High-Risk Investments in the UK- Best Options

High-risk investments - Beginners Guide

Every investment has some level of risk, that is there are always chances of losing money. Sometimes chances of losing money are low and sometimes the chances are very high. High-risk investments are those in which you could lose substantial or all the amount you have invested. Such investments are for those who have a high-risk appetite. In this article, we will talk about what are the best high-risk investments in the UK that you can start right now. We will also cover other major topics like best brokers to buy high-risk investments and how you can get started with an account today. So, stick with us until the very end of the article to have a crystal clear understanding of what high-risk investments are in the UK.

Best High-Risk Investments in the UK

Below is the list of the best high-risk investments that are available in the UK. All the mentioned assets have different levels of risks and potential. So, read each of them carefully and know which is gonna work best for you. 

Bitcoin – the most dominating cryptocurrency 

Bitcoin - High-risk investments

Cryptocurrencies are digital currencies that as an investment are useful for both short and long term investors. And, the riskiest crypto we have is Bitcoin. It is the world’s most revolutionary digital coin that is everyone’s favourite. With hundreds of Cryptocurrencies around, Bitcoin has managed to be able to top the market cap charts, again and again. In 2009, when it was first introduced, it was started at less than $0.01 per coin and today at the time of writing this article it has surpassed over $45,000. That means, if you had invested $1 back in 2009, you would now be a multi-millionaire and many have become so. However, the one thing to keep in mind is that an asset is highly productive only if it is highly risky. Simply put, Bitcoin is a risky investment and not everyone can handle it, as there are many variables standing in the way of Bitcoin. 

BITCOIN- high risk investment in the UK

It is not likely that you will always make profits, chances of losing substantial amounts or even everything you have invested are always more. For example, if you had invested in Bitcoin in 2017, when it skyrocketed- you would have paid $20,000 and 12 months later that same crypto was worth just $3,300. That means you would have faced a drop of 83% in just one year. 

Bitcoin graph

This is how threatening Bitcoin investment can be. So, it is clearly for those who are willing to lose.  And, if you are a beginner you are advised to opt for a low-risk dollar cost average investment strategy. This strategy allows you to make money on a monthly basis but on a small scale. That means you will receive the same amount each and every month. 

And if you are looking for a broker to start investing by depositing small amounts then eToro is the best option for you as it allows you to start by investing a minimum of $25 into Bitcoin without paying any Commission. Furthermore, the platform is regulated by the FCA so it also puts off all worries of whether or not your investments are safe.

Vanguard Emerging Markets Stock ETF 

This high-risk investment is the most suitable for beginners. And, if you are looking to access high-risk investment on the foreign exchange then this is the right place for you. In this investment, Vanguard will buy and sell shares on its trader’s behalf as you are investing in an ETF. This investment allows you to diversify your portfolio as 44% of your portfolio will be directed to Chinese stocks, 16% to Taiwan and the remaining 10% to India. Other countries like Russia, Malaysia, South Africa, Indonesia, Brazil and the Philippines are also included. It gives you access to over 5,000 stocks. For UK retailers it is not an easy process to access companies like Alibaba Group Holding Ltd, Taiwan Semiconductor Manufacturing Co. Ltd, Meituan Dianping, Naspers Ltd, Reliance Industries Ltd and many more. However, thanks to the ETF that has made it easy for us to access such high profile companies.

If you want to buy Vanguard Emerging Stock Index Fund or trade indices then you can do so on our most favourite eToro, without paying any commission. 

Rolls Royce

For those who do not know, Rolls Royce is a British Luxury Car brand and an aero-engine manufacturer established in 1904 in Manchester. It is the by-product of the partnership of Charles Rolls and Henry Royce. 

Now, coming back to our main topic, Rolls Royce is a very risky investment.

Just 12 months ago, Rolls Royce stocks were trading above 2,000p each. Since then, the shares have been falling down to 82p. That means a decline of 95% in 12 months. That means if you had invested £10,00 into Rolls Royce shares 1 year ago, your investment would be somewhere near £500.

