What are your best and safest investment options?

What has done best for American investors over the last few decades: buying index funds. Which is why everyone recommends them. In 2023 it isn't always good advice, especially outside of the USA.

The best things are paying off debt, avoiding debt, stabilizing yourself, and get ready for buying a house. If your employer matches some pension contribution do that.

At your age you should look at investing in yourself. Think about if you can buy knowledge to improve your career, maybe a masters degree or even books etc. Either more engineering skills or maybe management skills. This will give much better returns over the next few decades than an index fund.

Finally Financial knowledge is a great thing to learn if you're so inclined. I was always interested in investing in markets as well as small local businesses. Learn accounting and basic business speak and follow the stock market, maybe buy a few companies - even if you lose money you'll learn a lot if you follow them. This will be helpful when you're older and have more money. Be careful because for half the people in the world its not worth doing this, and are better off ignoring it so make sure if its you or not.

I'm CTO at a Hedgefund and we did very well last year but I would never recommend any of our strategies to a retail investors. Instead check out the Bogleheads wiki: https://www.bogleheads.org/wiki/Getting_started_for_non-US_i...

Most investors will never beat the market, aim for simplicity, low cost and broadly diversified index funds and you'll do very well in the long run.

Honestly, it’s hard right now.

Investing in a low-cost and well diversified index fund used to be the way to go and is probably still your best option (at least for the majority of your savings).

I’d read the little books by John Bogle (Vanguard founder), the Simple Path To Wealth (book or blog) and maybe I Will Teach You To Be Rich by Ramith Sethi (book).

That said, the future isn’t as certain as it was in the last 200 years. I doubt we will see the same levels of economic growth with the various crisises intensifying over the next few decades.

A house to live in in an area that is relatively safe from natural disasters would be high on my list as well.

> I'm based in Europe if that matters.

You'll have to do research into your particular retirement programs and what tax advantages they have, but other than that it should be roughly the same as anyone else's.

> What options do I have?

Hedge funds spend billions of dollars and hire teams of math PhDs trying to beat the market. You are a single software developer. You are not going to do better than average. Fortunately, there's an extremely easy and low-cost way to guarantee average performance: broad-market index funds. These will charge a ludicrously low amount of overhead (something like .04% annually) in order to buy basically everything the market as a whole buys in the same ratios as the market buys.

> I also perfectly understand that safe means lower return and I'm perfectly fine with that, since I am going into this for a long term.

IMO the correct approach for long-term investing is to set aside money you are perfectly okay with never seeing again, and literally not checking how the market is performing at all, while maximizing return regardless of risk. Long-term underperformance is actually a bigger risk over 30+ years than any number of market crashes, at least while you're underneath the Kelly Criterion (and even a 100% equities portfolio is comfortably below this).

> Also, any useful resources regarding investment would be helpful (YouTube channels, books, etc.).

https://bogleheads.org/

I recommend something like this, take your monthly net income and try to stick to something like this:

- allocate if possible max 25% into rent and for other recurring expenses (I know that this can be a challenge)

- (low risk): save 20% (into a basic savings account)

- (medium risk): invest 10% in ETFs; plain vanilla S&P500 is a good start

- (high risk): invest up to 5% in crowdfunding sites like Seedrs.com or in similar high risks assets such as Crypto

- spend and enjoy life with the rest (40%)

The challenge is of course the fixed expenses, when you are just starting out those will represent a big part of your expenditure. As such, adjust the other parts accordingly and gradually work towards the allocation I described above as your income increases over time.

Another life hacker tip: use a service like Revolut and let it round your change and put into a Vault. Use these savings to save or invest. While the daily amounts are small, it accumulates over time and it feels good to know that every time you spend something you save a bit.

When you hit 30s, you will have a solid saving and investment portfolio, thanking your 20 year old you.

Start from investing every month set amount of money into ETFs.

As you are from Europe, one of the best to start, would be Vanguard FTSE All-World ETF, or in short WVCE. I am mostly investing into it for my retirement.

If you want to feel the market more, you can buy some individual stocks, starting from blue chip ones, or if you want to gamble a bit more, you can take a look at crypto or small cap stocks.

As for platforms/brokers, there are couple of most popular in Europe: Degiro or IBKR. I myself use IBKR for stocks and ETFs.

