What is the best way to invest money?

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If you’ve been saving for some time or have a cash lump sum, you might be wondering how and where to invest your money. Your decision could have a huge impact on your future wealth so it’s important to do your homework. Read on for advice on the key things to consider before you invest, as well as guidance on the best way to invest money in the UK.

The rundown
  • Why invest: The main reasons to invest your money are for long-term financial security and to build your wealth
  • Where to invest: Savings accounts, stocks, ISAs and pension are some of the best ways to invest money
  • Risk appetite: Investing in stocks and shares may give you a good return, but it’s a riskier option than savings accounts

Why do I need to invest my money?

The main reasons to invest your money are for long-term financial security and to build your wealth. If you’re considering where to invest your money, it’s important to know what your savings goals are first, so you can choose the best place to save money for you.

You never know what’s around the corner, so in addition to any investments you decide to pursue, it’s important to have savings to fall back on, and having savings so you can enjoy your retirement might be another consideration.

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Things to consider when investing money

There’s no one-size-fits-all approach when it comes to investing, nor is there a “best way” to invest money. How you invest will depend entirely on your financial situation. Think about what your investment horizon might look like, whether you’ll need access to your money and what your financial goals are, both in the short and long term.

One of the most important things to consider before you start investing is risk. Investing money in the UK doesn’t provide guaranteed returns, so it’s important to understand the risk involved (that you might lose money). It’s equally important to understand the amount of risk you’re comfortable taking, to try and maximise returns on your investments. Investing isn’t for everyone, especially if you’re more risk-averse, as no matter where you invest your money, it’s subject to unpredictable rises and falls. 

Of course, there are other places to invest your money without taking such a big risk, so if you are more risk-averse you might want to consider safer options such as fixed rate bonds, notice accounts or easy access savings accounts.

Whether you choose to invest your money or save, it’s important to avoid entering into an agreement for a financial product that you don’t fully understand. It’s worth consulting an independent financial advisor or conducting thorough research beforehand to ensure you’re completely comfortable with the terms of the product and the risks involved.

What are the best ways to invest my money?

As we’ve mentioned, there’s no “best way” to invest money, as it’s down to your personal needs, your own appetite for risk, and your reasons for investing, but some of the most popular ways to invest money in the UK are the following:

Stocks and shares

While savings accounts might be considered the best place to save money without risk, investing in stocks and shares can give you a better return on investment if you’re prepared to take a risk and have a long-term approach. Investing in stocks and shares can be volatile and unpredictable, and might not be the best way to invest your money if you’re new to saving or aren’t comfortable with the associated risk.

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Savings accounts

There are many different types of savings accounts to consider, and they’re generally low-risk investments. If you have a lump sum, you might want to consider investing your money in notice accounts or fixed rate bonds. Notice accounts provide the flexibility of being able to access your money after a set notice period, and typically offer competitive variable interest rates. Fixed rate bonds allow you to lock your money away for a set time at a rate that won’t change until your account matures. That means they can be a good option in times of uncertainty and falling interest rates, as they guarantee your return.

Cash ISAs

Cash ISAs, or Individual Savings Accounts, are similar to traditional savings accounts, but provide the benefit of tax-free savings. There’s also an annual limit of £20,000 on your deposits. The three types of cash ISA offer different options, depending on your investment needs.

  • An instant access cash ISA allows you to deposit and withdraw money at any time without penalty, although this might be limited by your ISA provider.
  • Regular savings ISAs typically offer a fixed rate of interest as long as you deposit an agreed amount each month.

With fixed rate cash ISAs, you lock your money away for a set period to earn a competitive interest rate. You’ll usually find that the longer the term, the higher the interest rate.

Whether it’s better to put your money into an ISA or a savings account depends on your individual circumstances. The main advantage of an ISA over a savings account is that you can save up to £20,000 tax-free. However, savings accounts typically offer higher rates of interest. 

It’s also worth remembering that the personal savings allowance (PSA) means people won’t pay tax on their savings anyway. The PSA allows basic-rate taxpayers to earn up to £1,000 of interest per year without paying any tax, while higher-rate taxpayers can earn up to £500 per year tax-free.

Children’s savings accounts

Children’s savings accounts are investments you can make on behalf of your children to put them on the path to financial security, while helping them understand how to save and why it’s important. This type of savings account typically offers more competitive interest rates than adult savings accounts, making it one of the best ways to invest money for your child’s future.

Lifetime ISAs

A Lifetime ISA is a type of savings account designed for people over 18 and under 40, and it’s intended to help you either buy your first home or save for retirement. While you can only save up to £4,000 per financial year in a lifetime ISA, the government will then add 25% to your savings up to £1,000 per year until you’re 50. So if you’re looking to get onto the property ladder or save for your later years (and get a little help along the way), a lifetime ISA could be the best way to invest your money.


Paying into a pension is one of the best ways to invest money for your retirement. You might already have a workplace pension, but you could also consider a Self-Invested Personal Pension (SIPP), which gives you a wider range of investment options.

Peer-to-peer lending

Peer-to-peer lending firms typically offer returns on your investment of around 6%, but this type of investment doesn’t come without risk. Peer-to-peer lending means you’ll invest your money into a business or project that needs capital to grow. Your investment is paid back to you with interest, as long as the business or project has succeeded. This type of investment might provide a lower risk in times of economic growth.

Do I need an emergency fund?

An emergency fund can be an important safety net in the event of any unforeseen expenses. Having an emergency fund to fall back on might prove critical if you’re considering high-risk investments, where it’s possible you’ll lose money. 

You may also want to consider how quickly you might need access to your emergency fund, as this will determine where you keep it. For example, you might keep it in an easy access or notice account, which both offer the flexibility of being able to access your money easily.

Apply for savings accounts with Raisin UK

If you want to grow your savings without putting your wealth at risk, opening a high-interest savings account could be the best way to invest your money. The good news is you can access a range of competitive savings accounts through the Raisin UK marketplace.

You first need to open a Raisin UK Account; then you can apply by logging in, applying for a savings account and transferring your deposit.

If you’ve got any questions, please contact our UK-based Customer Services Team, who will be happy to help.

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