Best Way to Invest £50k: Think Long-Term

If you have £50,000 and are wondering about the best way to invest, the first thing you need to think about is whether your investment is going to be short or long-term.

Investments Fluctuate – How Long do You Intend to Invest?

The length of term is important, especially when you are investing in stocks and shares or related investment vehicles.

The stock market can be quite volatile, and this is very much a case of understanding that investments can do down as well as up, especially in the short term.

What is a Long-term Investment and what is Short-term?

Bearing this in mind, you might like to think about anything under five years as being short term.

If the stock market falls drastically and you are forced to withdraw your money for one reason or another when the market has dropped, you could lose a significant amount of your original investment.

Looking at the longer term view (more than five years), the market should recover – and may grow past the opening rate, meaning that your investment should grow.

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Aim for Higher Interest Rates for your £50k

The attraction of investment vehicles linked to stocks and shares is that they usually produce much higher returns on your investment than ordinary savings accounts.

However, what it amounts to is your appetite for risk.

Stocks and shares ISAs are very effective from a tax point of view. In 2017, you can invest up to £20,000 completely tax-free. Any interest accrued is also tax-free.

If you prefer the lowest risk, you might want to consider a high-interest savings account; something like the Santander123 offering, which gives you cash-back and interest. The current AER is 1.5%.

Unfortunately, you’ll only be able to invest a maximum of £20,000 of your £50k lump sum, until the next year when the ISA allowance resets.

Your existing allowance also depends on how much you have paid into other ISAs in the current financial year.

Spreading the Risk to Capital

A good way of spreading risk, especially on a large amount like £50,000, is to invest in different type of assets.

You can, for example, diversify: put some in stocks and shares, some in property and some in fixed interest accounts or investment bonds.

Take Investment Advice from an IFA

Investing to get the highest savings rate you can is a complex issue, especially if you want to keep on top of market fluctuations and new savings vehicles.

Unless you are a sophisticated and experienced investor, you may be better off seeking professional advice from a certified an IFA (Independent Financial Advisor).

Zachary Wyatt

Zach lives on the coast in the UK, with one eye fixated on the City. Prior to his writing, he got his feet wet with forex trading platforms.