

Ask HN: How should I best invest £5000? - refrigerator

What should I do with £5000 so that 1-3 years from now, I&#x27;ll have more than £5000? Theoretically, my life will not be affected if I lose it all so I can afford to be risky but I&#x27;m leaning towards not being very risky (maybe you can convince me otherwise?). Thanks
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allendoerfer
Asking this question on this website, you are probably male, under 30 and
working with technology. The largest amount of capital you have is probably
yourself.

You should increase the returns you make on this capital. Buy some books, take
some courses, invest in your health, hire someone to design your portfolio. If
you get a job with 10% more payment, you effectively doubled your investment
after one year, tripled id after two and so on.

Its lame, I know. Alternatively start and finish a side-project and invest the
money in PPC ads.

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bbcbasic
I am assuming you want to invest with minimal additional effort. E.g. more
like buying shares than flying over to the states to enrol in YC.

In that case you could pick up some books on investing in shares. This has
good liquidity and although risky it is unlikely you will lose 100%. If you
have a portfolio of shares in different sectors, you should be at low risk of
losing lots.

If you fancy learning but still a passive investment, then maybe stamps,
antiques, collectibles. You will get additional enjoyment out of it in the
meantime.

Some parts of the UK I imagine you could use 5k for a house down-payment and
rent it out. I have been expat for 4 years so I have no idea.

If you want to be more involved you could start some kind of business, using
50-100 pounds and your own effort to get it going, then 'invest' more money
once you have a proven method. For example once you can spend 100 on
advertising to make 200 gross profit, then you can scale that up using the
5000, then keep reinvesting to grow it. Easier said than done!

Or you could renovate something. Lots of people have broken things they would
give away or sell cheaply - you repair and sell on for a profit. But you will
need some capital and that is how you can invest your 5000.

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frobozz
> Some parts of the UK I imagine you could use 5k for a house down-payment and
> rent it out. I have been expat for 4 years so I have no idea.

Maybe in Merthyr, but even 4 years ago you'd have been lucky to find a house
under £100K without anything unrentably wrong with it.

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hackerboos
Plenty of houses for less than £100k outside of the South East.

I can get a 2 bedroom apartment in the city centre in Liverpool for <£100k and
it would rent out for £600/month easily.

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frobozz
Sorry, you are right, I do have a bit of a South East bias.

However, Looking on Rightmove, I see no houses in L1 for that price, but I do
concede that there are plenty near the L1 edges of L3, L7 and L8.

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hackerboos
Houses are rare in L1. Try L9, L6, L7, L4 very commutable to the city centre.

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my_username_is_
You should probably figure out what your risk tolerance is. The more you stand
to lose, the more you could win. What are you going to use this money for in
1-3 years? The traditional advice is either bonds or stocks, likely with some
amount of diversification. Bonds are safer than stocks, but might not return
as much. See this site [1] with a quick overview of some investment options of
varying degrees of risk.

For what it's worth, it's probably not a bad idea to put it in the S&P 500[2].
In the long run, it's probably going to outperform most other investment
strategies, although if the US economy tanks in the next few years you could
lose a good bit of what you put in there.

I also think that allendoerfer's advice about investing in yourself can be
very good, depending on your situation

[1][http://personalfinance.duke.edu/prepare-your-
future/savings-...](http://personalfinance.duke.edu/prepare-your-
future/savings-and-investments/what-are-my-investment-options)

[2][https://personal.vanguard.com/us/funds/snapshot?FundId=0040&...](https://personal.vanguard.com/us/funds/snapshot?FundId=0040&FundIntExt=INT)

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debacle
Investing in an index fund (US or otherwise) is going to be your best medium
risk investment (with middling to good return). There is more QE on the
horizon for the euro, though the dollar is strengthening. Minimal fees,
relatively minor risk (If you lose half your investment you'll have bigger
things to worry about than 2.5k quid), and pretty okay returns. Plus you'll
learn a bit about the market so that you can become a better investor in the
future.