Rolls Royce- high risk investment in the UK

The question here arises whether Rolls Royce is gonna stand back or not. But to understand this we first need to look at the fundamentals, that is it supplies many of its engines to the airline Industries, which has already plummeted due to covid 19. And this lack of demand for the engines forced Rolls Royce to issue £2 billion worth of equity. 

Well, it is very difficult to predict whether Rolls Royce will ever be able to get back to 2,000p.

Cineworld- UK’s Largest Cinema Chain

In the year 2020, the stocks for Cineworld world started at 220p each and in November the same shares were dropped to 24p, dropping market capitalisation to just £33 million. That means only in the 10 months of trading Cineworld shares have lost 89% in valuation. Cineworld is not the only sufferer, pubs, hotels, restaurants, gyms were all under severe financial pressure during the lockdown. However, the one who suffered the most and had a torrid time in 2020 is Cineworld. It is still battling its way through the wider impact of covid. 

Simply put, Cineworld is no doubt a high-risk investment. The upside potential is enormous, and it is hoped that Cineworld will come back to normality. 

Hedge Funds 

Hedge funds in a way are like mutual funds as both allow you to sell and buy shares. However, it is much riskier. In this capitals are pooled from individuals or institutional investors to invest in different assets. Unlike mutual funds, hedge funds allow you to invest in anything from real estate to cryptocurrencies. Hedge funds ensure that returns are maximized and the risks are minimised, regardless of whether the market is going up or down. 

Mini Bonds 

Mini-bonds are often called high-interest bonds. These bonds allow investors to invest in a company and receive a fixed rate of interest over an agreed period of time. At the expiry of the contract, the initial investment is returned to the investors. Mini-bonds are often highly subjective to high risks. Capital is raised by small companies or startups. That means, if the company fails, you would lose all the money you have invested. 

How to choose the Best High-Risk Investments 

Upside Potential

The very first thing you need to evaluate is the profit you will make in the future through your preferred investment asset. Well, we know that it is very hard or nearly impossible to know what tomorrow is gonna serve you even if you are an expert at reading charts and deploying technical indicators. So how to know the upside potential of the asset? Well, you can simply evaluate the historical gains of that particular asset so that you can have an idea of the behaviour of the asset and how the asset has performed in the past. 

How much can you lose? 

Every investment asset carries a risk to some extent. There is no investment asset that guarantees you no risk. And, when you are investing in a high-risk investment asset, then the chances of losing becomes stronger. But the thing here to consider is how much you are risking? Ultimately you just need to ensure that you fully understand the asset, how much you are risking with your chosen asset and the fact that you can lose everything you have invested.

Diversification

Diversification plays an important role as it limits your risks to some extent. For example, if you want to invest an amount of £500  of your capital, and if you are smart enough then you would split it across as many high-risk investment assets as possible. 

And, if you are investing through eToro then with a mere deposit of $500 you would be allowed to purchase 11 different high-risk investments. Diversification ensures that if a few of your selections do not work out for you others will. 

How liquid is the investment? 

Your high-risk investment must be liquid, if it is not then that simply means you cannot sell it for cash at the time you need. For example,  cryptocurrencies and ETFs are highly liquid which means you can exit your position at any given time during market hours. But that’s not the case with bonds. 

So, when selecting your high-risk investment make sure to choose the investment assets that are liquid.

Best Platforms to invest in High-Risk Investments 

There are hundreds of brokerages in the market, but it is very difficult and challenging to find the brokerage that is suitable for you and fits your financial goals perfectly. It requires ample time to analyze and look at the key metrics like fees, commissions, investment assets, regulation, for each and every platform.

Therefore to save your time and energy we have listed down the best brokerage platforms that you may consider for making high-risk investments in the UK.

eToro

eToro logo

eToro is always at the top of our lists of best brokerage platforms if you are based in the UK. This platform is packed with all the amazing qualities on which we measure the best brokerage platform. It is the most favourite trading broker in the UK for several reasons. However, the very first reason that attracts thousands of traders towards it is that it offers a variety of assets- many of which are classed as high-risk investments and doesn’t charge any Commission. Except you will be required to pay a 0.5% fee on all your deposits and $5 on each and every withdrawal. It is the cheapest brokerage platform in the UK. 