Plenty of good advice already regarding index funds and pensions, so I'll add: land is a finite resource, so buying some for yourself is unlikely to be a bad move. In most cases this will just be a house, but don't be afraid to think more broadly than that - particularly if it can also be a hobby, like buying some cheap derelict land to re-wild or grow trees on. Not going to deliver the same financial return as the S&P 500, but probably more interesting.

IMO you just should buy a house with low monthly fees. The prices are hopefully going down in most places during the next year which should provide plenty of opportunities. Then, if you like, just buy up some ETFs or otherwise diversified assets in industries you think will succeed. With relatively small amounts of money you just want to buy something simple and robust, don't get too creative.

I'm not gonna recommend any particular investment but something to keep in mind is that taxation has an important impact on overall gains, and it's different in every country. You need to learn the details relevant to your country of residence and take that into account. Most advice you'll get in internet assume you're in US and your country's taxation certainly works differently in many ways.

For example in France when you buy stocks directly, the taxation is less attractive than if you buy through other well-defined financial instruments which give you lower tax rate after 5 years.

In US, you have "short term capital gains" and "long term capital gains" etc. Such distinction doesn't exist in most of EU.

When asking these type of questions on HN and reddit you have to take the Doomer factor into consideration. Both places are full of people convinced the economy will soon collapse and we should all go into prepper mode.

World Index Funds are still the way to go n the long term.

“I'm based in Europe if that matters.”

I would argue that matters a lot. Taxes and fees play an outsized role in financial success. You are asking this in an American centric forum but with lots of international members. The advice you get will be heavily skewed.

1. Read a lot. Especially books etc for your country.

2. Develop your own thesis. What do you believe to be true. How much money are you willing to put away each pay period? What do you want to save for. What is your risk tolerance? Only you can answer these questions.

3. Do something based on #2. You can adjust your thesis over time.

4. Pay for advice when necessary. Accountants and lawyers but be leary of investment professionals. Read what Warren Buffet says about helpers.

Low comission passive index funds tracking the global economy.

Associate yourself with the global average growth in the most diversified way possible.

The young or old might need the money short term (buying a first home or retiring) so should perhaps keep risk lower than the middle aged. For long term savings I’d just go for a diverse portfolio. Stocks and broad/index low/zero cost funds. That might sound boring but it’s that simple. Keep it global to avoid regional downturns. An often overlooked part of diversity in investment is to look at what industries thrive in a poor climate vs a good one, and keep some of both. (For example defense).

I'm not a big investor, but here is my strategy:

20k blanket: you never know what can happen, this money can be put in accounts with small returns but can be available immediately.

Up to 5k immediate spending: i like surprise vacations, especially when I surprise myself. This allow me to say 'fuck this, I'm out' and go rent a boat or something.

Then, the excess goes into 3 categories. I divide it in 10.

6 part go into low risk, low return investment. State debt etc. It's pension funds, but also weird bank plans (ask a bank councellor);

3 part goes into diverse index funds. I got energy, green energy, old people (they have nice name for it), luxury goods and something else I forgot (i chose not to invest in the defense industry, but I'd take that if I weren't bothered by it). I hedged against tech for a reason: I'm very well paid, and as long as tech do well, i won't be laid off.

The last part i invest directly with my bank application. I got lucky [removed humblebrag coz details don't matters]. No real strategy here, invest in stuff you think is worth more than it cost.

I don't know if it's the best investment strategy, but the banking councellor helped me with it, so I guess it cannot be too bad. If you're in France, go to a bank outside big cities (doesn't matter anymore as everything is dematerialized) and ask for a financial counselor (it was free for me), they respond way faster than in Paris, and help you decide a strategy.

Detail that matters: i don't have kids and mostly frequent women who are independent

One major aspect that tends to be underrecommended is using money to save money. Cash buy a car. Prepay your rent for a discount. Buy an annual supply of cleaning products, drygoods...

For businesses, this is well understood. An old school CFO/controller will be all about paying later, collecting earlier, negotiating discounts, consolidating purchasing, etc.

Generally, anything like this will yield a much higher return than any kind of investment.

Interest rates are decent for cash right now (able to get 4.5% in the states as of Dec).

If you want a relatively hands off approach what everyone has already suggested is your best bet, index funds.

