Where to invest?

If you have money to invest, a logical question to ask is, “Where should I invest my money?” but unfortunately there is no one simple answer to that question. There is a way to figure out the best investments, but you should take time and not look for the quick fix.

Where in the world are you?

If you receive all of your income within the UK, and only want to deal in pounds, then investing in a foreign market may not be right for you, if it means you have to convert your pounds to another currency and back again. If you are new to stock market investing, start by looking at what’s available within your home country.

How much risk can you tolerate?

The higher the reward you seek, the riskier the investment will be. Any shares you buy can go up in value but they can also go down. The same is true for corporate bonds and mutual funds. If you are nearing retirement, for example, and you can't go out and earn more money, be conservative. Select investments that may not produce a great return for you, but will not put your capital at risk. Look for top-rated bonds and dividend-paying shares from long-established, top-flight companies such as stable major banks. On the other hand, if you can afford to lose your entire investment, then go ahead and speculate upon some risky stocks if you want to. Your objective is to find shares in companies that could take off. Examples: mining stocks (especially junior companies), technology companies that have not been “discovered” yet, and companies with promising inventions. Whether that’s in pharmaceuticals, technology, green energy, or something else, just remember that if you want a higher return, you will have to take a larger risk.

Get a good advisor

If you are new to stock market investing, find an investment advisor who is licensed and who understands your needs. Stockbrokers specialise in different areas. Find someone whose philosophy and interests are in line with yours.

Understand investing versus trading and speculation

The prevailing wisdom is that you should have a mix of investments in your portfolio. You may have some of your wealth completely outside the stock market, for example, in your own house. For the money you do invest in stocks, your advisor should suggest an appropriate mix of long-term, slow-growth investments that pay dividends, and some more speculative stocks where your return will come from the growth in the value of the shares themselves (capital appreciation). You can always adjust this mix. If you choose to take the high risk approach, you can win big, but you can also lose everything. Talk to a licensed broker for professional advice.