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rasengan
There is no such thing as a risk-free investment.

This comment should not be construed as a replacement for professional
financial investment advice.

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jkbyc
There might be. One financial sage gave the following example: buy nickles.
Currently, the value of the material is ~30%(?) higher than the nominal value
of the coin. Therefore at some point in future the government will have to
switch to a different material. At that point you'll be able to sell at 30%
gain. If this for some reason is not possible then you'll still have whatever
you started with. This way you are sure not to lose any money (except due to
inflation) and possibly make 30% profit. You have to consider the likelihoods
of both outcomes, etc. Anyway, he bought nickels worth of a couple of million
dollars.

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dangrossman
This seems like a bad idea. Firstly, the melt value of a nickel is less than
$0.05 [1]. Maybe he was confused by the fact that it costs more than $0.05 to
mint each coin; that's because there are costs other than the materials. That
also means it'd be cheaper to just buy the metals that are in the nickels than
to buy the nickels if you wanted to bet on their price. If the government
switches to a different composition, there will be _less_ demand for nickel
and copper, which doesn't bode well for the melt value _increasing_
significantly beyond $0.05 because of a switch.

Secondly, just holding the nickels doesn't mean you're sure to not lose any
money. As you said, simply stuffing cash (or nickels) under your mattress
means you're losing some every day to inflation. You're also losing all the
potential gains of the other things you could be doing with that money other
than piling up nickels. At the very least, you take no risk of losing the
principal by sticking it in a savings account (~1% APY) or buying a 1-5 year
CD (2-3%).

Then again, I don't have a couple million dollars to blow on stockpiling
nickels. The sage investor must know something I don't.

1: [http://www.coinflation.com/coins/1946-2007-Jefferson-
Nickel-...](http://www.coinflation.com/coins/1946-2007-Jefferson-Nickel-
Value.html)

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zcrar70
The easiest form of investment to get started with are investment funds (aka
mutual funds in the US). They are a form of collective investment (i.e. you
invest along with other people in a basket of goods, rather than a single
share). The advantage of this is lower cost (buying and selling shares has a
cost, with a fund there are economies of scale so it's usually cheaper to
invest via a fund than directly in a similar basket of shares), and generally
lower risk (if a company that the fund invested in goes bust, you usually lose
less money than if you invest in the company directly, because the fund
invests in many different companies whereas you'd usually invest in a smaller
number of stocks).

ETFs (Exchange Traded Funds) and Investment Trusts are similar to investment
funds in that they are also collectives, relatively low cost. The current
fashion in investing is to buy 'passive', 'tracker' or 'index' funds (or
ETFs), which all follow an index such as the FTSE or S&P. These tend to be
lower cost than 'actively managed' funds (where the fund manager tries to beat
the index). Vanguard is a popular 'passive' fund manager.

Other types of investments include property (you generally need quite a lot of
capital), and more risky types of investment such as forex trading, spread
betting, etc. Even experienced investors tend to consider these risky.

Investments have done reasonably well over the past year in some areas (some
UK income funds are up 8% in the past 12 months), not so well in others (a
FTSE All Share tracker is only up 0.6% over the year). Investing is not risk-
free, and generally speaking there is no guarantee to make a profit. You could
also consider saving in cash, but with interest rates as they are now, you'd
probably be worse off in real terms by the end of the year than you were at
the beginning (because interest rates are generally lower than inflation)

Some investment brokers in the UK include: rplan (disclosure: I work for
rplan), Hargreaves Lansdown (the largest), Fidelity, Nutmeg (another startup).

As others have mentioned, it's definitely worth doing a bit of research to
find out more about how things work. If you don't mind the shameless plug, we
have a 'guide to investing' available on our site which we think is quite a
good overview of what's available (it's fairly UK-specific though):
[https://www.rplan.co.uk/investment-guide](https://www.rplan.co.uk/investment-
guide) (note: registration required, let me know if you'd rather not register
and I can send you a copy).

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kiddo29
Found a company, follow your passion!

