What to do with £10,000 is, of course, entirely up to you. One thing to be aware of is that with investing comes risk, and with risk comes unpredictability. The world of investing can seem overwhelming for those who don’t know their bonds from their shares, so we’ve highlighted seven of the best ways to invest £10k below:
1. Investing £10k in your pension
If you were to invest £10k into your pension pot, you’ll not only benefit from government tax relief, but also from the free cash top-ups from employers if you’re in a workplace pension scheme.
For the self-employed, it might be good to consider a self-invested personal pension or ready-made personal pension. Ultimately, investing in a pension is investing in your future.
2. Stocks & shares ISAs
Stocks and shares ISAs are a great short to medium term investment option for tax efficiency. You won’t have to pay any income or capital gains tax on the interest you earn when you invest £10k into a stocks & shares ISA.
3. Shares
When you buy stocks and shares in a company, you’ll earn money when the value of that company goes up. While this, of course, has an element of risk to it since the company’s value could also go down, you may also benefit from receiving regular dividends if the company does well.
4. Bonds
Bonds represent a company or government debt. When a company or government issues a bond, they are issuing debt with an agreement to pay interest against the money you’re loaning them. They typically pay out annual interest while repaying their debt. Bonds are often considered a safer type of investment than stocks, especially for short-term investors.
5. Investment funds
An investment fund is where you pool your money or capital along with other investors to invest collectively and therefore make more money. With investment funds, however, you don’t have the same voting rights as you would with shares, but they are considered lower risk than just investing in one company.
6. Property
Investing in property, particularly in the buy-to-let market, is seen by most people in the UK as one of the safest forms of investment, generating reliable income in the form of rent. However, you must also consider the risks posed by the housing market and weigh up the value of your prospective returns against your mortgage.
7. Commodities
Commodities, such as precious metals, oil and stones are another option for investing. These, however, are subject to the same unpredictable fluctuations as other investments. You can usually invest in commodities via an Exchange Traded Fund, or ETF.
Putting your money into a savings account with a competitive rate of interest is also a form of investing. If you’re looking to diversify your investment portfolio and keep some access to your cash, you might be better off investing your money in savings accounts with competitive rates of interest.
