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Ask HN: Which 5 investments of £1k each should I make?
57 points by ratsimihah 8 days ago | hide | past | web | favorite | 86 comments
I have £5k to spare and want to make 5 separate investments, VC-like, such that even if 4 fail, one grows 10x over 5 years. What should those investments be?





If 4 fail and one grows by 10X you will have 10K. It seems that your goal should be turning 5K into 10K over 5 years which seems doable. Since the amount of money you're dealing with is fairly small, I would suggest putting your energy into a single project instead of multiple ideas. Splitting your focus seems like a mistake when dealing with so little capital. Start a side hustle if you want or spend it on teaching yourself a skill that will translate into a higher income. Investing in yourself is generally the best thing you can do with that kind of money.

If you work 40 hours a week, 50 weeks of the year for five years that equals 10,000 hours. So if you can learn a skill that increases your hourly wage by $1 you will have met your goal.

If you are looking to begin saving for retirement, put it in a Vanguard total stock market etf and let it sit for 50 years.


Hello! Thanks for the answer, I liked how you approached the problem. The issue is that I cannot focus on a single project.

> If you work 40 hours a week, 50 weeks of the year for five years that equals 10,000 hours. So if you can learn a skill that increases your hourly wage by $1 you will have met your goal.

I have a steady 9-6 job as a React Native developer, where I keep learning and growing and can apply my knowledge to front-end React as well

> or spend it on teaching yourself a skill that will translate into a higher income.

I've just invested in a yoga teacher training and started teaching yoga classes, so some of my time goes there

> Start a side hustle if you want

I'm building http://music.hatharaja.com and http://spotifyxgenius.now.sh in my spare time, making yoga websites for my friends (for free), and building a model to recognize yoga poses.

> Since the amount of money you're dealing with is fairly small, I would suggest putting your energy into a single project instead of multiple ideas.

I really want to start learning about 3d modelling and product design (inspired by https://www.instagram.com/dobu.haishen/ https://www.instagram.com/blankwilliamnyc/)

I'm also learning machine learning.

The Snowball book about Warren Buffet also advises focussing on one thing, which I wish I could do. Anyway, my point is that my time is already diversely invested, which is why I am also looking at some more passive forms of investment. People have been suggesting ETFs as "safe" long-term investments, which I'm looking into. Maybe I can use 50% of my investment capital to build some products after I've learnt 3d modelling and then invest the rest in ETFs.


Do you have debt? Yes? Pay it off!

Do you have an emergency fund? No? make that your investment!

Do you have 3-6 times your monthly expenses set aside? No? make that your investment!

Still money left? invest in MSCI World oder S&P 500 ETFs and let it sit for a decade or two ... that should net you your 10x growth

Edit: removed the MSCI EM ETF recommendation ... S&P 500 performs better.


I was about to post close to the exact same thing so I am glad to see it already mentioned.

IMHO £5k is too little to be worth investing in anything if you don't have the three things you mentioned in order.

Personally if I came into £5k and didn't need to clear any debts or top up my safety net I would treat myself to some new clothes, a new computer, a holiday or some other good experience before I think about investing it. Then again I have learnt the hard way that a lot of the time investing is just setting money on fire. These days I rather enjoy money when I get a little bit extra :)


Care to elaborate on MSCI? I've looked at some of the returns for at least one of their ETF's and I'm not seeing 10x growth even with them paying dividends at a reasonable sum, am I just not savvy enough with investing or something? I must be missing something.

Edit: I didn't account the increase of the value in the stock, saw one that doubled in value, so if someone had invested in it when it opened they would of gotten back twice what they invested, still not necessarily 10x but it's not bad for a safe low risk investment.


Thanks!

So for S&P 500 ETFs I'm seeing for example:

* Boost Issuer Public Limited Company BOOST S&P 500 3X LEVERAGE DAILY * Boost Issuer Public Limited Company BOOST S&P 500 3X LEVERAGE DAILY 30/11/62 * Boost Issuer Public Limited Company BOOST S&P 500 3X SHORT DAILY * HSBC Etfs PLC HSBC S&P 500 UCITS ETF * HSBC Etfs PLC HSBC S&P 500 UCITS ETF $

How would I know about telling the difference between them and which one I should choose?

