What’s the Best Way to Invest £100k in 2024?

But before we get started, there is some jargon that you’ll need to familiarise yourself with. For example, an ‘asset’ is something of value that can be used to convert to cash. It is something that can also be used to generate regular income.

Before investing, you need to consider whether you want to invest 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 pay-out. Of course, many investments can get you both of these benefits, but it is good to work out which one you prioritise more to select the best investment for your situation.

Return Potential:  ★ ★ ★ ★ ★  

Risk:  ★ ★ ★ ☆ ☆ 

Likely the most popular asset class for investors in 2024, 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:

1. Rent: Income earned every month and paid by the property’s tenant—currently an average of £1260 per month in the UK.
2. Capital Growth: The increase in a property’s value over time.

The UK property market exploded in 2021, with record-breaking house price and rental income growth despite the Covid-19 pandemic.

This has filled many investors with the confidence to add a property to their investment portfolio, with real estate known to perform well even 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.

Likewise, real estate can get expensive, with a current average property price of £284,691, 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 in 2024.

Please read our complete guide to buy to let property to learn more or the best areas to invest in 2024

Return Potential: ★ ★ ★ ★ ☆

Risk: ★ ★ ★ ☆ ☆

If you want to know how to invest £100,000 safely with minimal risk, you could consider putting money into student accommodation.

Types of student accommodation you can consider are:

• Purpose-built student accommodation – modern flats built with students in mind.
• HMOs – Houses of multiple occupancy.
• Private student accommodation – flats and houses converted for students.

Student accommodation offers secure strong income streams, as there will always be demand from new students every year. The property will also grow in value over time for when you plan to sell in the future.

Want to know the best part?

Investing in student accommodation can offer investors better returns than standard residential buy-to-let as rental yields can be much higher. It could also be a good addition to a property portfolio as a way to diversify your assets.

Return Potential:  ★ ★ ★ ★ ☆ 

Risk:   ★ ★ ★ ★ ☆

An alternative to buying an older property, off-plan property allows investors to be involved from the start of a new build and sees investors directly invest in a brand new property.

The benefit of this is that you will likely see better returns as you can make profits on capital appreciation before the property is fully built.

You can invest in off-plan via property investment companies that work alongside the developers.

Off-plan opportunities include unique advantages such as:

• Payment plans
• Luxury facilities
• Assured yields and rental income

While instant gains can be made through capital appreciation, it will take a certain amount of time before rental income can be received. This varies depending on the project.

For this reason, investing all of your £100k into this asset may not be for everyone.

Return Potential:  ★ ★ ★ ★ ★

Risk:  ★ ★ ★ ★☆

Are you looking to avoid risk in the future? Want to know how to protect your property investment from costly upgrades?

Then investing in energy-efficient property is the way to go.

Eco property, otherwise known as green or sustainable property, is a way to ensure you won’t be hit with unexpected costs in the future.

For those who don’t want to worry about changes to legislation surrounding EPCs, eco properties allow investors to avoid one of the biggest anxieties that investors face today.

The eco property then acts as a future-proofing measure and will ensure the investment stays in demand and high value until you decide to sell up.

There are two types of energy-efficient strategies for investment:

• Eco Property: These are new builds designed with energy efficiency in mind from the start. This is the best way to future-proof a property investment, as it will have cutting-edge technology built in. It’s better suited for bigger budgets but will save money in the long run.
• Energy Efficient Upgrades: An older property can also be upgraded with new technology to hit government targets. This is better suited for smaller budgets as cheaper upgrades can be made, but it would be very expensive and difficult to bring it up to the standard of an eco property.

Via eco properties, you can observe various impressive features, including solar panels, air source heat pumps, rainwater recycling, heat recovery, and even central business management systems.

Not only will you get regular income, but eco properties are a good strategy if you have one eye on the future.

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.

Here are some suggestions for how to 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 becoming a landlord.
• Passive investing is when investors take a back seat and wait for long-term growth.

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 property managed by a property investment company.

They will take care of the day-to-day and use their expert experience to determine the best opportunities and help ensure the property is tenanted.

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.

The trade-off is that the riskier an investment, the higher the potential for returns. Property investment is a good way to minimise risk whilst still maximising returns.

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.

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 a savings account.

By doing this, you’ll limit the impact of one of your investments performing poorly. You can also choose several real estate investment strategies, such as student accommodation and short letting, to create a diversified property portfolio with your £100k.