Whether you’ve inherited a cash windfall or have some money to spare, you might be wondering:

What’s the best way to invest £100k in 2023?

There are so many types of investment available right now, and finding the right one for you can be confusing and stressful.

Investing £100k means you have a lot of freedom when it comes to what is right for you, as that size of a budget can accommodate many investment strategies and can help with many investment goals.

In this guide, you’ll learn about seven of the best ways to invest £100k for income and capital growth in the UK. This guidance is general information about different methods of investing, and if you want specific advice, talk to a financial advisor.

We’re going to rank these ways of investing based on a number of criteria, so you have quick and easy comparisons you can make to find the best way to invest £100k for you.

This way, when you’re wondering how to invest £100k, you have a solid grasp of several options available to you.

Sound good? Then let’s get into it:

How to Invest £100k in the UK

Investing can be complicated, but that shouldn’t stop you. Some of the best ways to invest £100k are often some of the most simple.

Through investing, you can use your cash to make even more money and (ideally) become financially independent if you play your cards right.

But before we get started, there is some jargon that you’ll need to familiarise yourself with.

Asset – An asset is something of value that can be used to convert to cash. It can also be used to generate regular income.

Investment vehicle – Another name for an asset, investment vehicles are a place to put your money to help earn more. Examples of this include pensions or stocks and shares ISAs.

Tax Wrapper – An account or asset that wraps around your investment to protect it from taxes. Examples include pensions and ISAs.

You also need to consider whether you want to invest £100k of your money for income or growth.

Income will put more money in your bank accounts each month, while growth means you’ll need to wait for the long term before selling your asset for a big cash payout.

What Are the Best Things to Do With £100,000?

Investing £100k is no simple feat, so no matter your investment strategy, consider these simple tips to help make your investment a smart one.

Seek Independent Financial Advice

Before you invest money and set your financial goals, speaking to a financial advisor is always a good idea.

Investments can be far more complex than just the money you need, as your personal or financial circumstances can impact what sort of investment is right for you.

Your age, tax bracket, marriage status, attitude to investment risk, and investment timescale can all come into play.

By talking to an expert, you’ll be able to explore these options and settle on the right asset for you.

This is how you invest 100k wisely.

Consider Active or Passive Investing

Depending on how much free time you have available, you may need to decide whether you should actively or passively invest.

• Active investing is when investors take a more hands-on approach. This can include self-managing your stock portfolio or becoming a landlord.
• Passive investing is when investors take a more “buy and hold” mentality and wait for long-term growth. A solid option for those investing for retirement, this can include waiting for stocks to grow in price without reacting to dips in the stock market.

There’s no correct answer here, and it will likely depend on your confidence and skillset whether you choose to invest actively.

You may also find that traditionally “active” strategies can be passive.

For instance, you can invest in stocks managed by a fund manager or investment manager.

They will monitor the stock market and use their expert analysis to determine which stocks to buy and sell.

In property terms, this could mean buying a rental property and using a property management company to handle all landlord duties.

(This is key if you’re asking how to invest 100k for passive income, as you’ll want a hands-off investment).

Understand Your Risk Appetite

When deciding how to invest your 100k, you need to consider how much risk you’re willing to take.

Unfortunately, every investment comes with risk, and there’s no way to get a guaranteed income stream as things can go wrong.

But some strategies come with more risk than others, with stocks and cryptocurrency often seen as the riskiest.

The trade-off is that the riskier an investment, the higher potential for returns.

You may be willing to take more risks, but before you do, think about what you stand to lose. If you have children or people at home depending on you, this naturally will lower your risk tolerance, as will your career and housing situation.

For example, a middle-aged teacher living in a rented house with two children will have a lower risk appetite, but an IT consultant in their mid-20s living in their parent’s house will have a high one as they have far less to lose.

If you are investing £100k for income, you will likely need to have a higher risk tolerance, as many of the investment strategies that have higher return potential also have higher risks.

Given that no two investors have the same risk appetite, this helps us to understand why there is no clear-cut best way to invest £100k, as different strategies appeal to different investors.