Similarly for MSCI World:

* Amundi Index Solutions AMUNDI MSCI WORLD ENERGY * HSBC Etfs PLC HSBC MSCI WORLD UCITS ETF * Ishares Iii PLC ISHRS CORE MSCI WORLD ETF USD (ACC)

I'm considering picking them based on their Morningstar ratings and past performance over 5 years, would that make sense?


Great financial advice. I might quibble with the last bit, because we don't know what country the poster is in nor the time horizon for using the money. That will affect the investment possibilities. But the rest is spot on.

Actually I guess he is in the UK (the pound indicated that). Savings even more important in that case due to Brexit.

I am indeed in the UK as a French citizen.

I have debt - a mortgage. But it's only 2%. Surely it makes more sense to invest in the stock market (~7% over a long period) than pay that off.

Paying off all of your debts is life changing. Lose your job with a mortgage or rent? How long is your emergency fund runway? Lose your job with a paid off dwelling? Runway is a lot longer.

Want to take some time off and do something different? With a lot of debt hanging over your head this may not be possible. Everything paid off? No big deal.

You have to look at risk as well as rewards. You also have to look at flexibility and opportunity.


Liabilities are liabilities. If you got hit by a truck tomorrow, you'd still be on the hook for your mortgage, but your earning ability will have diminished. If the stock market tanks tomorrow, you're still on the hook for your mortgage and there goes your investments.

That often quoted 7% figure is based on US investments, I wouldn’t expect as high a return in the UK. It’s also historical, there is no guarantee it will continue. It also includes an element of risk, whereas paying down your mortgage eliminates risk.

The cutoff is between 3.5% and 4%, depending on your risk threshold. Anything less than that, keep it on the books and make minimum payments. Anything more than that and you'd be better off paying it down now.

Long-term stock market returns are 9-10%. 7% is after inflation but that's acting on your mortgage as well. Mortgages are indeed cheap leverage for your savings portfolio as you're basically using as collateral a probably somewhat oversized asset, since most people could easily live in a smaller/simpler house if an unforeseen event happens. It's still a higher risk investment of course.

People think all debt is bad.

A mortgage is leverage. Exclude that from typicle debt.

Bad debt is anything nontaxdeductible and over riskfree rate. So consumer debt


Emerging markets have substantially underperformed US stock market for last few years...in a global recession those markets would be the first to go.

well you're right. fixed that in my post.

No, yes, nearly, and no.

Aren't 2 and 3 the same thing?

How is money set aside an investment?

Thank you!


there is overlap

2 is more of a "oh shit the washing machine/car/stove broke" fund. stuff that costs more than i'm willing to cut from my income on a moments notice.

3 is leverage and runway.

employer fucked up your salary payment? frustrating but you'll live.

negotiating a raise? no need to bluff, bring in your written notice and sign it in front of them. important: ask them for a pen. the look on their faces is priceless and 3 month should be enough to get a new job.

Want to go the extra mile? get a second bank account with another bank and split the money. remove the bank as a single point of failure.


VCs with infinite capital, networks, business knowledge, and 100% focus are shooting for 1-in-10 investments to get a 10x return. It's rather optimistic to expect a success rate twice as good as their teams get.

You're trying to get an annual return of 15%. Investments into US index funds over the last 5 years returned ~10% p.a. with minimal risk of a major loss.


Fair enough!

Invest in 500 things by purchasing a low cost S&P 500 index like the ETF VTI and call it a day. 5k is too low of an amount to purchase 5 separate investments after you consider fees.

If it were me I would take that money and invest in myself. 5k can go a long way in self improvement and growth. If that’s not necessary or appealing, idk, I dont have any experience or knowledge of investing other than the stock market.

Another thought is to give it to a friend or acquaintance who would benefit enormously from it, such as someone who’s not making much money but could use a few thousand for self improvement that would double their income soon.


