10 Great Ways To Invest £20,000
Whether you’ve been saving it up or have suddenly received a windfall, £20,000 is a sizable chunk of money to get investing with. There are plenty of options, so where should you get started? Here some ways to invest £20,000.
Savings Account
Savings accounts are the low hassle, low-risk place to put your money. With interest rates so low, the returns on them are also very low at the moment, so this isn’t a good option if you want your money to gain value. The advantage is that, if the bank is UK regulated, then your first £85,000 of savings will be protected if the bank fails.
ISAs
If you’re going to keep money in savings, then it’s a good idea to put a chunk of it in an ISA. This is a form of tax-free account that lets you save a set maximum amount each year. As well as ISAs that act like savings accounts there are also investment ISAs, giving you a way to earn higher returns while minimising taxes.
Stock Market
The first thing many people think of when they hear the word “investment” is the stock market. Shares can earn you money through the way they rise in value over time, as well as paying out dividends along the way. There are risks to the stock market, and any investment should be chosen by balancing risk against reward, but if you want to make good returns on your money then this is an option
Investment Funds
If you don’t know anything about stocks and shares, and you don’t want to have to go to the effort of learning about and tracking individual companies, then investment funds are a good route into the stock market. By buying into a fund, you’re putting your money in the hands of the experts running the fund, and the fees you pay are balanced against the advantage of their expertise. To spread your risk, it’s worth investing in several different funds, instead of putting all your eggs in one basket.
Property
The limits on the amount of land available, alongside the constant need for housing and workspace, means that property is one of the safest bets for investors, as well as a source of good returns. £20,000 isn’t enough money to buy a property, but it can buy you into property investment schemes or let you chip in on lending towards a project through specialist websites. The market for this sort of property micro-lending is still relatively new, but it’s a promising area.
Peer-to-Peer Lending
As well as the property websites, others now existing for small-scale peer-to-peer lending. This is used to finance small businesses and others seeking loans outside the conventional banking route. The risk level depends upon the vetting procedures of the site arranging the peer-to-peer lending, but these sites at least take the onus off you to collect the money, and you can choose to invest in projects you consider worthwhile.
Pension Scheme
If your primary goal is to prepare for retirement, then a pension scheme can be a good investment. If you have the option of paying extra into a work-based scheme, then this may provide the best returns, due to the financial clout of such plans. Alternatively, you can look into investing in a private pension. Pensions can provide good long-term returns, but your options to access the money are limited.
Pay Off Your Mortgage
Another sensible option is to pay off your mortgage. Low as interest rates currently are, mortgages still accumulate a lot of interest costs over time. Paying off £20,000 early on might end up saving you more than that money would earn you elsewhere, as well as providing peace of mind from knowing that your home is securely yours.
Start Your Own Business
Have you always dreamed of being your own boss? Do you have the skills, experience, and contacts to go your own way? Then this might be your chance to take that leap.
Starting a business with your own money will mean that you’re not beholden to the bank, reducing the pressure for immediate returns and making it easier to take a long-term view of your work.
Education
An alternative way of investing in yourself is through education. If there’s a qualification that you want, either for your current career or to change tracks, and that £20,000 could fund it, then why not take the leap? A qualification that will give you a pay bump might earn you more than that £20,000 within a few years, as well as bringing you closer to living the life you really want.
Paul Connolly
Paul Connolly has been a journalist for more than 20 years, as a reporter and editor for Argus Media, Reuters, The Times, Associated Newspapers and The Guardian. He has covered Islamic Finance for Reuters in the 1990s. Paul has since helped launch three newspapers, as well as reported from Tokyo, Los Angeles and Stockholm.
