How to Invest 100k: The Best Way to Invest 100k for Maximum Returns
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When you’re lucky enough to have a lump sum amount of money available to you, it’s definitely a smart decision to think about investing. Without thinking of ways to make your money grow, it can vanish before you know it – no matter the amount you have available. Before investing, it’s common to wonder ‘how much money do you need to invest in property in the UK?’, especially if your budget is on the lower side. The good news is, if you’re ready to make your first investment and you have a budget of £100,000 to invest, there are a range of options available to you that have the potential to give your funds a significant boost.
In this guide, we’ll talk about how to invest 100k, exploring some of the different strategies available for saving and investing, and offering answers to commonly asked questions on the best way to invest 100k in property specifically. If you’re wondering what to do with 100k and are ready to find out more before you start investing, scroll down to read our latest money tips content.
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1. Determine Your Risk Level
Before making any type of investment, whether you’re wondering what to do with 100k, 800k or just 50k for your investment, you should always think about the level of risk you’re prepared to accept. It’s important to understand the level of risk you’re ready to take as this can help you identify the best asset to invest in, and can ensure you know how to invest £100,000 safely and effectively.
You may be familiar with a famous quote from Robert Arnott:
“In investing, what is comfortable is rarely profitable.”
This quote draws attention to the reality that every worthwhile investment comes with a level of risk. Certain assets, however, naturally come with more risk than others. Since those that invest £100,000 may wish to use their money more wisely, especially if the 100k they’re investing has been acquired through savings or inheritance, many people wondering how to invest 100k are likely to seek out less high-risk investment strategies. If this is the case for you, make sure you know to avoid any of the riskier investments and look out more investment options more suited to you.
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2. Think About Your Investment Goals
Along with the level of risk you’re ready for, you should also consider your investment goals. Whether you’re looking to invest 100k or figure out how to invest 500k, investment goals are an essential thing for every investor to plan out. Your investment goals should outline what you hope to achieve through your investment, and in this case, the type of returns you expect to receive from investing £100,000.
This includes how quickly you’d like to generate a return on your investment, as with some asset classes, your money may need to be tied up for a long period of time before you start to see your returns. This type of investment strategy would be classed as a growth based investment. The investor is interested in knowing how to get maximum return on investment over a longer period of time, and therefore, chooses an investment strategy that generates the best possible rate of long-term growth.
On the other hand, some investors may prefer a strategy that is more income-focused and will look for information on the best way to invest 100k for quicker returns. Before you invest £100,000, ask yourself whether you’re investing your money for income or growth. Thinking about whether you want to know the best way to invest 100k short term or long term, and knowing what kind of returns you want overall, will help you establish the best way to invest 100k overall and give you a better idea of where to invest 100k for your personal goals and needs.
Buy to let is the most popular real estate investment route, and considered one of the best ways to invest 100k in property. Compared to other property investment strategies like buy to sell, owning a buy to let property allows you to generate two types of return.
Amy Jackson, RWinvest3. Assess Different Investment Types
If you’re not sure what type of investment you want to make in order to get the best return on 100k, you should explore the different asset classes available. Here are some of the most popular £100,000 investment ideas for you to consider, with information on each investments risk level and potential returns.
Property Investment
If you’re thinking about what to do with £100,000 or even considered how to invest 1 million pounds, chances are that you will have already considered property investment. Property investment is one of the most popular investment strategies in the UK, and is utilised by those wondering how to get maximum return on investment. The two main strategies involved with property investment are buy to let and buy to sell, and in order to help you work out the best thing to do with £100,000 of your money, we’ve offered information on each strategy below.
Buy to Let
Buy to let is the most popular real estate investment route, and considered one of the best ways to invest 100k in property. Compared to other property investment strategies like buy to sell, owning a buy to let property allows you to generate two types of return. The process of buy to let is simple – you purchase a property and rent it out to tenants to make a regular monthly profit. Then, when you think it’s time to resell, you can benefit from an increased profit from your property sale, provided that the market has allowed the property to grow in value.
Risk Level
The risk level of buy to let is relatively low, which makes it a perfect investment if you want to know how to invest 100k safely. The risks that come with buy to let are mainly focused on the property market itself. If the property market was to crash in the area your buy to let property is based in, or if there’s a low level of demand for rental properties, your investment could suffer. The good news is that by researching the market, you can identify the best places to invest 100k in order to feel more secure in your venture. When investing in a property opportunity that comes with assured rental yields, you’re also guaranteed to make an income in this way.
Potential Returns
Buy to let is one of the best ways to make a monthly income from 100k, since you make regular income through rental payments. Not only this, but you can also make a large return on investment from the sale of the property. This is a huge reason why many people consider buy to let property the best place to invest 100k for maximum returns.
The returns you’re able to make from buy to let will vary depending on the location of the investment. In the UK, the buy to let opportunities with the highest returns are those in property hotspot cities like Liverpool and Manchester. Here, you can generate the highest rental yields and potential for capital growth.
