Where to invest $500 over 5 years: 3 experts answer

Left to right: Investment firm Perennial Value Management equities analyst Emilie O’Neill; TikTok star Queenie Tan; cryptocurrency research firm co-founder and financial advisor James Gerrard. (Source: Supplied, Getty)

Maybe you’ve never invested before; maybe you’ve dabbled a bit, and you’re looking for different ways to grow your savings.

Whatever it is, there are countless ways you can invest, from different platforms, different investment types (stocks? ETFs?) and even creative ways to ensure your money goes towards a more environmentally-friendly future.

If you had $500 to invest, with a time frame of five years, where should you put it?

If you asked a financial advisor, a ‘finfluencer’ and an investment firm analyst, you would get very different answers.

Yahoo Finance reached out to financial advisor James Gerrard, TikTok star Queenie Tan and Perennial Value Management analyst to find out where they’d tuck away $500. Here’s what they said.

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James Gerrard, financial advisor, cryptocurrency research firm co-founder

Cryptocurrency research firm CoinCurrent co-founder and financial advisor James Gerrard. (Source: Supplied)

• The quick answer: Invest in cryptocurrencies

• The background: Let’s go back five years, when the price of Bitcoin was $827. Today, it’s around $65,700.
  
  “So if you had invested $500 into Bitcoin five years ago it would be worth just under $40,000 today,” Gerrard told Yahoo Finance.
  
  While you probably wouldn’t see the same 7,858 per cent gain in the next five years if you invested in Bitcoin today, it doesn’t mean that other cryptocurrencies aren’t on a similar trajectory.

• The details: “Coins such as Cardano and Ripple that have interesting technology and projects are generally looked upon more favourably from an long-term investment perspective from traders, compared with coins such as Doge which are more sentiment driven but have less compelling longer term prospects,” Gerrard said.

READ MORE: Bitcoin, Ethereum: Which cryptocurrency is right for me?

READ MORE: Doge, Ethereum: 5 Bitcoin alternatives to know about

• The risk: Obviously, cryptocurrency is “extremely volatile,” Gerrard warned, so it’s not for the faint-of-heart or if the $500 is the last of your savings. “So although the potential returns can seem alluring, you always have to keep in mind that there is no such thing as a free lunch and there is a very high level of risk involved with investing in cryptocurrency.”

• The lesson: “Do your research before investing.”

TikTok star, ‘finfluencer’ Queenie Tan (@investwithqueenie)

TikTok star, ‘finfluencer’ Queenie Tan (@investwithqueenie). (Source: Supplied)

• The quick answer: Diversify

• The background: Tan would spread her money around using a concept called ‘core satellite portfolio’.

READ MORE: What is core-satellite investing, and why this expert has built her portfolio around it

“A core satellite portfolio consists of a core of passive investments (like ETFs) and satellites of more active and speculative investment (like individual stocks and crypto),” Tan said.

• The details: Tan would put $250 in global ethical ETFs, $100 each in Australian ethical ETFs and individual stocks, and $50 in cryptocurrency split between Bitcoin and Ethereum.

(Source: Supplied)

Like many other young Australians, Tan is keen on ensuring her investments make for a better planet, which is why she would spread $350 across ethical ETFs. The other $150 is reserved for riskier, but higher-return potential investments like stocks and crypto.

• The risk: Is worth the potential reward, says Queenie. “Since I'm young I'm happy to take on a bit of risk in my portfolio. I tend to stick to the big cryptocurrencies like Bitcoin and Ethereum. I see this as a long term investment rather than a get rich quick scheme.”

Investment firm Perennial Value Management equities analyst Emilie O’Neill

Emilie O'Neill, Co-Head of ESG & Equities Analyst at Perennial Better Future. (Source: Supplied) (Elena Raga)

• The quick answer: Put the whole thing in one place

• The background: ETFs let you buy one basket made up of several stocks, meaning your $500 would be littered across many companies.

• The details: O’Neill also recommends putting your money to the eInvest Better Future Fund (ASX:IMPQ), which is made up of 45 small Australian and New Zealand companies actively working towards sustainable solutions. It’s also won awards, too, and has a pretty impressive 3-year performance of 14.6 per cent per annum.
  
  “Companies held by the fund operate in industries such as healthcare, education, renewable energy or have developed technologies that reduce carbon emissions or improve worker health and safety.”

• The risk: While ETFs are generally considered a fairly safe way to invest, as with any investment, you’re subject to market risk, so if the ETF performs badly, your money will drop, too.

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DISCLAIMER: All of the above is general advice only and does not take into account individual objectives, financial situations or needs. Past performance is not indicative of future performance.

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