That's a great advice! I just put £3500 into my yoga teacher training and started teaching. That should be paid back fairly quickly :)

Even factoring in HN's pessimism towards cryptocurrency, it's the only thing available to a non-professional investor which meets your criteria (high risk, but possibility of 10x growth over 5 years). Maybe consider putting 1k in bitcoin, 1k in ethereum, 1k in a total-market equities index fund, and the remaining 2k in a volatile stock picks of your choice (e.g. Tesla).

FWIW I think this is a recklessly dangerous thing to do and I feel dirty giving this advice. But I feel someone should actually answer your question as asked.


Invest in yourself for a higher income (books, classes, laptop, etc)

I've already invested in all of those. £3500 in yoga teacher training, and I continuously learn and expand my knowledge. I do feel like I'm in a good place to explore more diverse investment opportunities. Thank you!

Whatever answer you get, make sure you can use your losses to cover some of your tax burden from your wins, otherwise even in the scenario you describe you lose a third or half to the government (depending on how the income is declared and what else you did in those 5 years) and barely come out ahead.

Plenty of countries have tax-shielded vehicles for small investments like this, which it would be handy to find out about. The UK "ISA", for example.

Good points! I do have an ISA, maybe I should limit my investments inside it. It doesn't support US shares though.

Hi check https://freetrade.io/ and is available in U.K and can invest in U.S stocks. Have a look. Cheers

My Halifax one lets me invest in US Vanguard funds, haven't checked whether it supports individual shares.

That sounds more like speculating than investing. I always view investing as simply a hedge against inflation rather than a true money making venture.

If you are investing put it in a low-cost index tracker sheltered in a tax efficient vehicle (in UK that would be ISA or private pension scheme). Let it compound forever. That's probably what I would do.

If you've not heard of him, look up Harry Browne. He recommended splitting your portfolio four ways: gold, cash, bonds, stocks. He reckoned that way you'd do OK no matter what was going on in the world.

If you feel more like speculating perhaps learn poker and take a trip to Vegas? ;)


I've played poker overnight in Atlantic City and made about $100 with $100. Not exactly profitable.

The cash, bonds, and stocks advice sounds similar to what Ben Graham recommends in the Intelligent Investor. Thanks!


The Enterprise Investment Scheme in the UK _could_ be very beneficial to you here.

Here's a description on Crowdcube: https://www.crowdcube.com/pg/eis-tax-relief-for-investors-44

In short, you can reduce your personal tax bill for the year by 33% of the EIS eligible investments you make.


Considering the current political and economic climate : 1- Pay back as much debt as you can: Signs point to the 'cheap money' party ending relatively soon and debt will start becoming considerably more expensive to carry. 2- Bitcoin. Yes, I said it. My 2 cents: Forgetting the debate on the currency aspect and its usability as such . A politically neutral store of value has a use case and there is a tremendous need for it going forward in this world. Bitcoin checks all the marks needed and has been around for more than 10 years now proving its use case. What you have to ask your self at this point is the following : What happens if it all goes down the gutter? Well you loose 1k. What happens if it actually works out? 10-100x? Who knows, but such asymmetric value propositions present themselfs once or twice in a lifetime. Educate your self and take action with the intention of being able to justify it to your future self in 10 years. Ultimatey that is whom you will have to answer to :)

I don't have debts and the 4k worth of btc I had when its value reached its maximum are now worth less than 1k. BTC is too volatile and not something I would consider an investment.

>debt will start becoming considerably more expensive to carry Only if it's not fixed interest. If you have low fixed interest debt, is there any reason not to keep it ?

If you manage to secure it for a sufficiently long term where you feel comfortable you can meet it's obligations before the terms expire, then go for it !

Which Bitcoin with or without segwit and small or big blocks?

There always was and will always be one Bitcoin.org

Oh great, another crypto shill looking to recruit new bagholders.

Put some in Premium Bonds [1]. No interest, but you get capital preservation and a shot at the monthly GBP1M prize. Likely you'll pick up a few GBP25 prizes over a year, so it will be as good as a cash deposit, given the crappy savings rates on offer from the major banks. I did this 10 years ago when I temporarily had a lot of cash after a house sale.

[1] https://www.nsandi.com/premium-bonds


I’m not going to give you financial advisor like advice, so be warned.