As a hypothetical example, let’s say you purchased a Liverpool investment property for £75,000, and charged your tenant £500 a month for rent. This would leave you with an 8% rental yield, which over twenty years, would have generated you a minimum of £120,000 in rental returns – more if the rental market was to increase in value. Then, if you were to sell your property after twenty years and it had grown in value by around 200% (in accordance with past performance of Liverpool house price growth), you could sell the property for £225,000, leaving you with a £150,000 profit. Combine both returns, and you’d be left with an overall profit of £270,000 if you had saved up your rental income.
Buy to Sell
Buy to sell property is another popular venture for those considering the property investment route. Unlike buy to let, buy to sell offers investors just one type of return which is generated once they sell the property. The aim of buy to sell is to purchase a property for a low price, such as one that’s in need of renovation, and then sell it for a larger amount once renovations have been made.
Risk Level
Like buy to let, buy to sell is a relatively low risk strategy depending on the type of property you invest in and the area you choose. The best way to invest 100k in buy to sell property investments is to properly research the market like you would with buy to let investments, as well as researching the best ways to add value to a property. If you’re an independent investor who has no property market knowledge on the best performing areas in terms of property price growth, or any knowledge on how to renovate a property, buy to sell may be a more risky strategy and not one to opt for if you’re considering where to invest 100k.
Potential Returns
The potential returns available from investing £100,000 in buy to sell property investments depend on the type of purchase you make. If you invest in a high-performing area and buy a property in which has a lot of potential for a growth in value, and make all the right renovations before putting it on the market, you could end up with some attractive returns. However, many people question whether this is the best thing to do with £100,000 when from buy to let, you could generate rental returns on top of the returns you’d see from a buy to sell investment.
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Investing in the stock market is one of the most widely recognised investment methods out there. When investing in stocks, you will tie your money up in a share of a company that you think is likely to increase in value. There are two ways to invest in stocks. If you prefer a more DIY approach, you can select the stocks yourself, which would require a lot of knowledge. However, if you don’t want this responsibility, you can hire someone to manage your investment for you.
Risk level
Stocks and shares are considered the riskiest of all asset classes. The main risks include economic changes and inflation. The bad news is that with stocks, the most successful investors are usually those who take the most risk. If you’re not prepared for this, stocks may not be right for you and you may want to reconsider this as the best way to invest 100k.
Potential Returns
Stocks and shares have the potential to bring some high returns, with some investors seeing success through strategies like value investing, but this is completely dependent on the amount you invest and the stocks you choose. You may have heard tales of people investing in stocks and more than tripling their income. Unfortunately, there are also a lot of stories where people lose all of their savings by investing in the wrong stock. To succeed, you need to accept the fact that you could either make some large returns or lose everything. If your money is important to you, you might want to think again when it comes to where to invest 100k.
Cash ISAs
If you want to know how to invest 100k safely without any risk, cash ISAs are a good option. Investing in a cash ISA such as a Lifetime ISA is a popular strategy for those looking to generate funds for their pension. By putting your funds into an ISA, you don’t have to commit to a property or stocks investment (although these offer higher returns), and can still make some return on your money.
Risk Level
Since most cash ISAs, apart from stocks and shares ISAs, are basically a savings account, you’re not at risk of losing your money. Of course, this has an impact on the returns you will see as a level of risk is often necessary to make larger amounts of money. With certain ISAs such as a Lifetime ISA, you’re also only able to access the money in your accounts when you buy your first home or retire, so you couldn’t use the funds from this as an emergency fund as you would end up losing money.
Potential returns
One of the biggest advantages of cash ISAs is that the money you make is completely tax-free. The amount you’ll be left with depends on the type of cash ISAs you select. The maximum you can invest in cash ISAs is £20,000 a year, which would normally be spread across different accounts. If you want to know how to invest 100k inheritance without risking losing your money, ISAs can be a good option. However, you won’t make as much as you would if you were investing in an asset like buy to let.
Frequently Asked Questions About the Best Way to Invest 100k in Property
If you’re looking for the best investment of 100k and you’re interested in property investment, choosing a buy to let strategy is the best way to invest 100k in property. This is because by investing £100,000 in buy to let, you can get the maximum return on investment through two types of return – rental income and capital appreciation.
There are certain tips you should keep in mind if you want to know how to invest 100k in buy to let. Firstly, you should do your property market research and look at different areas to find the best place to invest 100k in. Look for areas with high yields, strong rental demand, and promising capital growth predictions, as these will all help you generate a higher monthly income for 100k budgets. If you want to invest in buy to let, choosing to work with a property investment company is a good option on how to invest 100k wisely. This way, you have access to the best opportunities on the market and can be offered assured rental yields for your investment.
If you want to know how to start a property portfolio with 100k, the best advice would be to split your investment across multiple properties. When it comes to investing, building a diverse portfolio is the key to high returns, and with a budget of 100k, this can be easily achieved. This can be done by either using a buy to let mortgage on multiple investments or investing in two starter properties worth no more than £50,000 each. The former can be tricky, however, as most quality investments will cost more than this. Certain investment companies will also allow you to invest 100k by paying in separate instalments. This way, you could put a down payment of around 35% of the purchase price onto multiple investments, and then pay the rest at a later date.
