Walk on the wild side of finance

Sometimes you want a little excitement from your investments. We have all read about shares or funds that delivered 100 or even 1,000 per cent growth in a matter of months and wished we had a piece of the action.

When taking the high-risk route, you should always follow the gambler's maxim and only put in what you can afford to lose. After all, what you are doing is little more than a calculated gamble.

"There are three reasons for taking risks," says Martyn Page, investment researcher with Countrywide, a network of independent financial advisers. "In the hope of high returns, for the thrill of the punt, and as an education. People who invested in emerging markets five years ago will have learnt a lot from anxiously watching their investments shoot up and down."

Mr Page's current favourite high-risk funds are largely investment trusts. "I like Herald, which invests in media and computer services, the Taverners trust by Aberdeen Asset Management, investing in pubs and entertainment venues and First Ireland, which aims to tap into peripheral European economies."

He also names a couple of higher-risk unit trusts. "Remember that high risk does not mean plain stupid, so you can still stick with some of the established fund providers. I like Jupiter Financial Opportunities, which invests in banks and property services, and Framlington Health, which goes for smaller US health companies."

Patrick Connelly at Chartwell Investment Management says there are currently two main areas for high-risk investment. "Technology funds are very much in vogue. Fund managers like Aberdeen Asset Management, Henderson, SocGen and Scottish Equitable all have technology funds, but I would only put a small percentage of my portfolio in this type of fund, no more than 15 per cent."

The other area is the Far East and emerging markets, where investors have suffered great swings of fortune. "The Nikkei has dropped from 39,000 to 11,000 then back up to 18,000 in recent years, so you could have made sizeable losses or gains," Mr Connelly says.

"You could try Fidelity's South-east Asia fund, which has a large amount invested in Hong Kong, which is relatively stable. If you want to cover Japan there is the Jupiter First Eastern Fund, while Fidelity covers small and medium-sized companies in its Japan Special Situations fund. This fund has always performed well in its sector but has still delivered only 3 per cent growth a year over the last decade."

Remember that investing overseas carries the added risk involved in putting your money into another currency. Changes in exchange rates could wipe out - or enhance - your gains.

Internet stocks, while currently about as sexy as stocks can be, are a bubble that could easily burst. "The valuations of internet-based companies are not based on an awful lot of substance. They have no profits and only the promise of future returns," says Paul Penny, managing director of Financial Discounts Direct.

Another option for risk seekers are venture capital trusts (VCTs), which invest in small companies unquoted on the stock exchange. This comes with tax breaks; your investment gets 20 per cent tax relief and you also pay no tax on your profits. You have to hold your investment for five years. You get the tax breaks because VCTs are high-risk, but the Government wants to encourage invest-ment in start-up companies.

"My preferred type of VCT are those that invest in preference shares in very small companies with less than pounds 10m market capitalisation," says Mr Page. "This is a lower risk way of investing because it puts you higher up the list for payment if the company lapses, higher than ordinary shareholders."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Voices
Homeless Veterans charity auction: Cook with Angela Hartnett and Neil Borthwick at Merchants Tavern
charity appealTime is running out to secure your favourite lot as our auction closes at 2pm tomorrow
Arts and Entertainment
J Jefferson Farjeon at home in 1953
booksBooksellers say readers are turning away from modern thrillers and back to golden age of crime writing
Sport
Amir Khan is engaged in a broader battle than attempting to win a fight with Floyd Mayweather
boxing Exclusive: Amir Khan reveals plans to travel to Pakistan
News
Stacey Dooley was the only woman to be nominated in last month’s Grierson awards
mediaClare Balding and Davina McCall among those overlooked for Grierson awards
PROMOTED VIDEO
Voices
Joseph Kynaston Reeves arguing with Russell Brand outside the RBS’s London offices on Friday
voicesDJ Taylor: The great tradition of St Paul and Zola reached its nadir with a worker's rant to Russell Brand
News
Twitchers see things differently, depending on their gender
scienceNew study shows that birdwatching men have a lot in common with their feathered friends...
News
i100
Arts and Entertainment
Caroline Flack became the tenth winner of Strictly Come Dancing
tvReview: 'Absolutely phenomenal' Xtra Factor presenter wins Strictly Come Dancing final
Life and Style
A still from the 1939 film version of Margaret Mitchell's 'Gone with the Wind'
life
News
Xander van der Burgt, at the Royal Botanic Gardens, Kew
scienceA Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

The week Hollywood got scared and had to grow up a bit

The week Hollywood got scared and had to grow up a bit

Sony suffered a chorus of disapproval after it withdrew 'The Interview', but it's not too late for it to take a stand, says Joan Smith
From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?

Panto dames: before and after

From Widow Twankey to Mother Goose, how do the men who play panto dames get themselves ready for the performance of a lifetime?
Thirties murder mystery novel is surprise runaway Christmas hit

Thirties murder mystery novel is surprise runaway Christmas hit

Booksellers say readers are turning away from dark modern thrillers and back to the golden age of crime writing
Anne-Marie Huby: 'Charities deserve the best,' says founder of JustGiving

Anne-Marie Huby: 'Charities deserve the best'

Ten million of us have used the JustGiving website to donate to good causes. Its co-founder says that being dynamic is as important as being kind
The botanist who hunts for giant trees at Kew Gardens

The man who hunts giants

A Kew Gardens botanist has found 25 new large tree species - and he's sure there are more out there
The 12 ways of Christmas: Spare a thought for those who will be working to keep others safe during the festive season

The 12 ways of Christmas

We speak to a dozen people who will be working to keep others safe, happy and healthy over the holidays
Birdwatching men have a lot in common with their feathered friends, new study shows

The male exhibits strange behaviour

A new study shows that birdwatching men have a lot in common with their feathered friends...
Diaries of Evelyn Waugh, Virginia Woolf and Noël Coward reveal how they coped with the December blues

Famous diaries: Christmas week in history

Noël Coward parties into the night, Alan Clark bemoans the cost of servants, Evelyn Waugh ponders his drinking…
From noble to narky, the fall of the open letter

From noble to narky, the fall of the open letter

The great tradition of St Paul and Zola reached its nadir with a hungry worker's rant to Russell Brand, says DJ Taylor
A Christmas ghost story by Alison Moore: A prodigal daughter has a breakthrough

A Christmas ghost story by Alison Moore

The story was published earlier this month in 'Poor Souls' Light: Seven Curious Tales'
Marian Keyes: The author on her pre-approved Christmas, true love's parking implications and living in the moment

Marian Keyes

The author on her pre-approved Christmas, true love's parking implications and living in the moment
Bill Granger recipes: Our chef creates an Italian-inspired fish feast for Christmas Eve

Bill Granger's Christmas Eve fish feast

Bill's Italian friends introduced him to the Roman Catholic custom of a lavish fish supper on Christmas Eve. Here, he gives the tradition his own spin…
Liverpool vs Arsenal: Brendan Rodgers is fighting for his reputation

Rodgers fights for his reputation

Liverpool manager tries to stay on his feet despite waves of criticism
Amir Khan: 'The Taliban can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'

Amir Khan attacks the Taliban

'They can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'
Michael Calvin: Sepp Blatter is my man of the year in sport. Bring on 2015, quick

Michael Calvin's Last Word

Sepp Blatter is my man of the year in sport. Bring on 2015, quick