With £2k to invest, here are the top stocks I’d buy

Jon Smith looks at the top stocks he’d buy at the moment depending on what risk level he was happy to take with a £2k investment.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.

Image source: Getty Images

As the end of year approaches, I might be due a bonus from work. I could find myself with £2,000 or so that I want to invest in the market. If that’s the case, then this is how I’d allocate the money into the top stocks at the moment.

Setting my risk tolerance

To begin with, I’d think about the risk I want to take on with the money. This depends on the current make up of my existing portfolio. If I’m looking to try to increase my average annual return, I’d go for a more ambitious and risky set of stocks. Usually, this risk allows the potential for higher returns than other, safer stocks.

On the other hand, I might want to buy top stocks for my defensive portfolio. It’s impossible to predict the future, but I can look to invest in conservative ideas and stocks that should perform better than the broader index if we see another market crash.

Once I’ve decided the risk level I’m happy to go with, I can choose the specific companies.

Top stocks for growth

To increase my growth portfolio, I’d look for a mix of stocks based on both market capitalisation and geography. The FTSE 100 does offer some good growth stocks, but I need to remember that this is a mix of the largest companies listed in the UK. So I think I’m better off looking at the FTSE 250 and below to find some top stocks that have the potential for serous growth. I’d specifically look at buying renewable energy stocks, such as the Renewables Infrastructure Group. 

I also want to look across the pond to the US. The US equity markets have smashed it so far this year. Recently, I wrote that the indices do look expensive. However, I’d still consider buying some selective stocks that offer value. For example, I think the IPO this week of Rivian could be an attractive buy.

A more conservative approach

If I’m looking to increase my defensive holdings I’d stick to top stocks within the FTSE 100. I’d look to buy half a dozen firms, but limit my exposure to any one sector or theme.

Therefore, I’d pick one or two stocks from areas including utilities, supermarkets, defense, healthcare, and financial services. The ones picked can still offer me good growth prospects or income payments, but should carry less risk than the aggressive growth ideas mentioned above. 

For example, AstraZeneca is a company that has a solid track record of share price returns, coupled with relatively low volatility. Given the size and nature of the business, it should be able to weather any economic storm that comes through. This makes it an appealing stock to own if I’m wanting to buy lower risk stocks.

Overall, the attributes that make up a top stock are varied. It’s subjective, and dependent on what my goals are or what level of risk I’m wanting to take on. Ultimately, with £2k to invest, I can find ideas to suit my requirements.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Jon Smith and The Motley Fool UK have no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

2 ‘irresistible’ FTSE stocks to buy before the market recovers!

For me, the FTSE is the most attractive index to invest in. Valuations are low and yields are high. So…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

Is NIO stock a buy at $20?

NIO stock has been pretty volatile over the past few months. Here, Dylan Hood takes a look to see if…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

I’m buying more Lloyds shares at 45p! Here’s why

Lloyds shares look cheap to our writer at present. Charlie Carman outlines the factors behind his decision to invest more…

Read more »

Jumbo jet preparing to take off on a runway at sunset
Investing Articles

When will the Rolls-Royce share price recover?

The Rolls-Royce share price may be down, but cash flows are surging! Zaven Boyrazian explores how long it could be…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

1 dirt-cheap FTSE 100 stock I think could TRIPLE my money!

Demand for lithium is forecast to surge by 42 times, enabling this FTSE 100 stock to potentially supercharge its profits…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Should I invest in the FTSE 100 – or try to beat it?

Our writer has the option of investing in a FTSE 100 tracker fund. So why does he choose to buy…

Read more »

Young black woman walking in Central London for shopping
Investing Articles

£1,500 to invest in a Stocks and Shares ISA? Here’s how I’d do it

Our writer has been investing in his Stocks and Shares ISA. Here he details how he could put £1,500 in…

Read more »

One English pound placed on a graph to represent an economic down turn
Investing Articles

2 top FTSE 100 shares I’d buy before the market rebounds!

Christopher Ruane identifies a pair of FTSE 100 shares that have both tumbled in the past year and that he…

Read more »