Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
How to Invest £250,000
Lucy Miller
10th Aug 2020
We’ve already covered how to invest if you’ve got a spare £10,000 to play with. But what if your coffers are looking a bit more rosy than that?
If you’ve got a bit more money to invest, you’ll want to consider longer term strategies for growth. It’s likely that, with a quarter of a million to potentially grow, you’re going to be relatively comfortable in your retirement anyway and don’t need to squirrel away your money in savings accounts or ISAs.
So, how should you look to invest if your financial pot is in the hundreds, rather than the tens, of thousands?
You might have come into money through inheritance, through selling a business, or for any number of other reasons. You should still think carefully even if you feel like you’re having a bit of a windfall, though. With investing, the main thing to think about is whether what you’re spending your money on will grow in the long-term. So sports cars, which will lose value, are most definitely out. Sorry, aspiring boy racers!
Here are some ideas for things that you can invest in that will grow, rather than fall, in value. If you want to learn how to invest fairly substantial sums of money, you might want to bookmark this one…
- How to Invest in Property
- Peer to Peer Investing
- How to Invest in the Stock Market
- Investing in Assets
How to invest in property
Investing in property can be a great way to make money in the long-term, especially if you’re savvy about the area that you buy in. A quarter of a million might not get you much in London, but buy in a smaller city or one with a thriving or growing student population you could find yourself with a number of properties that you could then make a tidy profit from.
Of course, there are various things that you can do with a property that you’ve invested in. You could rent it out to students in a university town, or to young professionals in up and coming areas. If you’ve invested in a project, on the other hand, you’re likely to want to spend some time making improvements before flipping it for a profit.
So, how to invest wisely if you’re investing in property? Firstly, know that it isn’t the quickest money making scheme ever. You’ll need to pay attention, invest time, and make sure you’re not purchasing a money pit. Secondly, make sure you research the area you’re buying in wisely. Property prices do tend to rise, but in some places (*cough* London) they rise faster than others. Look for outer areas in cities that are being labelled as “up and coming”, and you’re likely to be onto a winner.
Peer to peer investing
Another option for your investment portfolio is peer to peer lending. Cutting out the middle-man (i.e., the bank), peer to peer lending allows individuals to borrow or lend money, for any reason they wish. Individuals might want capital to start a business, for example – and lenders might believe in their vision and want to support them with it.
That sounds great, you might think – but how can you make money from it? Well, you’ll keep all the interest yourself instead of having it scooped up by a bank, to start with. Often, interest rates are high with this kind of lending – and at the moment, when the basic interest rate is so low, this might be something that you want to consider.
The reliability of the borrower is also likely to determine how much money you make from interest. You are likely to earn more by lending to a less reliable borrower, because you’re taking on more risk. Most peer to peer lending platforms will rate their borrowers in terms of their reliability, so you can see exactly what you’re dealing with.
Of course, there are risks with peer to peer lending – this is just one of them. Make sure you research the platform you’re using before you make any real commitments.
How to invest in the stock market
£250,000 is a lot of money, and will give you the opportunity to spread your investments across a diverse portfolio. This is something that you should definitely do if you’re investing these kinds of amounts in the stock market. You don’t want to invest your quarter mil in one sector or in a single business and risk losing it if the market takes a turn for the worse, do you?
Remember to do your homework, too. A business might look exciting now, but does it really have the potential for long-term success? Ask yourself how it is managed, whether the sector it is in is growing, and what the owners’ ambitions look like. Are they realistic? Do this for every business you buy shares for, and keep a close eye on the stock market to see how they’re doing. Check out our stock market articles for more help. If you use a broker, make sure to read reviews.
A bit about dividends
One of the advantages of investing in stocks is dividends. A dividend is a type of interest that is paid to investors for holding specific stocks in their portfolio. Investing in stocks that pay dividends is one way to generate passive income and grow the value of your initial investment.
With a £250k pot, you may be able to see generous returns through dividends! Some stocks pay up to 5% per year which would generate an additional £13,750 in income (assuming a 15% dividend tax rate).
We must note here that dividends are not guaranteed and can go down. It is a good idea to sp0eak to a professional before deciding to invest in dividend stocks.
Investing in assets
If you want to invest your money in material assets, you need to be absolutely sure that what you’re buying is going to increase in value. Not everything will, but you can be confident that the following items won’t be losing their value any time soon…
- Precious metals, e.g. gold or diamonds
- Art
- Antiques
- Collectible items, for example rare vinyls
- Rare musical instruments
We have more advice on investing in these kinds of items here.
If you have large amounts of money to invest, Money Magpie always recommends that you speak to a financial advisor. Remember that no investments are completely secure, and that any investment you make can lose, as well as make, money.
Have you had success investing a large amount of money? If so, we’d love to hear how you did it. Let us know over on the forums.
*This is not financial or investment advice. Remember to do your own research and speak to a professional advisor before parting with any money.
£250k is nothing these days. In my opinion if inflation is 7.5% banks are paying a max 1.5% then losing money on the wrong shares adds another potential loss to it. I reckon hold fast for at least 6 months so reduce your losses due to inflation in the hope that an interest rate increase will come to the rescue.
I get 4.95% on my easy access savings account. Don’t mis-lead people pls
But be careful. UK govt only guarantees up tp £85k. So if you want to invest £250k you need to set up different names/accounts x3
Wow, if only!
Would love to have this sort of money to invest.