Better options than cash on deposit

[Sagit]

I would strongly recommend that you drop this idea for now.

If you really want to invest in individual equities rather than an ETF, then take the time to learn how to do it properly so you have a reasonable chance of being successful at it. To that end I would suggest you take out a subscription to Better Investing, it is US oriented of course, but the techniques they teach are just as applicable in Europe as they are anywhere else - the ability to identify good companies and determine the price at which it is worth taking a position.

In my book there are only two reasons to get involved in investing in individual equities:
- Your are interested in the companies.
- You want to and are able to beat the market.

In all other cases you are better to buy the index, because in doing so you will in fact be beating most professional fund managers over the long run.

Hi Jim,

Thanks for the comments. What I really want is to generate wealth as carefully and prudently as possible. I have no preference for direct shares over ETFs: whatever is most effective is what I'll go for.

When I hear of people having lost lots of money through non-property investments, am I right in assuming that these losses generally occurred because they bought shares directly rather than through an ETF?

Also, what is it that makes an ETF a good bet? Do people generally invest in one ETF or several? And how do I know what the ETF itself is invested in? Being brutally honest, I'd never even heard of an ETF before your post. That's how much of a newb I am.

Also, what would your advice be on property investment (either buy-to-live or buy-to-rent) for someone like me?

Finally, do you think I should set aside 10% per month specifically for a pension, or put everything but my rainy day fund into an ETF?

 

[cremeegg]

..if you are to generate wealth.

I don't just disagree with this, I think it is fundamentally mistaken.

The purpose of investing is the responsible stewardship of wealth, not generating wealth.

Generating wealth comes from business or other earnings. Desert and others have successfully generated some wealth and want to look after it in a responsible manner. Responsible to our future selves and or to our children. We are concerned that leaving money on deposit is not responsible as the returns are so low. We are looking for alternatives. Although they may not exist.

 

[cremeegg]

Just to reply to some of the points regarding Desert

1 Pension. I don't know what the tax situation is in Dubai so there may be no advantage in a pension as such. If you do want to buy a pension: low risk, low cost, reputable provider. It isn't really all that complicated.

2 Shares. Given your comments I withdraw my suggestion. Buy Jim's book, however when you have read it I suggest that you will not have learned much until you have invested and lost real money.

3 Property. If you are saving to buy a home, then obviously you cannot put your money into an other property. Nevertheless if you are looking for an investment I am happy with my original suggestion.