a good idea. If you put this in a globally diversified index fund, over the long term 30+ years, you can expect gains of maybe 7%-8% per year. However, this will fluctuate in the short term.
This is fine enough but it is important to remember that stocks, however many fund layers they are hidden behind, are literal ownership of literal companies. They make sense as a long term investment.
We like to talk about it as cash too much. The liquidity of the stock market allows for this. It is much more sensible to think of it as an asset you own that generates cash flow and when you do that your assumptions should change. A business can go down in value short term and forever. All businesses can simultaneously go down in value short term though so far never in the long run.
This is why it is useful to have a timeline. Most people who are terrified of the stock market have tried to use it as a savings account and it really doesn't work that way. I mean there are loads who've put money away and cashed out with double that 4 years later but as many who've lost half their principal. The people who always win are there for 10+ years.