Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
Here’s How I Would Invest £10K (If I Had It Sitting Around!)
Ruby Layram
1st Nov 2024
Got £10,000 sitting around, begging to be put to good use? Lucky you! Whether you’ve inherited a tidy sum, received a bonus, or finally managed to save up, £10,000 is a fantastic amount to kick-start a serious investment journey.
But with so many options out there, it’s tricky to know where exactly that money should go. In this guide, I’ll walk you through five of the best ways to invest £10,000 and help you weigh up the pros and cons of each.
Before I jump in, its important to note that isn’t investment advice. These are simply 5 investment opportunities that I like the look of!
1. Stocks and Shares ISA
A Stocks and Shares ISA is probably the most beginner-friendly way to invest £10k. ISAs are a tax-free way to invest, meaning you won’t pay capital gains tax or income tax on any profits you make within this account.
The Stocks and Shares ISA is particularly handy for long-term investments, making it perfect for those willing to hold onto their investments for at least five years.
These investment accounts feel similar to savings accounts (which is why they a great for beginners). The difference? Stocks and shares ISAs invest your money into the stock market and work to manage and adjust your portfolio. Some ISAs are fully managed – you can just sit back and let the pros do all of the decision making. Whereas, other’s let you pick and choose which stocks you would like your money to go into.
How to Invest in a Stocks and Shares ISA
First things first, you’ll need to pick an ISA provider. Most banks and financial institutions offer Stocks and Shares ISAs, so look for one with low fees and good reviews. Once you’ve opened your ISA, you can start choosing your investments.
Most ISAs allow you to invest in a range of assets, including stocks, bonds, and funds. If you’re unsure where to start, you might want to consider investing in funds, which spread your money across a range of companies and industries to reduce risk.
Or, if you’re feeling adventurous, you could handpick a few stocks yourself (check out our stock research guide to help you!).
One last thing to remember: you can invest up to £20,000 in ISAs each tax year, so if you’ve got more than £10K down the line, you can keep adding to your account tax-free (individual tax circumstances apply)
2. Exchange Traded Funds (ETFs)
Exchange-Traded Funds (or ETFs) are a popular investment choice these days, especially for those who like the idea of a diversified portfolio without having to manage individual stocks and shares.
ETFs are one investment product that represents a basket of investments—you get a selection of multiple assets that usually fit under an umbrella. Because they’re traded on stock exchanges like shares, they’re easy to buy and sell.
My Top ETF Picks
The beauty of ETFs is that there’s one for every type of investor. Below are a few top picks to consider:
Gold ETFs
A Gold ETF is exactly what it sounds like—a fund that holds gold assets. Gold tends to hold its value even when other markets are wobbling, so it’s often seen as a “safe haven” asset. If you’re looking to add a bit of stability to your portfolio, a Gold ETF might be worth considering.
Tech ETFs
For those who want to jump on the current tech trend, tech ETFs offer a basket of the world’s most reputable tech companies. These ETFs usually include companies like Apple, Microsoft, and Tesla. Just bear in mind that tech stocks can be volatile, but over the long term, they often deliver solid returns.
FTSE ETFs
If you want to invest in the UK stock market, a FTSE ETF could be the one for you. FTSE ETFs track the FTSE 100 or FTSE 250 indexes, meaning you’ll be investing in some of the biggest UK companies like Tesco, HSBC, and BP.
This can be a relatively stable choice, as many FTSE companies pay dividends, giving you a little income along the way.
3. Stocks and Shares
Now, if you’re comfortable taking on a bit more risk and you like the idea of handpicking your own investments, buying individual stocks might be for you.
While individual stocks can be riskier than funds, they also give you more control over where your money goes.
How to Create a Diverse Stock Portfolio
When building a stock portfolio, the key is diversity. You know what they say: don’t put all your eggs in one basket.
A good rule of thumb is to spread your money across different sectors such as tech, healthcare, consumer goods, and energy.
For example, you might buy shares in a tech giant like Apple, a healthcare company like GlaxoSmithKline, and a consumer goods brand like Unilever.
Another tip? Look for companies with a solid history of growth or reliable dividend payouts.
Dividend stocks can provide a nice income stream, which is especially handy during market downturns when share prices might fall.
Remember to keep an eye on your portfolio and be prepared to make adjustments over time. The stock market changes constantly, so being adaptable is key!
4. Gold
If you’ve ever wondered why investors seem to love gold, it’s because it’s one of the oldest and most reliable assets around.
If you’re looking for a relatively stress-free place to put your £10K, gold is a good option!
Gold holds its value well over time, and when the stock market is shaky, gold prices often rise as investors look for a “safe haven.”
Gold is known as an inflation hedge, which means it tends to keep its value even when inflation is on the rise. It’s also a tangible asset, unlike stocks or bonds, which gives some investors a sense of security. You can buy gold bars and store them yourself if you want to.
Over the long term, gold has proven to be a steady store of value, and many people find comfort in having a portion of their wealth in gold.
You can invest in gold through physical bullion (bars and coins), gold ETFs, or even gold mining stocks. Each option has its pros and cons, so think about what suits your needs best.
Physical gold requires secure storage, while gold ETFs are easy to buy and sell.
Gold may not produce high returns like some stocks, but it can be a great way to balance out your portfolio and provide stability in volatile times.
5. A Rental Property
This one is for people who are interested in a more hands-on investment and are prepared to put in some effort. If you shop around is lower-cost areas, £10K could be used as a house deposit for a small rental property in the UK.
Property is considered to be one of the strongest long-term investments that you can make (although, I personally think there are plenty of great alternatives!). This is because the housing market has consistently gone up over time – in the last10 years alone, housing prices have risen by over 100%!
Owning a rental property provides an added perk on monthly income, which is a nice way to give yourself a bit of extra cash flow.
Of course, you will need to pay off a mortgage each month. But usually, rental income comfortable covers mprtage repayments, with a little left to play with.
But property investment does come with its risks. First, being a landlord isn’t always easy. There are maintenance issues, potential tenant problems, and the possibility of vacant periods when you won’t receive rent. Also, property values can fluctuate, so there’s no guarantee that your property will always increase in value.
It’s crucial to do your research before diving into property investment. Look at the area’s rental demand, average property prices, and potential rental income to make sure it’s a sound investment.
How to Choose Where You Invest £10K
With so many options available, it’s easy to feel a bit overwhelmed. Here are a few tips to help you decide where to invest your £10,000:
- Assess your risk tolerance: Some investments, like stocks, can be more volatile but may offer higher returns. Others, like gold, are more stable but might not see rapid growth. Think about your comfort level with risk and choose accordingly.
- Consider your time fame: If you’re investing for the long term (10+ years), you might feel comfortable with stocks or ETFs. For shorter-term goals, something stable like gold or a Stocks and Shares ISA might be better suited. Short term investors should pick investments that won’t drop and require time to regain value.
- Think about diversification: Ideally, you’ll spread your money across different investments to avoid putting all your eggs in one basket. This can help reduce risk and improve your chances of consistent growth.
- Start small: If you’re new to investing, don’t feel pressured to dive in with your entire £10K right away. You could start with £5K, see what works, and add more as you feel more confident.
If you’re unsure, try starting with a stable investment and spend time learning more about investing before you put more money at risk.
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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
Thank you
Good to hear
An informative article. Thank you.
Good points but investment is relied upon risk bearing profile of an individual.