How to invest £10,000


So you have £10,000 to invest?

£10,000 is a tidy sum to have to invest and you will want to make the most of it. Maybe you have a goal in mind for your money, like getting the kids on the housing ladder, or through university, and a fixed period of time in which you can invest it. This is an important consideration because it will determine what kind of risk you can tolerate with your money. This in turn will determine the kind of strategy you will use with your investment.

In this article we will explore how to invest £10,000 and the factors you will need to consider to invest successfully and effectively.

8 things to think about when investing £10,000

1. Time

Time is what makes the difference to money. If you have a time horizon of ten years or more, then more risk can be taken, but if the time horizon is closer to five years, then a lower-risk profile would be more sensible.

2. Strategy

If you want to make the best use of something, it’s good to have a plan. It’s the same with investment. You will need to think about how you select the stocks, funds, bonds, or investment trusts that best match your attitude to risk.

3. Diversify

Variety isn’t only the spice of life, it is also central to a good investment strategy. Spreading risk around different sectors and asset classes is key to managing risk. You will have to ensure you are investing in a diversified way across different sectors and regions and across a variety of assets.

4. Be flexible

We live against an ever shifting landscape of events that can and do move markets. Market movements will affect the performance of your assets, so it is wise to take a flexible approach to investment. By tracking the performance of your portfolio you can then make any tweaks to the investment strategy that are required.

5. Take advice

Unless you are a confident, seasoned investor, it makes sense to use a financial adviser to guide you through the maze of sectors, assets and products on the market so that you can choose the best for you and your needs. Make sure you check with the Financial Conduct Authority that your advisor is regulated.

6. A ready made solution?

To save time and hassle, a ready-made portfolio (RMP) could be a good solution, particularly for novice investors. Many investment platforms offer these off-the-peg investment products where experts build a portfolio at a relatively inexpensive cost with the RMPs typically tailored to different levels of risk.

RMPs offer a simple way to achieve diversification as they invest across a range of assets and benefit from a professionally balanced selection of investments.

7. Passive or active?

Investment funds broadly come in two forms: active and passive. With active funds fund managers select investments aiming to beat the benchmark against which the fund’s performance is measured. Passive funds work by tracking and thereby performing in alignment with markets.

Your only decision is to find the right RMP for you as some providers only use passive funds while others blend trackers and active management, or use in-house expertise from an investment team to offer a carefully selected collection of investments.

To find the right ready-made portfolio, you must first decide your attitude to risk and then consider whether you prefer a simple set allocation fund or one that an investment team actively monitors.

8. Taxes

Just as you diversify your investments to manage risk, you can also use a range of investment products to ensure you are investing in the most tax-efficient way. For instance, savers can shelter up to £20,000 this tax year in an ISA with any income or capital gains tax-free, allowing them to grow wealth and withdraw investments when they want without fear of a hefty tax bill at the end.

Ready to invest £10,000?

If you’ve reviewed your options and made the decision to invest, use our comparison tools to help you find the best home for your money. If you like the idea of managing your own money, then the DIY platform comparison tools will help you find the best one for your needs.

Altneratively, if you prefer someone to make the investment decisions for you, then the digital investing app comparison tool is for you.