Investing a windfall
May 3, 2023 8:24 AM Subscribe
I've recently received a small windfall of around 60,000 euros and I'm wondering how best to invest it. What I'm really after is your top tips for resources to learn about buying shares. Can you point me to some good sources of information, so I can spend my time learning rather than searching? (Other investment ideas are also welcome. I'm in the eurozone but am also very open to investing in Australia/NZ.)
I would also suggest you look at this wisdom from Warren Buffet who has done alright for himself. 😏
Granted he has staff and funds and time you probably don't have, but I think reading down the list might get you in the right frame of mind (???).
Edit: start at the top of the list #1, my link apparently is wonky.
FWIW
posted by forthright at 9:08 AM on May 3, 2023
Granted he has staff and funds and time you probably don't have, but I think reading down the list might get you in the right frame of mind (???).
Edit: start at the top of the list #1, my link apparently is wonky.
FWIW
posted by forthright at 9:08 AM on May 3, 2023
If you are looking for the mechanics of it, put the funds in one of the large, stable investment houses (Schwab, Fidelity, E*Trade, etc. (I apologize for being US-centric here, but that is all I know)) and they cheaply provide all the means for buying and selling (and shorting, options, puts, etc.) you want.
As far as getting good advice for what to buy and sell and when to do so, that is much more difficult. Here in the US we have two main categories of financial advisors - fiduciary and non-fiduciary. Fiduciary advisors get paid by you directly and non-fiduciary get paid by commission from the products you buy. Fiduciary is of course better, but the up front costs can be significant.
The real issue is that anyone who is really good at investing and knows markets and are deeply involved with the goings on of particular business sectors and so could give you good advice, won't. They are either too busy investing themselves or are selling that advice to the highest bidder, generally through fees for the funds they manage. (So buying a fractional share of Berkshire Hathaway may be your best bet). And of course, as mentioned above, there is real evidence that none of these guys are better than the averages, so putting everything in a low cost S&P tracking fund is likely a better bet.
Now if what you really want is to have some fun with it and constantly buy and sell based on the trends you see, you can do that , but realize its just gambling. And no one is good at it (except maybe Warren Buffet (see Berkshire Hathaway above)), some people are just lucky. If that's the case, look at everything you can and follow your gut.
posted by rtimmel at 9:15 AM on May 3, 2023 [1 favorite]
As far as getting good advice for what to buy and sell and when to do so, that is much more difficult. Here in the US we have two main categories of financial advisors - fiduciary and non-fiduciary. Fiduciary advisors get paid by you directly and non-fiduciary get paid by commission from the products you buy. Fiduciary is of course better, but the up front costs can be significant.
The real issue is that anyone who is really good at investing and knows markets and are deeply involved with the goings on of particular business sectors and so could give you good advice, won't. They are either too busy investing themselves or are selling that advice to the highest bidder, generally through fees for the funds they manage. (So buying a fractional share of Berkshire Hathaway may be your best bet). And of course, as mentioned above, there is real evidence that none of these guys are better than the averages, so putting everything in a low cost S&P tracking fund is likely a better bet.
Now if what you really want is to have some fun with it and constantly buy and sell based on the trends you see, you can do that , but realize its just gambling. And no one is good at it (except maybe Warren Buffet (see Berkshire Hathaway above)), some people are just lucky. If that's the case, look at everything you can and follow your gut.
posted by rtimmel at 9:15 AM on May 3, 2023 [1 favorite]
A lot of the Buffett quotes relate to investment selections, which he does very well. But even Buffett recommends that almost you not follow in his footsteps and instead just buy index funds, not shares in individual companies. If you want to try to beat the market, go ahead, but do it with the knowledge that it's effectively an expensive hobby: it takes more time and effort than buying index funds and will cost you money (in the sense that you will almost certainly make less than if you invested in indexes).
posted by Mr.Know-it-some at 9:17 AM on May 3, 2023 [4 favorites]
posted by Mr.Know-it-some at 9:17 AM on May 3, 2023 [4 favorites]
Put the bulk of it in an indexed fund, where it will be invested in a broad array of stocks. Most studies I've seen show that index funds beat most managed funds, and these are managed by people who do this full time. If you want to buy and hold individual stocks, do it with maybe 1/10 of the money.
posted by theora55 at 9:51 AM on May 3, 2023
posted by theora55 at 9:51 AM on May 3, 2023
The Reddit windfall FAQ is good.
Before you even think about buying individual stocks you should understand why the default advice for almost everyone is to buy index funds.
Be extra careful about buying individual stocks that are not denominated in Euros. This makes you vulnerable to currency fluctuations and is complicated from a tax perspective. It is in other words advanced investing, and is not the place to start.
posted by caek at 10:57 AM on May 3, 2023 [4 favorites]
Before you even think about buying individual stocks you should understand why the default advice for almost everyone is to buy index funds.
Be extra careful about buying individual stocks that are not denominated in Euros. This makes you vulnerable to currency fluctuations and is complicated from a tax perspective. It is in other words advanced investing, and is not the place to start.
posted by caek at 10:57 AM on May 3, 2023 [4 favorites]
Vanguard index tracker fund if available in mainland Europe and you are happy to have cash locked up for c 5 years.
posted by laukf at 1:17 PM on May 3, 2023
posted by laukf at 1:17 PM on May 3, 2023
Let's talk about crypto, and investing in gold...
Can't figure out how to do strikethru...
What they all said. Dollar cost average it into an index fund.
posted by Windopaene at 1:44 PM on May 3, 2023 [1 favorite]
Can't figure out how to do strikethru...
What they all said. Dollar cost average it into an index fund.
posted by Windopaene at 1:44 PM on May 3, 2023 [1 favorite]
There is no debate over index funds: you absolutely should use them.
But there is plenty of debate over dollar-cost averaging. There are reasonable arguments on both sides, as it's basically a question of what your risk-reward preferences are.
posted by Mr.Know-it-some at 8:43 AM on May 5, 2023
But there is plenty of debate over dollar-cost averaging. There are reasonable arguments on both sides, as it's basically a question of what your risk-reward preferences are.
posted by Mr.Know-it-some at 8:43 AM on May 5, 2023
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For long term investments, their general recommendation would be summarised as 'pick a market index and find a cheap ETF that tracks it'. In the US that might be the S&P 500, and Vanguard would be an example of a fund provider that has funds of this nature with a very low expense ratio. I don't know what the European equivalent would be.
It comes down to the idea that managed funds don't consistently outperform the indexes, doing it yourself is unlikely to do better than the professionals that run those investment funds, and the costs of some company just following the market index with a fund by buying shares in that index are low so you don't pay a lot to invest in those indexes or spend any time on them.
posted by How much is that froggie in the window at 8:52 AM on May 3, 2023 [7 favorites]