Cactus Personal Finance

Hello everyone! Today’s I’m going to talk about asset allocation and how to invest a lump sum of cash in the stock markets.

If you’re lucky enough to have spare cash, say £50,000 to invest in the stock markets, this post is made for you. This is a beginner guide to someone completely new to investing.

As per usual, this is not financial advice. If you have any doubts, I strongly recommend seeking professional advice from a regulated financial advisor.

Step 1 : Think about your risk profile (again)

As a reminder and before starting your investment journey, it’s worth considering your risk profile. I wrote a post about risk profile and, if you have a 5 minute-read, perharps it’s worth reading it again.

You can find the link here: How to get started with investing
https://cactus-personal-finance.com/2024/11/24/how-to-get-started-with-investing/

Why is risk profile so important ? If you need your money back in less than 5 years time, then the stock markets isn’t for you. The reason being is that you may receive less than your initial capital due to market downturns.

Step 2 : How to split £50,000 ?

Now let’s talk about asset allocation. It means how much money is invested in each instrument. Previously we discussed about the advantages of exchange-traded- funds (ETF) so let’s dive into it.

Here’s my geographical allocation :

U.S.A : 50% or £25,000

Europe : 35% or £17,500

Japan : 5 % or £2,500

China : 5 % or £2,500

Emerging / Southern markets : 5 % or £2,500

It’s worth noting that geographical diversification is essential to benefit from the stock markets.

Now here’s my portfolio allocation by ETF :

U.S.A : 50% or £25,000

• Invesco S&P 500 UCITS ETF : 20% or £10,000
• iShares Nasdaq 100 UCITS ETF (Acc) : 20% or £10,000
• SPDR Russell 2000 US Small Cap UCITS ETF : 10% or £5,000

Europe : 35% or £17,500

• iShares Edge MSCI Europe Quality Factor UCITS ETF : 10% or £5,000
• Amundi CAC 40 UCITS ETF Acc : 20% or £10,000
• SPDR MSCI Europe Small Cap Value Weighted UCITS ETF : 5% or £2,500

Japan : 5% or £2,500

• iShares Core MSCI Japan IMI UCITS ETF

China : 5% or £2,500

• iShares MSCI China UCITS ETF USD (Acc)

Emerging markets : 5% or £2,500

• Amundi MSCI Emerging Ex China UCITS ETF Acc

Now you have a concrete example of how to invest in the stock markets. If you decide to go ahead, then you may look into 2 different options :

Option 1 : speak with your existing bank.

Option 2 : search for a regulated and approved investment platform.

I hope you enjoyed reading this post. Feel free to drop me a line if you think something needs to be discussed. Investing is fun and we keep learning as we invest, enjoy the ride !