Where to Invest 100k in 2023

With more people than ever starting to invest in different assets to build an income, investing correctly can ensure the health of your financial future for decades to come.

But how should you invest your 100k to get the returns you want? How should you invest 100k today?  What is the best investment for £100k for you?

Below you will find seven of the best ways to invest 100k for income and capital growth.

Wondering where to invest 100k? Check out the best strategies below:

1. Property 

Return Potential:  ★ ★ ★ ★ ★  

Affordability:  ★ ★ ★ ☆ ☆

Risk:  ★ ★ ☆ ☆ ☆ 

Overall:  ★ ★ ★ ★ ★  

Likely the most popular asset class for investors in 2023, property is one of the safest (and best) ways to invest 100k in the UK.

Ideal for both income and capital growth investors, you can earn returns from buy-to-let property in two main ways:

Rent: Income earned every month and paid by the property’s tenant—currently an average of £1,175 per month in the UK.

Capital Growth: The increase in a property’s value over time. Over the last 12 months, the average UK property price increased by 9.8%.

The UK property market exploded in 2022, with record-breaking house prices and rental income growth despite the cost of living crisis.

This has since filled many investors with the confidence to add a property to their investment portfolio, with real estate known to perform well during times of uncertainty.

Just keep in mind that property is not a liquid asset, which means you can’t quickly sell to see investment returns like stocks or bonds.

Likewise, real estate can be expensive in some circumstances, with a current average property price of £294,000, according to the Land Registry.

However, if you have the cash needed for a mortgage deposit and are asking how to invest 100k safely, property could be a top choice.

You could also choose to invest in off-plan property, where the below-market-value prices and flexible payment plans may help you avoid a buy-to-let mortgage altogether.

Off-plan properties are often located in top investment areas and are new-build properties which are popular with young professionals. They are often considered some of the best property investments for a £100k budget.

Please read our complete guides to buying UK property from the USA or abroad and buy-to-let property to learn more about the best areas to invest and where to find a tenanted property for sale in the UK.

2. Stocks 

Return Potential:  ★ ★ ★ ★ ★  

Affordability:  ★ ★ ★ ☆ ☆

Risk:  ★ ★ ★ ★ ★  

Overall:  ★ ★ ★ ★ ☆

If you can handle risk, stocks can be one of the best ways to earn huge returns in 2023.

Able to earn both income and capital growth, stock investments are when investors purchase a small part of a company through the stock market.

By doing this, investors can earn a portion of a company’s profits through dividends paid monthly, quarterly, or annually.

However, dividends aren’t always sizeable, and some companies don’t even pay dividends, instead opting to reinvest profits.

Question is:

How do I invest in stocks and earn regular income?

Well, investors will need to purposefully invest in high dividend-paying stocks or exchange-traded funds (ETF) to increase their short-term profits and generate income streams.

Barclays Equity Glit Study found that stocks have generated 5.4% annual returns over the last 50 years.

However, stock prices can wildly change, which can either net you a massive profit or deliver a gut-punching loss.

As such, for those asking for the best way to invest 100k safely, stocks may not be for you as it performs poorly during times of uncertainty – hence the 2020 stock market crash.

Current industry predictions indicate we are on the brink of a bear market – a prolonged period of falling investment prices. So while this can be a good way of investing £100k for high returns, it may not be the safest £100k investment you can make right now.

3. Savings Accounts 

Return Potential:  ★ ★ ☆ ☆ ☆

Affordability:  ★ ★ ★ ★ ★ 

Risk:  ★ ☆ ☆ ☆ ☆ 

Overall:  ★ ★ ★ ☆ ☆ 

If you want to know how to invest £100,000 safely without any risk, you could consider putting money into a savings account.

Types of savings accounts you can consider are:

Instant Access – Can take and add money at any time.

Notice Account – Need to give notice before withdrawing money.

Regular Saver – You’ll need to save up a set amount each month.

