Only invest the money you can afford to lose

With the app making it easier for people to invest which is great.
First timers need to know you can lose your money as quick as you can make it.
As the old saying goes don’t keep all your eggs in one basket.
Happy investing every one

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Solid advice…however, I’m more in the camp of YOLO-ing it all into Tesla calls.

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Great when it pays off :moneybag:

Sucks when you YOLO into SXX :hole:

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I think this advice is sound when it comes to gambling / trading. But when it comes to investing for the long term (20/25 years), I certainly won’t be putting in money I can afford to lose, as I don’t want to be a skint 55 year old.

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I think the underlying point needs to be that investing without spreading your risk will see a much higher default chance on the money you put in. I know of people who for whatever reason only have one share holding as investments and that’s all they have. In that case they need to be comfortable with the higher chance they could lose all or most of their money when cook pared to a diversified individual in multiple companies and etf’s

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Everyone has different limits to their investment exposure. A basc litmus test would be to say if you went 50% down on your investments would you panic? Would it keep you up at night? If yes, you’re overinvested and need to put your money elsewhere. Find the number you are comfortable with and adjust accordingly.

If there’s one rule that you absolutely positively need to take away:

Don’t ever invest with borrowed money

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I remember when people “invested” borrowed money in Bitcoin :joy::see_no_evil:

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Some health warning to remind people that markets go up and down may not be remiss, but likewise you can’t protect people from their own stupidity, or greed.

TO THE MOOOOOOOOOOOOOON

:laughing:

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To some extent, the recent volatility gives investors a chance to see if an X% drop in portfolio value feels the same way that they imagined it would. If it feels much more painful than you expected, you might consider changing your asset allocation.

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LAMBO!!!

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How else will we get them tendies? :laughing:

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I think the title on this thread is well-intentioned, but it is wrong.

To use an extreme example, say you are a 50-year old with most of your life savings in a pension pot and ISA built up over the years. Obviously, you can’t afford to lose it all. But keeping it in cash would almost certainly be a very poor decision.

Investing != yolo bets on Tesla. Low-risk government bonds did quite well the past week amongst the market turmoil, for example (check out Bond ETFs in the Discover section of the app).

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It would make more sense if it said only gamble what you can afford to lose

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Exactly. Too many people in the UK still equate investing with gambling, which is something we are trying to change.

It doesn’t help when gambling/CFD/spread betting firms mix the two in the same product and marketing. The FCA really needs to do something about it.

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“Only invest what you can afford to lose”

If I’m not mistaken the sentence has several implications, and therefore it is meant to transmit different ideas that in the end of the day are at play simultaneously. Let me mention two of them.

  1. A person has revenues and expenses. Invest only what is not necessary to cover expenses. And keep a cash cushion. So the need to sell an investment to cover expenses is reduced.

  2. Investments are risky. There’s always the chance of bankruptcy. Or the possibility of price volatility causing panic sales at a loss.

My goal is to build a portfolio meant not to be sold, and from which I can collect revenue in the form of dividends and, maybe one day, interest.

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I get to the point now I don’t tell people in my circle I invest in the market for that very wrong preconception. Probably why I started a YouTube channel, so I can actually interact with people who support and understand it.

If I tell them I’m buying property the difference in reaction is stark, when compared to telling them I’ve invested in companies that they use multiple times a day, every single day.

On the note for the original post, the best advice is have an emergency fund set away. This calms the part of the brain that makes you make irrational decisions.

I’ve got 7 months living expenses stuck away in a high interest, liquid, savings account. And the difference to my mindset now, compared to before when I’m investing is night and day.

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What could we possibly do in order to introduce some hygiene measures that would ultimately result in the segregation of investments in underlying assets vs gambling with derivatives?

Only keep money in cash whose value you can afford to lose at the rate of inflation.

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