Right now, I’d invest £10k in a mix of passive and active share-based vehicles.
And, to me, that means choosing between passive index tracker funds, managed funds, investment trusts, and the shares of individual companies.
In fact, I’m doing that with a sum of just over £10k right now. So, my strategy is clear in my mind.
Time in the market
And one of my guiding investing principles is time in the market. Several stock market opportunities have tempted me lately and I intend to hold new investments for the long haul. In that approach, I’m copying the style of billionaire US investor Warren Buffett.
The general macroeconomic and geopolitical outlook is murky, that’s for sure. But I’m not letting that put me off. Buffett is known for searching for better stock valuations under such conditions. Indeed, share prices tend to fall when most people are worried about something. But that doesn’t always mean the prospects of underlying businesses have deteriorated. Or perhaps things aren’t as bad for a business as the stock market thinks.
I’m aiming to find some of the best opportunities by focusing on the news and numbers coming from the businesses that interest me. And by tuning out most of the market and economic commentary that clogs the media channels.
Diversification
However, despite using such techniques, going all-in on individual share opportunities is not part of the plan. Instead, my strategy is to diversify money between several different investments in the hope of mitigating some of the risks. But it’s worth me bearing in mind that risk is part of the deal when investing in stocks and shares. And any number of operational challenges could occur in a business and sink my investment in it.
Nevertheless, one of my share purchases was in banking giant HSBC Holdings. I also added software company Cerillion to my portfolio alongside the fast-moving consumer goods business Unilever.
And as well as individual businesses, I’ve been investing in a few investment trusts. For example, I added to my positions in Finsbury Growth and Income Trust and Fundsmith Emerging Equities Trust.
Tracker funds
Those are not my only stock investments lately but they do give a flavour of the diversity. And on top of lump-sum investing, I’ve been keeping up regular monthly investments into various passive index tracker funds. For example, money goes into trackers every month following the FTSE 100 index and the FTSE 250. And I’m investing in trackers following large and small companies in the US and smaller companies in the UK.
There is no guarantee that any of these investments will increase in value from my purchase prices. And my timing could prove to be wrong. Nevertheless, I’m hoping that a long-term approach to holding shares will deliver a satisfactory outcome in the end.