1k each in:

1. Teladoc $TDOC (telemedicine) 2. Canopy Growth $CGC (weed) 3. Nvidia $NVDA (gaming, crypto) 4. Bitcoin $BTC 5. Adyen (payments)

Macrodrivers: growth in telemedicine/direct to consumer healthcare, eventual worldwide legalization of weed, gaming, mainstream crypto use, ecommerce payments....


Buying Bitcoin as an "investment" is like buying baseball cards or Beanie Babies as an "investment".

I disagree on the nature of bitcoin, but FYI buying collectables can be a good investment strategy:

http://money.com/money/4162059/lego-investment-compare-gold-...


10 years later, millions of percents higher, still waiting for the final collapse to zero.

The utility of a Bitcoin approaches zero for nearly all of its purported uses. Unlike financial instruments, the underlying asset represented by Bitcoin has no intrinsic value.

Bitcoins are more like tulips, baseball cards or Beanie Babies than actual vehicles for investment.


Thanks for the suggestions, I'll look into those!

AMD is trending better than NVDA currently.

Both can succeed...

If you are bullish on crypto, gaming, and AR/VR owning either or both is not a bad play...


NVDA I wouldn't touch until it can break $166~ with high volume.

Reminds me of back when I was studying economics; I read an article by a prominent economist, Samuelson I think, about how to get the benefits of diversification when buying stocks. He said that you could reasonably expect to get pretty near market returns by buying 5 stocks. Now, an investment guru will probably get you into well more than 5 funds, each of which will hold dozens or hundreds of stocks. The benefits of such attempts at diversity are low, good chance if you diversify into 5 of any class of investment offered to the public, you will get close to typical of that class.

Of course, investment != stock, but don't speculate on pork bellies if you do not know to which end of a hog one talks.


Spend it for something nice which makes you happy and you’ll remember forever.

I have all the material things I need, which is why I am looking into building longer-term wealth.

What percentage of your liquid net worth does $5k represent? I’d suggest far more traditional and less experimental investments for someone looking to invest their first $5k than for someone with $5m already in stocks and bonds looking to branch out with some “play” money.

Most answers you're getting here are on the responsible side i.e. Bogleheads-like. Your question makes it feel like you're ready for some extra risk and I am assuming these 5k aren't your entire savings.

- Wefunder allows you to invest in companies with small amount. Find something really promising there.

- Spend time researching small-cap companies in the $1-$5 range and invest 1K where metrics and fundamentals seem to line up for you. It can be almost like angel-funding but a bit more proven.

- Learn about derivatives and buy Options calls above the current stock price for something you feel will go up significantly in the public markets. This allows you to leverage huge gains from a small amount of capital. In the worst case you end up with nothing. This is an interesting time due to the recent bear market and there are many many stocks ready to go up given the right macro triggers.

Note that selling Options is dangerous and don't do that unless you're an expert - that can land you in big trouble. Leave that for https://www.reddit.com/r/wallstreetbets :)

- Ride strong momentum and trends for smaller companies that have good fundamentals - momentum can be a strong and proven factor for many investments in the public market. I'd plug my own project [0] that's designed to detect low-volatility trends and momentum across the entire market. It's soon going to be in Alpha.

- There are many leveraged ETFs in all directions of the market for different segments - they give outsized returns for market moves of all different kinds. You can speculate and get outsized gains (or losses). Again higher risk.

- There is still plenty of money to be made in the ICO market even in this environment by riding momentum, and it's perfect for smaller amounts due to lower volume involved. Many tokens keep on returning outsized gains all the time. If you have the inclination, you can look into that. Here are some examples from my project: https://i.imgur.com/N4H3pka.png

- https://www.reddit.com/r/weedstocks/

- I can give you many more ideas but they start getting a bit too speculative and into the realm of gambling.

----

[0]: https://stockquanta.com and http://coinquanta.com (For detecting crypto momentum)


Boglehead here...;)

Good answer, and you made me think of something with a bit more risk. There are these micro-loan companies now where you can lend out cash and get at least a higher rate of interest than most savings accounts.


