How would invest 5k ?

by superredditman9. Posted on Sep 09, 2020    54    60


Hi guys! I’m based in the UK and I’ve got 5k that I’d like to invest and grow as a passive income. I did some research and I was thinking maybe bonds? Or some index funds ? I just don’t want my money to be sitting in a bank. If someone could give me some advise that would be great ;-)

Cheers !


Comments

Cool1998

Throw it all in crypto. I doubled my money since I started investing. 100% yearly gains vs 10-15% traditional gains if you’re lucky

mike_mg

Tesla stock to the MOON

DistraugtlyDistractd

I am 20 and have a few months investing in stocks, so please take my advice accordingly.

Grain of salt. This is what I would do if I found 5k in my account today

Tesla seems like it will pull back to the 300s (Around $380 USD currently) and I THINK it is a safe LONG TERM play. Short term, who knows what will happen. With that asteroid coming to earth the day before US elections, and US elections being primmer to a even worse scenario and all. You really got to weight the options here, I have quite a bit in Tesla and I am holding long term > 1 year. Calculate the risk, make a plan, do research (fundamental and technical analysis, make a choice to buy/sell don't buy or don't sell). I would invest probably in safe dividend stocks like Qual Comm, Apple, or whatever stock you have DONE YOUR OWN RESEARCH on and can confidently invest in if not Tesla as the market in general does seem like it can go either way, (US markets that is) as whispers of a recession are looming.

I would spend some on prep gear for survival. Maybe not run off into the woods rambo style which is unlikely. Maybe a plate carrier and some plates, water filters, stuff for gardening, a back pack, water, seeds, a knife, fire starter, lighters, blankets, tent, flares, etc. Depends on what you are preparing for, I think preparing to me looks like either a civil war/riot scenario, power outage for long time, or a fire burning my house down. (From least to most likely) Most likely is still incredibly rare. Any way, failure to plan is planing to fail. I don't what its like in the UK but the US MEDIA is wack, everyday people are chill.

ROTH IRA may be a good start for ya

I don't think bonds are good really, index funds would be way better.

Maybe buy yourself a nice meal too! But you should save most of it!

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God Bless brother, stay safe out there

TheGreatItlog 2

I want to understand why this comment has a lot of downvotes. Could someone explain? Thanks. I do not know shit about stocks and I'm trying to learn.

DistraugtlyDistractd 1

I would recommend charting and technical analysis by Fred McAllen it has really good charts, details about indicators, how to read charts, etc. Not in color unfortunately but easy enough to understand.

I don't know why this got downvoted lol! To be clear, this is what I would do if I had 5k, not telling you what to spend your money on. I want you to make a logical decision by your own research and plan.

hellomoto_x

100% in Bitcoin

topkushler 1

cryptocurrency?

you only live once, and that shit is too volatile to NOT invest in it

id recommend ethereum, bitcoin obviously, chainlink, monero, nix, dogecoin, maybe even sushi coin, ubiq

niem254 1

> maybe even sushi coin

exit scammed yesterday

topkushler 1

I don't think they exit scammed, the dev still on Twitter posting etc. Right? Plus he only made like 10 million with his coin, ain't really jack sht

d5t 1

Nah the dude exit scammed. Doesn't mean he needs to run across a border. He wanted $ and crashed the market. Same stuff that 2017 ICOs did in crypto.

  superredditman9 1

What have you invested on ?

hollyberryness 1

My pocket 😬

  superredditman9 1

Send me your bank details

hollyberryness 1

Haha!

  superredditman9 1

Which platform do you use for this ? Can we also talk in private ?

TheGreatItlog 1

Thank you

headgard 1

Lots of good advice but haven’t seen DIVERSIFY. Myself I prefer physical things that appreciate with time.

So if you don’t own your own home that should be priority 1. Especially with how volatile the global economy is.

After that precious metals Are good long term investment. Stocks ETFs are good also but again the idea is to buy low. Watched AMAZ for 2.5 years and when it hit the fan in March picked it up for $1750. Just have to be patient.

Most of all research and stay on top of it. Everything is in flux right now and come Nov god only knows what’s going to happen. Stocks are on the way down and sept historically is a Turbulent month. Good luck.

ViralGreek_ 1

Whats the #1 thing you know the most of?