For beginners, eToro provides the copy trading feature. This feature allows you to copy ongoing trades of expert traders. You can also use the Copy Portfolio feature, which allows you to diversify your investment portfolio.

Unlike other platforms, account creation on this platform is not time-consuming. It takes only a few minutes to create an account on eToro. Once you have done creating your trading account, you are then required to fund it to start your trading journey. For the convenience of its trader’s, it accepts various payment methods for making a deposit such as Debit/Credit Card, Bank Account, e-Wallet e.t.c. The platform also offers a mobile application for the convenience of its customers.

Pros 

  • Beginner-friendly
  • Allow you to buy stocks without paying any Commission
  • Allow you to trade CFDs in the form of stock,
  • Regulated by the FCA
  • Offers 150+ ETFs
  • Offers a variety of payment methods

Cons 

  • Not suitable for advanced traders

IG- Trusted UK Broker 

IG logo- Trading Platform

Another amazing broker that offers a variety of assets including high-risk investment assets, international stocks, ETFs, mutual funds and many more is IG. It is regulated by FCA, which means you don’t have to worry about the safety and security of your funds. The platform gives you access to over 12,000 assets. It also allows you to access cryptocurrency markets, apply leverage and engage in short-selling. This trading platform is highly suitable for those looking forward to making long term investments through stocks and shares ISA. 

The account creation on this trading platform is also super easy. However, you do need to pay an entry-level fee of £8. But the good thing is that if you trade regularly then this entry-level fee will be reduced to £3. Once created an account you will be required to make a minimum deposit of $250 on this platform to initiate trading. This minimum deposit isn’t the fee of this platform but the working capital that is needed by the investors to start investing journey.

Pros 

  • Well reputed UK Broker 
  • Offers more than 12,000 traditional assets
  • Offers leverage and short selling
  • Offers spread betting and CFD products
  • Offers educational tools 

Cons

  • $15 commission on US stocks 
  • $250 minimum deposit amount

Plus 500- Commission-free Trading Platform

Plus 500-  high risk investment in the UK trading platform

For those who are looking to trade high-risk investment assets in a more advanced manner, Plus 500 is highly recommended. Because every trading instrument is represented via CFD on this trading platform. Moreover, it allows you to apply the leverage of up to 1:30. That means if you have $100 in your trading account then you would be able to trade a value of $300. 

The platform is regulated by the FCA.

Hence it makes sure that all of its traders’ funds are not compromised at all. Its parent company is listed on the London Stock Exchange. The account creation on this platform is not time-consuming. All you are required to do is to enter your few basic details, undergo a verification process, make a deposit and that’s all. To make a deposit on this platform you can either use debit/credit cards, bank transfers or PayPal. 

Pros 

  • Regulated by the FCA
  • Access to a wide range of investment assets 
  • Leverage of up to 1:5 for retail customers
  • Easy and fast account creation
  • Offers short selling 

Cons 

  • CFDs only 
  • Not beginners-friendly

Things you should ask yourself before investing in high-risk investments

High-risk investments are not for every investor, the risks of losing are so high that cannot be handled by everyone. Therefore, before you make up your mind about investing in high-risk Investments, you must ask a few questions to yourself that are listed below.

#1 Am I prepared to lose my investments? 

See the thing is every investment carries a risk to some extent. Of course, you may enjoy higher returns on your investments but there are chances that you may lose everything you have invested. So before you make any such commitment, first ask yourself, are you ready to lose everything you have invested or not? If you are having second thoughts then do not proceed further. 

#2 Is the investment I am making ‘liquid’? 

