The Motley Fool

How I’d invest £2,000 in the stock market right now

UK investor holding smartphone and monitoring shares
Image source: Getty Images

The UK stock market has moved higher over the course of 2021. The main index referred to is the FTSE 100. However, when I’m looking at how to invest in the stock market in general, I can also look to the US, where some of the most popular stocks are listed. So with a free rein as to where and how I allocate my money, here’s how I’d go about putting £2,000 to work.

Picking the hot areas

One way that I’d split up the money is by looking at the hot areas right now. If momentum is with an industry, then this could bode well for 2022 and beyond. It could mean that the financial performance could improve, something that could lead to more investors picking up shares in the future.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

For example, one area I think is hot is virtual reality (the metaverse). Not only has Facebook rebranded to Meta to focus on this area, but other more niche stocks are doing really well here too. I wrote about Roblox, an online gaming platform that allows users to build games within the virtual world. The share price has almost tripled since it went public at the start of this year.

Another area is renewable energy. This has been topical for a while, but the recent COP26 summit has reinforced commitment and investment from governments and corporates. I think this will mean good growth for the sector going forward, particularly for the energy providers that are making use of such things as wind and solar infrastructure.

Investing in a balanced portfolio

Having £2,000 to invest means that I can pick a broad range of stocks to include. It’s important not just to look at how to invest in the stock market, but rather the different types of stocks within the market. Some will be paying out generous dividends. Others could offer high growth prospects. Finally, some will lack volatility, but can outperform during times of uncertainty.

Personally, I’d look to split it something like 40% towards income, 40% towards growth and 20% towards defensive stocks. This should give me a balanced portfolio, achieving multiple aims and minimising risk.

But while I think this is a good starting point, things do change over time. For example, as I get closer to retirement age, I’ll probably want to focus more on getting income to replace my work. Some of the growth stocks also might be a bit too high-risk for comfort at that age. Yet by starting out with a balanced portfolio in the first place, it makes it easier to make slight tweaks over time.

Investing in the stock market now

There’s always a tendency to think about holding off putting cash in the stock market until we see a crash. In reality, no one knows when the next correction will be. As they say, time in the market beats timing the market! So when thinking long term, I’d look to follow the above pointers and start investing now. 

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you'll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

Jon Smith has no position in any share mentioned. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. The Motley Fool UK has 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.