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Invest there.

  superredditman9 3

That would be stock market...

ViralGreek_ 1

go there. invest. find people who will give you their money to invest for them.

it doesn't have to be 100% passive tbh

_MOHCTP_ 3

Buy some cocaine. Split it into small bags. Sell to minors. Make money.

  superredditman9 2

I consume le cocaine before selling it! Thats what I was doing wrong I guess ? Haha

entrep_che 4

Affiliate marketing

BJS_1 2

Vanguard dividend appreciation fund AT&T has 7% dividend
NOBL DGRO

KatWasAlone 2

We're all different and have different risk tolerances interests and investment ideas/ strategies. What are you investing that 5k for? When do you plan on needing it? How much can you comfortably add each month? How much risk are you comfortable without panicking and selling everything probably at the bottom? Investing is a lifelong game that requires you understand yourself as well as the market. Whatever you end up doing start an investment journal I wish I'd kept one for the first few years of my journey.

Personally I hate people who say don't buy individual stocks because I've found due to my interests and ability to follow rabbit holes for days I'm a good stock picker and consistently outperform the market. On down days I outperform on the downside too but I keep cash in the account so I can get rid of those negative feelings with some purchases.
However this doesn't work for everyone and if the whole process of finding good businesses and figuring out what you think a fair price would be is too daunting/ not interesting to you then yea keep it simple with an idex fund and maybe some ETFs in areas that interest you or you think will outperform in the long run. It all depends on what you want from this and what you're prepared to put in.

Whatever you do it's probably a good idea to drip feed that money in to get a good average buy in price and to avoid panicking and selling when it's down. Listen to the Motley Fool podcasts they're free and absolutely full of sensible advice for the average person. Don't invest cash you need to live on for the next year at a bare minimum. And for the love of God stay away from margin.

  superredditman9 1

Thanks a lot ! It’s not money that I will need anytime soon so I could let it sleep for years and years I guess. I’m just getting my head around all the risk management so I need to dig deeper to get a better understanding of everything. My ultimate goal would be to have some dividend paid and passive income obviously haha

KatWasAlone 2

You're welcome. Making sure you're comfortable with the ammount of risk you're taking is very important as it allows you to play the long game and that's the only way to win.
I love dividend payers yet actually only own about 4 out of a basket of 28 I've gone for growth at this point because I'm more excited about those companies and pretty sure they'll be paying dividends by 2055 and I have zero intention of selling until then. I add money monthly to TRIG and they have now become my largest dividend payer I love seeing those payments although it's probably time to search for a second dividend play to start adding to monthly.

  superredditman9 1

Is there a platform or a broker you would recommend ? I was about to use trading 212. What do you think?

BernardoHuyser 2

If that's all you have then work towards an emergency fund; this is 3\~6 months of expenses saved in a savings account, beyond that index funds will give an average of 7% return(in the U.S. at least) so compounded over many years it will amount to a significant sum of money later in life

RaunchyBushrabbit 5

Stripclub! Best night of your life!

Seriously though, Index funds are always a good idea. Make sure you understand what they are, how they work and why you are picking a certain one.

alextiming 3

Listen to the book Fake by the author of Rich Dad, Poor Dad.

Buy gold/silver and crypto.

uninformed- 10

If you have any debt pay that off first.
Depends on your job but look into investing in a couple classes and certificates to increase the status of your job. Look into perks, lot of jobs give a percentage increase if you speak a second language.

  superredditman9 1

I speak a second language actually that I’m using at work as an advantage and in my job there’s not really certifications to get to be honest. I make decent money here in London and I have no debts.

doolittledee 6

Not bonds lol

Llenyataire 6

I'm starting in this word, so let me ask you, why not bonds? As far as I know, low risk investentment.

Sascot 1

The return on bonds , while super safe, are super sucky. You’re young , you can go higher risk.

Income from investing is a very , very slow process and it’s time in more than the amount in that yields results

FIREKoolAid 9

General consensus is no bonds (or, if you invest in more than a single fund, then a low percentage of the total investments being bonds) when you are a ways away from drawing from your investment because even though bonds are low-risk, they are low return (2ish%) compared to the average market return (7ish%). I can only venture to guess, but I'd be willing to wager a pint that you are on the younger side compared to others who have investments. As such, the higher risk investments will probably be attenuated by the many years you'd let your investment grow before starting to withdraw from it. That is, the trend is generally up over the history of the markets, so you can weather the storm of the inevitable lows from year to year. Later, when you are closer to retirement and don't want to have the risk, you could switch a portion of your investment to bonds.

