Where Should I Invest My Money?

Finally ready to set up an ISA account? Keep asking yourself, and anyone around you “So now where should I invest my ISA?” 

Well, let’s have a looksie lou at a possible starter portfolio.

First things first, this is not financial advice. You shouldn’t just blindly copy this portfolio without any consideration of whether it’s a good choice for you. If you don’t know what the fudge I’m talking about half the time, you should pay a financial adviser to explain in more detail the options available to you. I’m here to give you an idea of what you COULD do, not what you SHOULD do. 

This is a beginners’ portfolio. I’m assuming I’m starting with £2,000 but if it was less, I’d just lower the amount I put into each fund. If I had more than £2,000, then I’d probably go for more stuff, but there is no point owning 418 funds if you only put £4.78 into each one.

I'd suggest you're looking at around a minimum of £100 per fund. This is usually the minimum you can invest anyway, but anything less than that and fees are ridiculous. 

There's a good argument that even £100 is too low, so you might actually want to up that to £500. But do what's right for you. 

where to invest

Literally No Feckin Clue

With £2,000 as a starting point then I’m going to use my ISA allowance for it. Depending on what timeframe you’re working towards, or what you’re saving for, you might chose a different type of ISA than a standard Stocks & Shares ISA - find out about other ISAs.

If you can’t be arsed with any of this, then check out the following three options. You pick what your risk profile is, answer a few questions and it will recommend a split of your money across different funds. 

Wealthify
Hargreaves Lansdown
WealthSimple

Vague Idea, or Want to Know More?


If you’re a keen bean and want to learn a bit more about investing, then you’re going to have to learn how to evaluate funds and decide for yourself what you want.

I’m going to select a couple of specific funds for my £2,000 beginner portfolio, but the actual fund selection is secondary to the asset allocation within the ISA.

WTF is asset allocation? Buy my book, I’ll tell you all about it.

Briefly, it’s spreading your money around various types of investments, so if one does badly – hopefully the others will do well and balance things out for you.

Sensible diversification should smooth out your returns, so you don’t gain 50% in a week, but you also don’t lose 90% the following week. It’s easier on the nerves to have a slow but steady growth over time, trust me!

Portfolio Split

Once again, just for funsies, this is not financial advice. Seriously, stop listening to me. I’m drunk.

Here is where I’d be putting £2,000 though if I was just getting started.

Asset

Percentage

£ Amount

Shares - UK

30%

£ 600

Shares - World

10%

£ 200

Bonds

25%

£ 500

Property

20%

£ 400

Commodities

15%

£ 300

TOTAL

100%

£2,000

Why? Why the Hell not

The UK stock market gives you a fairly good exposure to the world stock market anyway. Think Shell and BP only sell petrol in the UK? Does GlaxoSmithKline only sell drugs to the NHS?

The stock market is pretty volatile but does have a tendency to do quite well over the long-term. I don’t want too much exposure to it, but enough to get the benefit of the long-term growth.

Bonds and Property are the two boring but solid performers. I used to prefer a high allocation of bonds to be fair, and with a larger portfolio I would increase that percentage. Bonds tend to do very little, so they counteract the volatility that you’ll get from shares. Smooths things out.

Property ain’t going anywhere, we’ll always need somewhere to live and work, and it’s much cheaper to gain access to the property sector through a fund than it is to buy your own property. If I’ve got £2,000 then I can’t afford the £20,000 minimum to buy a property.

Commodities, these are a hedge against inflation really. Think gold and some industrial metals. When the world enters into a high inflation period, then commodities tend to do quite well – and usually during high inflation periods, bonds and stocks both suck balls. So it’s a nice counter-balance.

Exact Funds

These, to be honest, aren’t particularly well researched. In fact I just used the funds I’ve personally invested in (which I hope I researched in the past) and a quick scan of the Hargreaves Lansdown website.

You should absolutely do your own research here and figure out which fund is best for you. While there are lots of things to consider, one of the biggest factors is the fees involved.

High fees can screw you out of thousands over the long-term, so keep an eye on them.

Asset

FUND

£ Amount

Shares - UK

Legal & General UK Index

£ 300

Shares - UK

Old Mutual UK Mid Cap

£ 300

Shares - World

Fundsmith Equity

£ 200

Bonds

Marlborough Global Bond

£ 250

Bonds

iShares Overseas Corporate Bond

Index                    

£ 250

Property

Aberdeen European Property

Shares

£ 400

Commodities

Investec Global Gold

£ 150

Commodities

Threadneedle Enhanced

Commodities

£ 150

TOTAL

100%

£2,000

Conclusion

So what’s the point of this starter portfolio if I keep telling you not to follow it? I want you to see how £2,000 can be spread across several assets and diversify your investments. A lot of people don’t have a clue where to start and are tempted to just bung the full £2,000 into a UK FTSE 100 tracker.

Fine, that’s better than not starting at all, but when the stock market inevitably crashes (it always does eventually), will you freak the fuck out and panic sell like most people do? You’re over exposed to just one asset class. That ain’t cool.

What you can hopefully take from this is the fact I’ve gone for a diversified selection of funds that are giving me exposure to;

  • UK stock market
  • World stock market
  • Global bonds
  • Corporate bonds
  • European property
  • Gold
  • Commodities

With £2,000 I’ve bought myself a little bit of everything. If stocks collapse – as they like to every now and then, then commodities and gold could go up and save your portfolio from losing too much.

If property becomes mega unpopular, then bonds and shares could be the new flavour of the week. 

Nobody has a clue what any of the markets are going to do. People are paid millions, billions even to try and guess, and often they are wrong. So why bother trying to play their game?

When in doubt, buy everything! At least that way you’ll always be right with at least one of your purchases.