Yes that's a good point. Getting 5-10x gains there are hard to come by though :)

You can sell options - they are like selling insurance for market crashes. That gives infinite return in practice since you get money for free.

The downside is you can lose your shirt if the market goes south and are liable for the insurance policy you provided.


Brilliant! Let me digest all that and get back to you, thank you!

If you really want to spread your risk, choose 5 different ETFs that are not correlated. But I don't think any investment available at the 1k level will net 10x.

I'm not particularly expecting 10x. I'll look into those, thanks!

This might help: https://www.portfoliovisualizer.com/asset-class-correlations

I honestly don't know enough about finance to go from correlations between two asset classes to the correct correlation between five, but maybe google will help.


If I am in a similar situation, but in a third-world country, with a few $K to spare, does anyone have any advice on how to put some money for the future?

such that even if 4 fail, one grows 10x over 5 years

This seems really hard. Sounds like you're asking for some kind of coupling; a set of five stocks such that if any four of them go to zero, one of them will definitely multiply by ten. If anyone here could do that reliably, they wouldn't be here.

Whatever you end up investing in, don't forget to do it inside a taxfree ISA.


what would you recommend with 30-40K EUR in EU and low risk? no mortgage/debts.small apartment in some country?

Invest in ChainLink :)

https://chain.link


Vaporware scam

Follow satoshi nakamoto


If you're considering following the suggestions of investing in the stock market, hold off until a possible Brexit market reaction passes in March.

Also, wait to see if the S&P can get up and hold steady above $2750. If it can't hold above that mark for a month or so, expect significant drop.

Read up on simple moving averages (sma), relative strength index (rsi), and stochastic rsi indicators. Then read up on golden and death crosses. Follow the readings up with monitoring daily, weekly, and monthly charts.

https://www.investopedia.com/terms/s/sma.asp

https://www.investopedia.com/terms/r/rsi.asp

https://www.investopedia.com/terms/s/stochrsi.asp

https://www.investopedia.com/terms/g/goldencross.asp

https://www.investopedia.com/terms/d/deathcross.asp

Nadaq's site offers a solid chart and indicators at no cost, as does Yahoo and Stock Charts.

https://www.nasdaq.com/symbol/spx/interactive-chart

https://stockcharts.com/h-sc/ui?s=$SPX

https://finance.yahoo.com/quote/%5ESPX/chart?p=%5ESPX#eyJpbn...


Instead of doing this focus on making more money at the actual career you've chosen and being disciplined at avoiding hedonic treadmills and at investing consistently over time. Start doing this as soon as possible, ideally from day 1 of your earning career. If you do that variations in market timing are nothing to worry about. The worst possible timer in the world comes out well ahead of >90% of the population:

https://awealthofcommonsense.com/2014/02/worlds-worst-market...


And this imaginary "Bob" still lost a ton of potential gains and psychological trauma because of his poor timing. He did not come ahead of the 90% of investors, he was in the 90%.

Investing blindly in any market is a terrible idea and ignorant advice. Buying and holding is a terrible strategy, especially during crashes or leads up to crashes. "Bob" invested at the peaks of four market cycles and suffered heavy losses of nearly 50% with each subsequent crash. He could have nearly 50% more in gains had he taken the time to read the signs.

Anyone in their right mind would be livid had they just invested a nice chunk of their hard earned pay, only to lose 50% of it in the following month. Best bet to dodge these avoidable pitfalls, is to hold off on dropping money into investments until you feel comfortable enough with assessing markets. Then make an informed decision on what to invest in , instead of throwing shit at a wall to see what sticks


The >90% don't invest at all and end up worse than Bob. Bob isn't real because it requires perfect market timing and yet even if you were as unlucky as Bob you'd come out ahead. That's the point, that you don't need to worry about timing if you just invest consistently. Calling other people ignorant when you're trying to peddle market timing as a strategy is a bold move...

Not peddling, just offering insight from someone who has experience in this field. Sure no one can time the market, but they can use techniques to assist in their decision making.

If you're an American, the number isn't 10%. 32% of Americans have a 401k. So 32% are investing and a solid portion let their 401k management bank make decisions for them/go by the typical advice given, by bank reps, of "aggressive portfolio when you're young" (majority stocks), "moderate when you reach middle age" (mix of stocks and treasury bonds), "conservative when you're older" (mostly treasury bonds).