Fixed Bond – An account that locks away your cash for a fixed amount of time.

While savings accounts won’t secure strong income streams, like property or stocks, they help keep your money safe while growing in value over time.

You can also consider an ISA, like a Cash ISA or stocks and shares ISAs, allowing investors to save up to £20k per year tax-free while delivering higher returns than a standard savings account.

You could even opt for a general investment account if you reach your cash ISA total (more on this by Vanguard).

Want to know the best part?

For most UK savings accounts, your cash is protected up to £85,000 in the UK as per the Financial Services Compensation Scheme.

However, while your money may be secure and protected, you are not likely to make more of it any time soon. Savings accounts typically have lower interest rates because of their security.

The average interest rate for a UK savings account is 0.23% APY, so you won’t see high returns if investing £100k in savings accounts.

While this may not be a good £100k investment if you are looking for high returns, it is a very secure one, making it one of the best ways to invest £100k for those preferring a low-risk route.

4. Bonds 

Return Potential:  ★ ★ ★ ☆ ☆ 

Affordability:  ★ ★ ★ ☆ ☆ 

Risk:  ★ ★ ★ ☆ ☆ 

Overall:  ★ ★ ★ ☆ ☆ 

Want to know how to invest £100k today? Maybe bonds are the answer.

Not to be confused with fixed bond savings accounts, bonds are fixed-income investments typically used by companies to generate cash.

Companies (or even governments) will borrow money from investors and pay it back at a fixed interest rate.

Types of bonds include corporate bonds and government bonds.

Each bond is rated AAA to C based on it’s risk, with C bonds being riskier but offering higher returns.

Bonds are seen as a decent alternative to stocks as they have distinct advantages.

For starters, fixed-term interest rates mean you will know what you’re getting yourself into and the exact money you’ll see in return.

Likewise, if a company liquidates, bondholders are paid first before stockholders.

However:

Fixed-term interest can be a double-edged sword, as it will likely limit the overall return you can get compared to buying a risky stock on the stock market.

You can buy bonds anywhere from £1,000, so they are worth putting some money into, but may not be the best answer for how to invest £100k cash.

5. Start Peer-to-Peer Lending 

Return Potential:  ★ ★ ★ ☆ ☆ 

Affordability:  ★ ★ ☆ ☆ ☆ 

Risk:  ★ ★ ★ ★ ☆ 

Overall:  ★ ★ ★ ☆ ☆ 

An alternative to savings accounts, peer-to-peer lending cuts out banks from the investment equation and sees investors lending cash directly to other people.

The benefit of this is that you will likely see better returns as you’ll have more profits without the bank taking a cut.

You can lend and apply for loans via peer-to-peer lending platforms.

Examples of these include:

• Lending Club
• Upstart
• Peerform

Sounds good, right? But what’s the catch?

Well, at the time of writing, P2P lending is not covered by the Financial Services Compensation Scheme.

Likewise, borrowers could default on payments and be unable to pay you back.

For this reason, investing all of your £100k into this asset may not be the best decision.

There is too much of a risk in investing in P2P lending to make it a viable option for investing £100k, but it could be used as a good diversifier for your portfolio.

6. Cryptocurrency 

Return Potential:  ★ ★ ★ ★ ★ 

Affordability:  ★ ★ ☆ ☆ ☆ 

Risk:  ★ ★ ★ ★ ★ 

Overall:  ★ ★ ★ ☆ ☆ 

While not offering much in the way of income, cryptocurrency is an exciting (albeit confusing) asset for capital growth investors.

Cryptocurrency is a digital form of currency traded via online platforms.

In other words:

Investors will purchase a unit (or a fraction of a unit) and then hold onto it like a stock and let it grow in value.

Each unit of cryptocurrency is worth a certain amount of money, with investors able to sell to get a hold of their real worth.

(For instance, one unit of Bitcoin was worth just over £20k in March 2023).

Since the creation of Bitcoin in 2007, the value of one Bitcoin has grown by over 4000%! That means if you invested £200 in Bitcoin back then, you’d have around £800,000 today.