This is very very important because if you are not fully aware of what you are actually doing if you cannot understand it then you can never make much out of it. So, before you invest in you should know whether your investments are liquid or not, that is whether it is available when you need it? Is it easy to sell at the time you need it? Would people be willing to buy this investment from you? and many more. So it is better to first search for the answers to all such questions before you make any move. 

#3 What if things go wrong?

What is the guarantee that your investments are safe? What if you wake up knowing you have money on your investments? Well, I know having such thoughts scares you inside-out. That’s why to never face such a situation you must make sure that you are using a regulated broker. In the UK the FCA authorization ensures that the platform is safe and trustworthy. If the platform is not regulated then you cannot raise a dispute if it dupes away your money. So, confirming the regulations becomes a necessity when choosing a broker. You can check whether a platform is regulated or not on the Financial Services Register. 

#4 Do I need to get financial advice?

Well, that totally depends on your understanding of the assets and investments. If you believe you have a keen understanding of investments and risks then you are good on your own. But, if you believe you still are lacking somewhere then yes you should seek financial advice. But before you choose any advisor make sure to confirm your advisor is regulated by the FCA.

To add more to your knowledge you can also take help from the internet, you can read investment blogs, watch investments related YouTube videos and listen to investment podcasts. The choice is all yours.

How to buy high-risk investments? 

Here, we are taking eToro as an example to make you understand the whole procedure of buying high-risk investments in a super-easy way. And, of course, because we highly recommend you to choose eToro as this platform is packed with all features that a reputed platform should have. 

Step 1: Open an account 

eToro step 1- open ana account

The very first step to start creating an account is to register yourself on its official website. To do so, you are required to fill in a registration form that you can easily find on its official website. In this registration form, you will be required to enter a few of your details such as your name, email, phone number and also required to set a strong password. After entering all of your required details make sure to accept terms and conditions. 

eToro will ask you to verify your identity by uploading some of your documents, don’t worry as your documents are truly safe on this platform.

However, you don’t need to undergo verification until you deposit more than $2,250 or you request a withdrawal.

Step 2: Fund your account

Now that you have successfully registered on this platform you are now ready to fund your account by making a minimum deposit of $50. This funding amount isn’t the fee of the robot but the working capital that is needed by the traders to execute trades. eToro offers several payment methods for the convenience of its traders, you can choose whatever method you feel more comfortable with. The payment methods that are supported by eToro are Debit/Credit Card, PayPal, Skrill, Nettler, and Bank transfer.

Step 3: Buy high-risk investments 

Now that you have successfully funded your account, you are then required to select your preferred high-risk investment asset. For example, suppose you are buying Bitcoin, then simply enter the name Bitcoin in the search box at the top of the page. After selecting it, enter the amount you wish to invest, click on the ‘Open Trade’ button. Congratulations, your high-risk investment is successfully added to your eToro portfolio.

Conclusion

high risk high return

Though High-risk Investments offer much greater returns, it is well suited for experienced investors who have a firm understanding of the additional risk involved in the asset. Since high-risk investments also offer higher risk, it is not for insecure investors. If you cannot afford to lose all of your investments then the high-risk investment is clearly not for yourself. 

Nevertheless, if you have an appetite for losing and are willing to invest in high-risk investments then eToro is your go-to platform. As it is Commission free and allows you to start your investment journey by investing in the minimal amount of just $25. 

FAQs

  1. What is a high-risk investment? 

High-risk Investment is that investment in which the risk of losing is much higher than other investments. In this investment, you can even lose all the money you have invested. 

  1. What are examples of high-risk investments? 

There are many examples of high-risk Investments including emerging market bonds, stocks, cryptos crowdfunding, commodities, peer to peer lending and many more.

  1. Is high-risk investment well suited for me? 

As long as you can afford to lose all you have invested, it is suitable for you. 

  1. How much should I invest in High-risk investments? 

you are advised to keep your high-risk investment to 5% of your portfolio capital.

  1. Which is the riskiest high-risk investment? 

The riskiest of all is Bitcoin. This digital currency is the most volatile asset that has managed to outperform over the past decade.