Llenyataire 1

Understand. Thank you!!

[deleted] 22

[deleted]

JoshSidekick 3

Buy $2500 worth of cocaine, a stack of legal pads, and a box of pens and lock yourself in a room to try to come up with a way to turn $2500 into a million dollars.

MrMoneyMilker 44

Vanguard funds are always safe.

dogmetal 25

I love Vanguard. I dump most of my investment money into VWUSX, a growth fund. Up 60% over the past year. I get some nice dividends from my index fund, VFIAX, but I just reinvest.

KriegHobby7 5

Would you mind messaging me how that works?

norwegianmorningw00d 14

Open vanguard account.

Fund account.

Search VWUSX

Click on market buy for however much you want to buy

  superredditman9 1

I’ll have a look. Cheers ;-)

RuthBaderBelieveIt 2

As you're in the UK please please please put this in a stocks and shares ISA not a fund account. ISAs exempt you from capital gains tax.

Depending on whether you want to use this money to buy a house a LISA may also be a better option.

Take a look around /r/UKPersonalFinance and ask on there too you'll get much better UK centric financial wisdom.

  superredditman9 1

Oh thank you so much for the recommendation. I’ll post there as well ;-)

dogmetal 2

I wouldn’t consider mutual funds passive income, if that’s what you’re looking for. But it would be a great place to put your money if you’re not looking to touch it for 10+ years.

  superredditman9 1

Yeah thats what I want. Put the money somewhere and not touch it.

dogmetal 18

It’s not all that complicated. It’s as simple as buying stock. Just a matter of setting up an account with Vanguard and buying shares of the fund. There is a minimum investment of $3,000 for VWUSX, though. I have it set up to automatically invest $100 twice a month (not as much as some people here... but hey, working with my budget), so it’s a set it and forget it type of situation which I love. Vanguard makes everything pretty easy.

Although it’s performed great for me the past couple years, it’s still considered “high risk”, so you should consider that and do your own digging before making any decisions.

mattjstyles 27

Be careful with many of the answers here.

It really depends what your financial goals are.

If you think you'll want this cash within the next few years, investing in index funds (or any stocks/equities) is risky. These are designed to be long term investments. Some provide dividends so you might get some passive income, though most prefer to reinvest / let them accumulate.

Bonds are much safer for short term investments, and you can even get inflation-protected gilts which protect against big losses in the value of currency, which might be useful given the current uncertainties due to The Event. The downside is that they offer much lower annualised returns than you would get from an index.

Investing in individual stocks is super risky and I'm sure Tesla and Apple holders are happy right now but remember that even out of professional fund managers trying to beat the market (as opposed to index trackers which track the market), around 90% don't, and buying shares when they are at a high is usually the opposite of what you want unless you are sure they will stay there, which isn't normally true - markets fluctuate. Apple and Tesla are doing well partly because they announced a stock split which gave them a sharp boost. You can already see that they've started to fall back down again. To beat professional traders in buying the difference between price and value you would need more business intel on Tesla than all of the traders on Wall St and the ability to act on it quicker than they do. Seems unlikely. And is basically gambling to you and me.

If you plan on investing, I recommend reading Tim Hale's Smarter Investing - it is a short book and very concise and covers from the basics up. It also includes some sample investment mixes for different financial goals/investment durations and risk appetites. Also helpfully Tim is from the UK so it addresses some relevant issues there.

Some UK specific advice. If you plan on buying a house, get a Lifetime ISA (LISA). The government gives you an instant 25% bonus on what you save or invest. This is sort of passive income if you want to buy a house.

If you're thinking of retiring early then investing in a pension provides instant tax relief which is also basically free money. This will provide passive income when you retire.

And in the classic personal finance flowchart, make sure you've paid off debts first.

  superredditman9 3

Thanks for the answer. Indeed it’s not money that I’d need anytime soon actually. I’m for the longterm. I’ll definitely check out the book ;-)