Yes, you read that right: 4000%.

So, what’s the catch?

It’s risky.

A financial expert quoted in Time magazine said about Bitcoin: “You have a high chance of losing it all, but a small chance of winning it big.”

Many have referred to cryptocurrency as the ‘Wild West of investing’, as there are little to no regulations. It is incredibly easy to find yourself a victim to scammers or hackers, robbing you for all you are worth with no way of getting your investment wallet back.

The value of cryptocurrencies can rise and fall very rapidly as well. Many experts believe Bitcoin is failing, despite fluctuating values.

Naturally, if you’re looking at how to invest £100k safely, this is not the option for you.

7. SIPPs 

Return Potential:  ★ ★ ★ ☆ ☆ 

Affordability:  ★ ★ ★ ☆ ☆ 

Risk:  ★ ★ ☆ ☆ ☆

Overall:  ★ ★ ★ ☆ ☆ 

Are you looking to avoid investment risk? Want to know how to invest £100k for retirement?

Then saving with SIPPs is the way to go.

SIPPs, otherwise known as a self-invested personal pension, is a do-it-yourself pension.

For those who don’t want a pension company to control how their savings are invested, SIPPs allow investors to choose how to build and manage their pension.

The SIPP then acts as a wrapper and will hold onto the investments until you decide to retire.

There are two types of SIPP:

• Full SIPP: This offers the broadest choice of investments but incurs the highest charges (typically an annual 1% charge for a £50k pot). It’s better suited for bigger budgets.
• DIY SIPP: This provides plenty of investment opportunities but doesn’t include owning property. They’re also offered by investment platforms. DIY SIPPs are better suited for smaller budgets with a charge of £10-£15 for online transactions.

Via SIPPs, you can choose to invest in various assets, including stocks, bonds, ETFs, property, and even offshore funds.

While you won’t get regular income, SIPPs are a good strategy if you have one eye on your future retirement.

If you’d like to learn more about how to maintain a long-term retirement investment, here’s our updated pension investment guide to help you get started.

What Is the Best Investment for £100,000? 

So, what’s the best investment for 100k?

Like most questions of this nature, the answer is always the same:

It depends.

Investments are a personal choice, and it will entirely depend on your goals for the best way to invest £100k.

If you want to be completely safe but limit your return potential, savings accounts or self-invested personal pensions are the way to go.

On the other hand, if you’re willing to risk your cash for the best chance of long-term returns, stocks or cryptocurrency could be ideal.

However, for the best midpoint, rental property is likely the best way to invest £100k in the UK.

By investing £100k in real estate, you can get access to regular rental income each month while also enjoying considerable returns in the future through capital growth.

And don’t just let the price put you off.

There are ways to reduce the entry price of a property by making an off-plan property investment.

However:

Although some tax relief is available, your income can be taxed through income tax and capital gains tax.

If in doubt, speak to a financial advisor to see if real estate investment is the right choice for you.

How to Invest £100k Safely

Where’s the best place to safely invest £100k?

You have a few options if you want to manage risk and keep your £100k investment as safe as possible.

Likely the safest asset class is real estate, as it very rarely gets impacted by short-term fluctuations – take the COVID-19 pandemic, for instance. During this period, average UK property prices actually rose to record levels.

However, for the safest investment possible, your best bet is to choose a savings account, cash ISA, or SIPP.

These options won’t net you the highest earnings, but they’re a good way to protect your cash until you feel more ready to invest.

Remember to Diversify Your Investment Portfolio

While having £100k in your back pocket might give you the confidence to splash the cash on a big purchase, most investors find a diversified portfolio the best way to invest 100k.

Creating a diversified portfolio means investing in several different investment markets.

Someone with £100k could choose a property investment strategy while putting some cash into stocks or a savings account as a means of diversification.

By doing this, you’ll limit the impact of one of your investments performing poorly, while allowing you to get returns through multiple investment options.

As the saying goes:

Don’t put all your eggs in one basket.