If you're younger and signs are pointing to the market crashing within a year or two, your management bank is going to advise on this and tell investors to move their money to cash (if there's even a cash option) or to treasury bonds. No, it's up to the investor to make a decision based on their own research/reading of the signs. Hell, these banks even use dark patterns to make it more difficult for investors to manually control their own portfolio, leading to users giving up on finding or thinking that they can't manage their portfolio and leave it up to the banks to do so.

There are signs for when things aren't going so well and things are going to take a turn for the worst soon. Certain indicators can help with gauging this. No where near being 100% accurate, maybe 52% accurate, but that's still an edge. On top of certain indicators, monitoring quarterly GDP, yield curve rates, unemployment rates, home owners rates, among other stats, help to show what lies ahead. If one can get out some months before a crash, then great, it's likely that they didn't get out at the peak of the market cycle, but at least they likely saved their 401k from a 20% drop. And in the case that they did move to a cash option at the peak, then they likely saved themselves from a loss of between 40%-60%. If cash isn't an option, then likely saved around a 35-40% loss.

Investing blindly isn't a good strategy no matter how one looks at it, but learning what to look and monitoring periodically can help in preventing catastrophic losses


I buy and hold index funds, so by definition I obtain the market average over time. All these supposed schemes to beat market returns never explain who are the suckers on the other side of those bets that are getting lower than average returns so you can have higher than average ones. And in aggregate those advantages are impossible as can be trivially demonstrated with just some basic math:

https://web.stanford.edu/~wfsharpe/art/active/active.htm

If you can actually derive meaningful excess returns from market timing that's great for you. I suggest a career in finance, you'll be obscenely rich if you can do it consistently, and probably still very rich if you can at least convince other people of your theories. To suggest that normal retail investors who don't specialize in this can obtain those advantages as well is fantasy.


All I know is that I'm in a good place with my experience in finance and my gains, and was just trying to share information. And fyi, the information shared isn't "mine", it's what's used in the industry, and the measurements outside of technical indicators are used by the Treasury Department.

But whatever works for you man.


Thank you for this, especially the Golden Cross / Death Cross links. I learned something today.

Of course, glad to share resources/information.

I would add, for US markets, keep an eye on Treasury yield curve rates and look for inversions between shorter time frames and longer time frames. This has been an indicator which has preceded the last 9 US market crashes.

The bottoming of unemployment numbers and the start of a turn upwards has also been a signal.

https://stockcharts.com/freecharts/yieldcurve.php

https://www.treasury.gov/resource-center/data-chart-center/i...

https://www.bls.gov/opub/mlr/2016/article/unemployment-rate-...


You didn't. Technical indicators like that are nonsense

Rather than be dismissive, present your case. Moving averages and rsi are not the same as drawing arbitrary triangles. They actually measure trends in buying, selling, and price movements over a given period. And if you actually look at the 20,50,200 day moving averages for major indexes, you'll see significant moves in price where golden and death crosses occurred. They're legitimate indicators and used by professional traders within the finance industry

What’s interesting to me is that that’s a technique that can be used to analyze trends other than financial ones.

With your risk tolerance as described I feel like I need to be the (ir)responsible one and suggest at least 1k into Bitcoin.

Username checks out.

Personally I think Bitcoin is going to go huge soon, perhaps not as big as it originally was, but it's definitely going to go up a bit - bear in mind I'm no crypto expert, merely a CS student.


Any more info on your thinking? Not looking for a fight, just wondering what makes you say this against a backdrop of near universal negativity. (I say this as someone who has 10 BTC and has pretty much give up on it (I bought it in 2013, IIRC, so I'm still up)).

Nope, no info! Just a total guess... Feel free to downvote me, I just have a feeling it's gonna surge, but who knows?

Near universal negativity is a good way to describe the current backdrop. The OP mentioned 5 years, which is the far short end of the timeframe that someone needs to be comfortable to hold before I suggest cryptocurrency as an "investment" to them.



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