The best way to invest £50k

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Are you looking to invest £50k? Whether you’ve come into a windfall, received an inheritance, or saved diligently over the years, clever investment can help you achieve high returns and secure your financial future. In this guide, we’ll explore the different options available to you, such as property, stocks, and P2P lending. We also consider the alternatives to investing, including opening a high-interest fixed rate bond.

Please note, this page is for your information only, and does not constitute financial advice. You should always do your own research, consider your personal circumstances and appetite for risk, and seek independent financial advice if and when required.

The rundown
  • Investing £50k: Some of the best ways to invest £50,000 include investing in property, the stock market, ETFs, mutual funds and buying bonds
  • Financial advice: A financial adviser can help you maximise the return on your money, particularly if you’re new to the world of investing
  • Risk: Any form of investing carries an element of risk. If you aren’t comfortable with this, consider opting for a high-interest fixed rate bond instead

What to consider before investing £50k

What are your goals?

Are you investing for short-term gains, such as buying a house or going on a dream holiday? Or are you planning for retirement? Your goals will influence your investment strategy

What are your financial priorities?

Your financial priorities probably hinge on your current circumstances. One important aspect to consider is any debt you hold, and whether it’s worth paying off that debt before you invest any money. This will both give you a clean slate to work from and mean you’ll avoid future interest payments

What is your appetite for risk?

Finally, you’ll need to consider your capacity for risk. Any form of investment carries at least a slight risk, which is why you need to work out how much risk you can tolerate when it comes to your money. Once you’ve worked out your time frame, organised your priorities and figured out how much risk you’re comfortable with, you’ll be ready to look into how to invest £50k

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How to invest £50k wisely

Investing all of your money at once is risky, and you could lose it all. To mitigate the risk, you should first take the below steps to protect yourself against unexpected financial shock.

  • Keep around three to six months’ earnings in an accessible savings account as a buffer
  • Pay off existing debt like credit cards and personal loans
  • Consider putting more money into your pension scheme

What is the best investment if I have 50k?

How you choose to invest your £50k will depend on your financial circumstances and your priorities, timeframe and appetite for risk. There are, however, some great options available for those looking for the best way to invest £50k in the UK, including the following:

1. Invest in property

  • The property market does tend to perform well against FTSE investment options
  • If you choose to invest your £50k in property, you’ll need to offset your earnings against any capital gains and income tax
  • Although investing in property can be one of the safest and most profitable ways to invest £50k wisely, it isn’t entirely without risk. This is because the housing market, like the stock market, is subject to price corrections and crashes (just think back to the 2008 financial crisis)

2. Stocks and shares ISAs

  • While a cash ISA is simply a tax-free savings account, a stocks and shares ISA is a tax-efficient investment account that allows you to invest in a range of different assets, including individual shares, investment funds, investment trusts and bonds
  • Most stocks and shares ISA providers are protected by the Financial Services Compensation Scheme (FSCS), which means that up to £85,000 of your money per banking group will be covered in the event that the institution you’ve invested with collapses. This is something you should always check before opening an ISA
  • Note that ISAs have an investment limit of £20,000 per financial year, so you won’t be able to invest £50k all at once in an ISA

3. ETFs

  • An Exchange Traded Fund (ETF) is a type of investment where stocks are traded in an exchange market. Although ETFs can invest in any number of industries, they often track a specific index, for example, S&P 500. Stocks in ETFs can typically be bought and sold throughout the day
  • ETFs hold assets such as stocks, bonds, commodities or a mixture of all three, and generally operate on a type of mechanism designed to keep trading close to the asset’s net value, which allows stocks to be bought and sold easily

4. Invest in stocks

  • Stocks are shares of ownership in a company. Companies usually sell shares of stocks to raise capital when they want to develop or grow their business
  • When you’re looking for the best way to invest £50k, buying stocks can generate a good return, but it all depends on how well the company you buy stocks in performs, and if they underperform, you could lose some or all of your money

5. Mutual funds

  • Mutual funds are amongst the most popular types of investment for both beginners and experienced investors.
  • They allow you to pool funds with other investors to invest in securities such as stocks, bonds, money market instruments and other assets. Your investment will ultimately hinge on the performance of the fund, and you need to be aware that you don’t have the same voting rights as with investments in normal shares

6. Invest in bonds

  • Bonds represent a company or government debt. When a company or government issues a bond, they are issuing debt and agreeing to pay interest on the money you’re ‘lending’ them. Bonds typically pay out annual interest, repaying their debt at the same time. Because of this, bonds are often considered one of the safer types of investment, especially if you want to invest over a short term
  • The different types of bonds are best described as a spectrum from most to least risky, starting at ‘gilts’, or government bonds, at the safer end, through to high-yield bonds from companies with low credit ratings at the much riskier end

