Finding Places To Invest Is Hard !

The world seems to be in a crazy place nowadays ! Economic news is all over the place, and information from governments and legacy media often appears to be propaganda rather than factually accurate.

I don't have huge amounts of money to invest, but I'm lucky enough to have a little surplus each week. Living a relatively frugal life has it's advantages ! But it does mean I think carefully before making each investment, and also means that I need to find investments where trickling in cash over time works, not just ones which need large lump sums in each investment.

A significant factor right now is that I'm finding it harder and harder to find investment options which look like having a decent prospect of steady returns. Hoping for long term returns feels a lot like gambling !

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So what are the options ?

Bank Savings Accounts and Cash ISA's

I'll wrap these two into a single category, because they operate in very similar ways. The only difference is the tax treatment (basically, ISA's are tax free up to a point, interest on savings accounts is taxed over a threshold).

These are easy to put money into, and usually easy to access. Here in the UK, personal savings are covered by the government Financial Services Compensation Scheme (FSCS) up to £85,000 in the event of bank failure.

But they come with significant disadvantages as well. The rate of interest is poor, quite a bit below inflation. Once deposited, the money is no longer yours, and banks have been known to find ways to restrict access even without them failing. If they do fail, the FSCS is useful but can take a long time to pay out, and might not pay out at all in the event of a sovereign liquidity crisis (but at that point, we'll have much bigger problems !)

My conclusion on these is that they are mid to low risk, but only worth keeping enough funds in to cover emergencies - major car repairs, hospital bills, freezer or cooker replacement etc.

Stocks & Shares

Historically the stock market can offer good returns over the long term, through a mix of increased price of shares and dividends (for those companies that pay them - not all do). I won't go into detail about the technicalities of investing in shares, directly or via funds. It's complex and I know I've still got a lot to learn myself !

Suffice to say that in the UK, there is such a thing as a "Stocks and Shares ISA". This is a way of getting the earnings tax free, but doesn't protect you from loss if a share price drops. A key thing to be careful about is the fees charged; different investment companies have different charges (and ways of charging) when you buy shares, and some (e.g. Freetrades) have a fixed monthly management fee for Stocks & Shares ISA's which can really eat into your earnings unless you've invested millions (I wish !)

Although I have a few shares, I have real concerns about buying more right now. I'm not an expert, but just looking at the graphs and listening to the news I have a feeling the stock market is too high and due for a significant correction. The only shares I'm pretty sure will do well are arms manufacturers and companies in certain key minerals, and those come with some ethical concerns !

Gold & Silver

Gold has historically done well. Effectively, it's chart is the inverse of fiat currency buying power ones. So maybe gold is the constant, and everything else is dropping in value.

But the premiums on buying gold can be expensive if you are only buying a little at a time. In some areas, silver is a good alternative, although the price is a lot more volatile than that of gold.

In the UK, the tax treatment of precious metals is worth taking note of. Investment gold is VAT-exempt, and gold coins are also inheritance tax exempt. Silver does attract VAT, and this means if you buy from a dealer, you'll need a 20% gain (plus premium) before you even break even.

Precious metals have some downsides, as well. They don't earn passive interest, so the only gain is on price changes. You also need to consider the cost of secure storage. If you're buying from eBay, you'd better know what you're doing; fakery and shenanigans are rife !

I know enough to know not to do that, so I only buy (and only very occasionally !) from reputable dealers. Their trap is to try to persuade you that they'll look after your gold in their vaults. To modify the well-known crypto phrase; "not your safe, not your gold".

My view on precious metals are that they shouldn't be a big part of my investment portfolio, even though it's pretty to look at ! But it would be nice to have some so that if everything falls apart, it can be a final reserve - either because fiat goes through a hyper-inflationary phase, or because the bombs have started falling and you need to leave the country by unorthodox routes in a big hurry.

Collectables

There are all kinds of collectables; art, fine wine, vintage vehicles, specialist hobby products, you name it someone collects it !

My view on this is only invest in this if it's something you love and are happy to hold onto ! The prices of collectables are very subject to the economic situation and fashion. It can also take time to find a buyer willing to pay what they are worth, and the cost of selling can be high, whether you're talking eBay or an auction house. Plus it can cost money to store and keep your collectables in good condition.

Right now, I've got quite a lot of collectable items (mostly model soldiers and vintage bike spare parts), but with the current state of the world, they are worth virtually nothing. In a decade or two things should turn and some of them will be valuable again, but others are likely to have permanently fallen out of fashion and be only worth scrap value.

Crypto

The final type of investment I'll consider is probably the one you've all been waiting for; crypto.

Suffice to say most of you probably know far more about it than I do !

The advantages and disadvantages of crypto are well known. Massive volatility leading to potentially huge gains or losses, projects disappearing entirely, the risk of over-regulation or bans, and enormous over-complexity of DeFi projects which sometimes seems to be deliberately designed to befuddle casual investors.

Conclusion

Of all the investment types above, I think the ones I most favour are crypto and precious metals. Primarily because I feel they are less likely to be taken away by government diktat or economic policies designed to transfer wealth upwards.

With crypto, I'm mostly sticking to projects I consider lower risk - BTC, ETH and HIVE. While Altcoins might deliver much higher returns, the risk with them is much higher, and the amount of research and attention needed is more of a time commitment than I have available.

But with only a little to invest, my overall goal is to have a bit of everything. To my mind, that spreads the risk, and creates a balance in terms of assets which are low return but easy access and others which will only deliver gains in the long term.

So what do you think ? Are there any classes of investment I've missed out that I should look at ?

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