If you like individual stock picking then I recommend in terms of personalities Lyn Alden (twitter, and personal website), Unrivaled Investing (youtube, also has a paid membership), also interviews/Berkshire investor days with Buffet and Munger on youtube. In terms of the classic resources you have "The Intelligent Investor", "One Up on Wall Street", "Security Analysis", "The Little Book that Beats the Market", etc. Please be mindful that this option is a long journey with lots of reading, making mistakes that results in "paying tuition to the market", and not for those who can't control their emotions when it comes to the stock market. However, if like me you find this fun for whatever insane reason then that's where I'd recommend starting FWIW.

For stocks, I strongly recommend reading The Intelligent Investor (Ben Graham). It is very readable and gives a excellent summary of value investing principles, which is on of the safer stock strategies and generally provides decent returns. Reading the Berkshire Hathaway annual reports is also useful in how Buffett things about valuations.

0. Compound interest is your friend

1. Time in market > Timing the market (you're good starting early)

2. Use bogleheads (as mentioned) but check EU specific tax avoidance strategies. Ideally, prefer tax free > tax rebate > taxable investments

3. The younger you are the more risk you can take on, go 10% crypto, 90% equities and don't worry about bonds for now or something along those lines

4. Diversify into US stock, foreign stock, bonds as time goes on rebalance.

5. Once all that is done, look at real estate and other alternative investments.

6. Dollar cost averaging is always a good idea, invest the same amount every month no matter how good or bad the markets are

7. The only caveat to #6 is when you have a lumpsum amount (bonus, etc.) the earlier you invest the more time it spends in the market the greater your returns

The safest is a US Treasury Bond. Unfortunately this is a bad long term investment, due to a poor return vs inflation. It is still good to have some in a portfolio as a hedge.

For a 5- 20 year portfolio: 60% VOO, 40% BND

Re-balance quarterly to keep the ratios constant.

To clarify, VOO/ BND are both Vanguard funds.

What I did is that I looked into a couple of forward-thinking pension funds in my country. These are ones that only invest in index funds and have very low fees. From those, I picked three index funds that felt good - one covering Europe, one covering US and one covering the world - and I've been dumping money in them.

To me, this seemed like the most straightforward way to invest in index funds, keeping a comfortable risk level and not requiring any time from me at all. With the recent economic downturns, it has proven to be quite an OK strategy, as the market fluctuations between Europe, US and the world differ wildly, so the three funds sort of balance each other out.

Additionally, I max out the 401k-equivalent pension fund in my country.

Beside some other good advices (like picking an index) I would recommend investing in learning:

0. Define what's your emergency fund and lock that money into something that you can redeem immediately.

1. Pick a safe investment vehicle and put around 30% of your savings there (expect them to be locked there for 5 years at least)

2. Learn, and plan, about recurring investment/saving

3. Setup your recurring investing/saving plan

4. Learn, and plan, about investing/saving for your next goal like buying a house (this might mean an retirement fund)

5. Setup your investment/saving plan for that goal

6. Learn, and plan, about saving/investing for retirement

7. Setup your investment/saving plan for that goal

Assume this will take you at least 2 years to do.

Index funds, mainly S&P500 (or SXR8 to be exact). My investment horizon is ~25 years away. I also have some investments in other index funds that follow areas I am interested in or understand.

I own a handful of companies stock directly - only ones I actually understand and ones that are always needed. Banks, infrastructure companies, grocery chains and the like. People will always need a place to store their money and get water, food and electricity.

"Time on the market beats timing the market"

It's statistically better to buy a small amount of stocks 12 times a year than one HUGE bundle once a year. That way the value fluctuations will even out in time.

"risk" means different things to different people. I'd say it might be that investing in "safe" assets is risky for you, because over the 10s of years you are investing in, they just won't make you money.

Investing in stocks might lose you 30% one year or another, but will likely make you good money over the long run. Look for as much diversification as you can, avoid single stocks, single sectors or single countries / regions. Eg don't invest in EUR stocks just because you earn in Euros, for example.

Keep enough cash for emergencies though in bank account or liquid safe assets / savings accounts.

IANA Financial Advisor

Follow the advice of the hedge fund people in other comments.

Richer, Wiser, Happier by William Green was a good book.

It talks about investing longterm. Having a very long time horizon as you do is a considerable advantage.

The other main message I got was that (successful) stock pickers expend a stupendous amount of effort to understand and select stocks. And I will never be able to come close to this effort. So either I just don’t, or if I really want to have a few discretionary stock picks, copy what they do (eg https://whalewisdom.com).

