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
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.
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.
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.
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.
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.
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.
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.
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 ?
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? ;)
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.
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.
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
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.
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.
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.
[+] [-] pg_bot|7 years ago|reply
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.
[+] [-] ratsimihah|7 years ago|reply
> 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.
[+] [-] cabraca|7 years ago|reply
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.
[+] [-] satysin|7 years ago|reply
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 :)
[+] [-] giancarlostoro|7 years ago|reply
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.
[+] [-] ratsimihah|7 years ago|reply
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?
[+] [-] unknown|7 years ago|reply
[deleted]
[+] [-] mooreds|7 years ago|reply
[+] [-] IshKebab|7 years ago|reply
[+] [-] randomacct3847|7 years ago|reply
[+] [-] ratsimihah|7 years ago|reply
Aren't 2 and 3 the same thing?
How is money set aside an investment?
Thank you!
[+] [-] e1g|7 years ago|reply
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.
[+] [-] ratsimihah|7 years ago|reply
[+] [-] marcrosoft|7 years ago|reply
[+] [-] auslegung|7 years ago|reply
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.
[+] [-] ratsimihah|7 years ago|reply
[+] [-] garmaine|7 years ago|reply
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.
[+] [-] ctwilkie|7 years ago|reply
[+] [-] ratsimihah|7 years ago|reply
[+] [-] pliny|7 years ago|reply
[+] [-] pjc50|7 years ago|reply
[+] [-] sefrost|7 years ago|reply
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.
[+] [-] zMiller|7 years ago|reply
[+] [-] ratsimihah|7 years ago|reply
[+] [-] ovi256|7 years ago|reply
[+] [-] Temasik|7 years ago|reply
[+] [-] cycrutchfield|7 years ago|reply
[+] [-] randomacct3847|7 years ago|reply
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....
[+] [-] fucking_tragedy|7 years ago|reply
[+] [-] ratsimihah|7 years ago|reply
[+] [-] marketgod|7 years ago|reply
[+] [-] zapperdapper|7 years ago|reply
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? ;)
[+] [-] ratsimihah|7 years ago|reply
The cash, bonds, and stocks advice sounds similar to what Ben Graham recommends in the Intelligent Investor. Thanks!
[+] [-] lucas_membrane|7 years ago|reply
Of course, investment != stock, but don't speculate on pork bellies if you do not know to which end of a hog one talks.
[+] [-] osullivj|7 years ago|reply
[1] https://www.nsandi.com/premium-bonds
[+] [-] Scotrix|7 years ago|reply
[+] [-] ratsimihah|7 years ago|reply
[+] [-] cimmanom|7 years ago|reply
[+] [-] nyrulez|7 years ago|reply
- 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)
[+] [-] zapperdapper|7 years ago|reply
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.
[+] [-] ratsimihah|7 years ago|reply
[+] [-] mooreds|7 years ago|reply
[+] [-] ratsimihah|7 years ago|reply
[+] [-] arithma|7 years ago|reply
[+] [-] EliRivers|7 years ago|reply
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.