Investing 20k

A question for those with experience in any relevant field. Over the course of university ill be receiving 20k (not work). My logic was as follows. Whilst i could invest in an index fund, until im working and able to consistently add to it, the 7% return is unlikely to be substantial. However, i think in the next 20 years we are likely to see automation/AI begin to replace very simple jobs. Would investing perhaps £2k into a multitude of Ai/robot developing companies be a smart LONG term investment? It seems like a field guaranteed to take off and since ive diversified my portfolio I'd have maximised my chances at getting in on whoever takes over the market.

I'm an 18 year old with ZERO experience in stocks other than some research, so i thought it would be for the best to get opinions from those more knowledgeable. FYI, im aware of course nothing is guaranteed and for all i know i could lose the entire 20k, but its not something i need it's just additional money i receive from parents.

(edited 2 years ago)

Reply 1

lojawa

Have you considered looking into financial services companies that do the investing for you, like Fidelity? I’d be wary of taking advice from online forums, as understanding the daily workings of financial advice and the stock market usually takes years of training and experience, and you can’t be sure whether the advice is sound. Probably better to do your own research or listen to some daily podcasts to develop your knowledge of market trends if you’re going to go it alone - the Financial Times might be a good place to start, and they have a specialist tech column with a podcast.

Reply 2

Scrooo

Original post by lojawa

My understanding is companies like that aim for 10% averages (around there) with consistent trades. Im thinking of getting in early on a long-term, somewhat risky investment. I feel if i wanted consistent returns my money would be better off in the S&P500.

Reply 3

Quady

Original post by Scrooo

Sure you want to tie the money up for 20 years?

Reply 4

Scrooo

Original post by Quady

Sure you want to tie the money up for 20 years?

Most definitely. It's not something i need, please don't take that as arrogant, but just for context of how the money is to be invested.

Reply 5

Scrooo

Bump, any opinions on the safety of my original idea to invest in a multitude of AI stocks for the long-term?

Reply 6

Jack22031994

Volunteer Team

Yeah, I wouldnt be taking investing advice on here. Go and see an IFA as they are qualified and regulated to be able to give you financial advice.

Have you thought of maybe using some, if not all investing in property perhaps too? Diversity is key - not all eggs in one kinda thing. But as I said you should really speak to an IFA.

Reply 7

Educate_Yourself

Do not under any circumstances invest in a bunch of tech stocks hoping some will do really well. What you need to ask yourself is what do you want from your investments: do you want the money to grow over time or have a steady amount of money coming in every month? If you just want your money to grow then invest your money in a total stock market index fund on Vanguard not just the sp500 as you will want exposure to emerging markets as that is where the best potential for growth lies in the future. If you want income then property is your best bet as you have a large amount of capital but you may want to wait for a bit as the UK housing market is significantly overvalued.

Reply 8

Zarek

There’s a principle that the higher return you are looking for the higher the risk you take. You can mitigate risk to an extent by investing for the long term but you can still lose if you invest is something which later fails. 7% is a pretty reasonable return from investing while taking some risk. I would suggest getting some help to evaluate your risk attitude and then to invest in a balanced portfolio that matches it. An IFA will do this for a fee. You might be able get some free help from banks or investing companies. Your strategy seems very high risk albeit with my limited experience.

In my experience good safe investments are where the government or your employer will match contributions, give discounts, add lump sums. So I would look at a lifetime ISA and later companies with good pension and share save schemes.

(edited 2 years ago)

Reply 9

Canary84

Personally, I’d just smack it all in an index fund and forget about it. If you fancy the tech play so much maybe look towards tech focused ETFs

20k when looking to invest is very small you probably need 200k+ to properly diversify across individual stocks. As such, you would likely be wasting your money paying fees to anyone who does offer to manage it for you (i’d be surprised if they did )

Reply 10

username5088030

a lot in a non risk - bank account
majority in index fund
rest in high risk high reward that you dont mind losing

Reply 11

CartoonSoldier

if youre asking for investing advice on a student forum, you shouldnt be investing at all. just buy yourself something nice :smile:

(edited 2 years ago)

Reply 12

Scrooo

Original post by CartoonSoldier

if youre asking for investing advice on a student forum, you shouldnt be investing at all. just buy yourself something nice :smile:

i could buy myself something even nicer once its compounded.

Reply 13

Quady

Original post by Scrooo

i could buy myself something even nicer once its compounded.

Unless you die before you buy it of course.

Reply 14

sebking1109

If I were in your position I'd be looking at a well diversified ETF or index fund. I personally use the 100% equity LifeStrategy with Vanguard which gives decent enough exposure to some emerging markets while placing enough emphasis on established markets that offer some "safety". Many financial advisors are of the opinion that after the last decade of mega growth, the S&P500 can't and won't sustain those levels and that 5% average yearly growth is more realisitic. That being said, the US stock market has been touted to be in for the larger sustained correction for several years now and barring covid it hasn't really. The tax benefit of sticking into a S&S ISA are decent as well. A VCT is also an option to split your funds into if you are looking for something slightly higher risk with the benefit of the 30% rebate by the government each year.

Reply 15

Dutchy1986

Original post by Scrooo

I would worry about picking the right one and usually is better to look for someone that makes the parts for them or similar

Reply 16

DonDuck

Original post by sebking1109

A VCT is also an option to split your funds into if you are looking for something slightly higher risk with the benefit of the 30% rebate by the government each year.

True what you say about the lucrative tax benefits of VCTs, however, you need to have the tax liability in the first place against which to claim relief. In OP’s case, it sounds like he won’t have sufficient income to create a tax liability in order to get a 30% refund - hence the tax benefits of investing into a VCT are essentially wasted.

I agree a well diversified ETF in a stocks and shares ISA is probably the best way to go.

Reply 17

sebking1109

Original post by DonDuck

Of course, good point about the tax liability. A good option if and when you do though. At your stage in life the index fund S&S ISA would be the route to go down discounting the VCT.

Here is a useful compound calculator to estimate the ROI on either the lump sum invested and left over however many years or indeed then added to over subsequent years - https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php

I would use 5-6% as a more conservative average ROI. If the bubble continues it may well exceed this but better to level expectations. In any case it will smash any savings account over the same time frame.

Reply 18

Napp

Youd do better speaking to a financial expert (or one of the many resources you can find through google) than asking fellow students, few of whom are likely to be investing or market gurus