My largest current holding is Exxon, because, globally, oil is the source of most things like it or not. I was holding Tesla too, I skipped out mid crash, sadly, I wish he’d focus on his core business (I only bought Tesla because of spaceX too!!) I would think own a Tesla car - hard to say why, there’s just something not quite right with them for me. I have a few smaller oil companies and some banks, I keep tasting Amazon, but always leaves a bad taste !! Really Amazon, Christmas should be you biggest opportunity And apple of course

With interest rates so high and recession possibly looming a savings account would likely be best for the majority of your money. You’re looking for safe. In the US I would say open up a Wealthfront account (3.8% interest) and when you’re looking for more “risky” investing you can use their robo adviser to regularly invest some set amount of money. I am not sure of the equivalent in Europe.

But when talking about safety and return in investing in 2023 I think high interest savings accounts should not be ignored. (Backed by Gov Insurance like FDIC)

Look at your pension….in the UK, if you’re in the 40% tax bracket and with the tax relief, you’ll get an instant return on your money of 67%…the downside is the lock in.

Unfortunately all the books I could recommend are canadian focused, but the gist is investing in etfs with low mer and high diversification.

I use asset allocation etfs, little bit higher mer but extremely straightforward.

Don't try to beat the market, follow the market.

Over 20 years this seems to be a decent strategy, granted that nobody can predict anything, so "safe" doesn't really exist with "investment"

I don’t know anything about European investment channels, but in the U.S. the advice usually goes:

* max out 401k

* max out health savings account (HSA)

* max out IRA, or backdoor Roth IRA if income is too high

* deposit certain amount monthly or regularly into a so called broad based index fund / ETF strategy, having a mix of broad market, growth market, dividend, international, developing market, small capital, and so on ETFs.

I’ve spread my money around index funds, mostly overseas. This all goes through my pension fund though, so I’m not sure what goes into it. The ‘developing world’ indexes seem to consistently do the best.

The important thing to note is that only like 5% of all my income goes into that, so if it all disappears overnight I’ll be bothered, but not in any actual trouble.

I think the amount of risk you are willing to take on will depend on your individual financial situation and goals, as well as your risk tolerance; it is generally considered that investments with lower risk tend to have lower potential returns, while investments with higher risk have the potential for higher returns.

1) Savings accounts and certificates of deposit (CDs): These options offer relatively low risk and low potential returns, as they offer guaranteed interest rates.

2) Cryptocurrencies: They are not controlled by any central authority, it can potentially offer more financial freedom and autonomy. However, it's important to do your own research before investing.

Here's a website you can check out: https://www.ratherlabs.com

3) Treasury bonds: These are considered to be among the safest investments available. They typically offer low potential returns.

And last but not least, I think the best advice I can give you (from my experience) is to DIVERSIFY: it's a risk management strategy that involves investing in a variety of assets, it is generally considered to be a good way to invest, as it can help to mitigate the impact of any single investment performing poorly.

Hope my answer helps!

Broad index funds as a longterm buy and hold investment. I would take a "FTSE all world accumulating", that is all you would need.

https://www.justetf.com/en/etf-profile.html?isin=IE00BK5BQT8...

For the next year sit in cash or pick up stocks that pay good dividents and are poised to grow after the crisis passes (e.g. banking or telecom). 8-10% is achievable. The goal is to offset the inflation while things stabilize. Afterwards look at conventional long-term investment options.

How does historical data support the statement that "safe means lower return"?

Most commenters seem to recognize that index funds are the way to go, and they’re correct. There are some who are pointing out that the future is much more uncertain now and that index funds might not be as good a bet as they used to be.

Here’s the thing, though. Betting on index funds is like betting that our society will continue to function and continue to remain capitalist. If you make that bet, and you are right, all good. You have more money. If you make that bet and socialism rises, no problem. You might lose the money or be taxed heavily, but will receive government services and you won’t suffer later in life. If society collapses entirely, and it’s Mad Max, then it’s ok to lose all the money because money would have become worthless almost no matter how you invested it.

The one other thing I would like to add is that life is short. You never know how short. Father time is undefeated. If there is something you have the opportunity to do in life that you want to do, don’t hesitate to spend the money and do it ASAP. Financial investments are just a means to an end. If you can skip it and go directly to some of the ends, then get them while you can.

Max out your 401k, and save money towards downpayment for a house.

I used to have an all-in 5x levered position on SPY.

I have now de-delevered.

Inflation linked bonds.