7. Annuities

  • An annuity will provide you with a guaranteed income stream for a certain amount of time without needing to worry about investing it or managing it yourself. It will, however, mean you give up your right to access your cash
  • When you reach retirement age, you can convert your pension pot into an annuity, guaranteeing regular income – whatever happens on the stock market. You hand over a sum of money to an insurance company, and they give you an income in return. Your capital is gone, but you have a guaranteed, risk-free income, often for life

8. Peer-to-peer lending

  • Peer-to-peer lending (P2P) is an alternative way to invest or diversify your existing investment portfolio. This type of investment facilitates direct loans without involving banks. What this means is that you lend an individual, or ‘peer’, money and earn interest while they gradually pay it back. All parties collaborate via online platforms, which keep the operational costs down and make for better rates of interest
  • While this sounds risky, P2P companies mitigate this risk by splitting your money across several different borrowers, rather than lending it all to just one
  • The downside is that P2P lending is not currently covered by the FSCS, meaning there is more risk of losing your money should the borrower fail
  • The upside is that interest rates can be very competitive, and the first £1,000 of interest earned from P2P lending is tax-free for basic rate taxpayers. Some P2P savings can also be held in some ISAs

What is the safest investment with the highest return?

The UK property market has historically shown strong growth, and investing in real estate can yield high returns over time. Gilts are also considered one of the safest investments in the UK. When you buy a gilt, you’re essentially lending money to the government in exchange for regular interest payments and the return of your principal when the bond matures. The risk of default is extremely low, making gilts a safe investment option.

Investing in blue-chip stocks (well-established, financially stable companies listed on the London Stock Exchange) can provide attractive returns over the long term. These companies often pay dividends, which can be reinvested or used as a source of income. ETFs, meanwhile, provide exposure to various sectors and markets, spreading risk.

Alternatively, cash ISAs and stocks and shares ISAs provide a tax-efficient way to save or invest money. You can compare a wide range of savings accounts from our partner banks in the Raisin UK marketplace. Simply log in or register for a Raisin UK account today to get started. It’s free to open an account and once you’ve been approved, all you need to do is make a deposit and watch your savings grow.

Should I save or invest my £50k?

There are pros and cons of saving vs. investing £50,000. If you’re trying to decide between the two, the most important thing to consider is how much financial risk you can tolerate. This is because savings accounts are typically safer places to invest your money. While the rewards might be greater, investing comes with a lot more risk, and you stand to lose some or all of your money if your investments fail. You can learn more about growing your savings by visiting our savings guides.

With interest rates high at the moment, fixed rate bonds provide the peace of mind that the rate won’t change throughout your term, making them perfect for safe, long-term saving goals.

How do I earn the most interest on my savings?

  1. Do your research – there are a lot of savings options out there for investing £50,000, so look into the different types of savings accounts and which ones will earn you the most interest. You can compare a range of competitive savings accounts in the Raisin UK marketplace
  2. Consider switching accounts – you may find a good three-year savings account, but put a plan in place for what to do with your money at the end of these three years and try to find a better rate
  3. Check your deposit is protected – always make sure that your savings account provider is covered by the FSCS so your deposits are protected

Should I pay a financial adviser for investing £50k?

If you’re new to investing, taking the DIY approach carries a lot of risk. By opting to speak to a financial adviser before you make any decisions, you’ll have a better, more well-rounded understanding – it could be well worth paying a financial adviser if they can help you reap greater returns on your investment.

A financial adviser will be able to:

  • Consider your position impartially and select the best product for you
  • Provide expert, insider knowledge into investing trends and what works
  • Take away the stress and time of trying to do it all yourself

The best ways to invest £50k

1. Do your research

Get to grips with investment jargon and how all the different types of investment accounts work. You can find out more in our comprehensive investments guide.

2. Expect fluctuations

Keeping your investments during turbulent times is often the best strategy – even if you lose money in the short term. Investing is a long term game and often requires patience for prices to bounce back.

3. Be vigilant

Spotting good opportunities for acquiring promising assets at bargain prices is all part of successful investing. Market volatility can allow you to buy into suffering funds that are well-placed for a strong recovery. However, if you’re new to investing this may not be a route you want to take, as it comes with great risk and no guarantees.

4. Drip-feed for security

The best way to invest £50k safely is to drip-feed your funds into smaller investments rather than taking a big dive into the unknown using the full amount.

5. If it’s income you’re after, choose investments with dividends

Dividend payers are usually robust, established companies that generate profits from a range of products and services. These are a good option if you’re looking to stay on the safer side while earning an income, and you can still expect a payout even when markets are volatile.

6. It’s best to reinvest

If you’re able to leave your income from investments untouched, you can take advantage of compound interest and let your money snowball