If you want to know how to invest 100k in 2020, the best advice is to purchase property in the UK’s North West region. Liverpool offers some of the highest rental yields in the country, reaching up to 10%. This is thanks to the fact that properties in this city are affordable, while rental demand is high. According to research by Savills, the North West region also has the highest predicted growth rate of 27.1% over the next five years, giving you confidence that by investing 100k in this area, your buy to let investment could significantly grow in value over time. By investing in the best buy to let areas like Liverpool where property prices are more affordable, you give yourself a better chance of making the best investment for 100k budgets.
If you can’t decide what asset type you wish to invest 100k in, it’s possible to split your money across different assets. Depending on the cost of the investments, you could purchase a buy to let property alongside stocks and shares or a cash ISA if you want to combine different investment types and spread your risk across multiple assets.
The best strategy when considering how to invest 100k in the UK is to make an accurate financial plan of how much each separate asset may cost to invest in. While it is possible to use a buy to let mortgage to pay for a buy to let investment, keep in mind that you’ll need to put down a deposit of at least 25% if you get a mortgage deal agreed. If investing in a property worth £180,000, this would mean that you should put down a deposit of around £45,000. Then, the rest of your £100k budget could be spent on an investment in stocks and shares, as long as you seek expert advice and are prepared to accept the higher risks that come from this investment.
If you’re more risk averse, but still want to spread your money across different investments, you might consider buying a buy to let property, either with a buy to let mortgage, cash, or by using a structured payment plan, and then using leftover money to invest in a cash ISA or some premium bonds. This way, you’re still able to diversify your portfolio, but with lower risk investments than stocks and shares. Then, once you begin generating a return on your investment through investing 100k in these two assets, you can think about growing your portfolio with further investments.
In 2020, the best way to invest 100k of your money is into the buy to let market. Following the Covid-19 pandemic, the stock market saw one of the largest falls which led many investors to sell their stocks and shares, and instead invest in property. Property is known as a more secure asset, and throughout the last several months, has proven stable despite the uncertainty the economy and property market has faced. Property prices are now rising at record levels, the rental market is booming, and deals and discounts offered by property developers mean that investing 100k in buy to let in 2020 is the most lucrative and attractive option out there.
While it’s difficult to say the exact amount that your property will be worth in twenty years, by looking at past market trends and future predictions, we can estimate how much your property may have grown in value after investing 100k. According to past house price growth trends, the UK average UK property has increased in value by around 174% over the last twenty years. From January 2000 to January 2020, House Price Index data shows that the average property price has grown from £84,620 to £231,857, which is an added value of £147,237.
With high capital growth expected across the UK, with a 15.1% rise predicted for the country as a whole by 2024, and higher growth of 24.1% in the North West region, those who invest 100k in 2020 can expect to see a significant increase in property value over the next twenty years and beyond.
I Think Property Investment is the Best Choice For Me - What’s the Best Way to Invest 100k in Property?
If you’re looking for the best investment of 100k and you’re interested in property investment, choosing a buy to let strategy is the best way to invest 100k in property. This is because by investing £100,000 in buy to let, you can get the maximum return on investment through two types of return – rental income and capital appreciation.
There are certain tips you should keep in mind if you want to know how to invest 100k in buy to let. Firstly, you should do your property market research and look at different areas to find the best place to invest 100k in. Look for areas with high yields, strong rental demand, and promising capital growth predictions, as these will all help you generate a higher monthly income for 100k budgets. If you want to invest in buy to let, choosing to work with a property investment company is a good option on how to invest 100k wisely. This way, you have access to the best opportunities on the market and can be offered assured rental yields for your investment.
What Advice Can You Offer on How to Start a Property Portfolio With 100k?
If you want to know how to start a property portfolio with 100k, the best advice would be to split your investment across multiple properties. When it comes to investing, building a diverse portfolio is the key to high returns, and with a budget of 100k, this can be easily achieved. This can be done by either using a buy to let mortgage on multiple investments or investing in two starter properties worth no more than £50,000 each. The former can be tricky, however, as most quality investments will cost more than this. Certain investment companies will also allow you to invest 100k by paying in separate instalments. This way, you could put a down payment of around 35% of the purchase price onto multiple investments, and then pay the rest at a later date.
What's the Best Place to Invest 100k in Buy to Let in the UK?
If you want to know how to invest 100k in 2020, the best advice is to purchase property in the UK’s North West region. Liverpool offers some of the highest rental yields in the country, reaching up to 10%. This is thanks to the fact that properties in this city are affordable, while rental demand is high. According to research by Savills, the North West region also has the highest predicted growth rate of 27.1% over the next five years, giving you confidence that by investing 100k in this area, your buy to let investment could significantly grow in value over time. By investing in the best buy to let areas like Liverpool where property prices are more affordable, you give yourself a better chance of making the best investment for 100k budgets.
I Want to Invest in Different Assets at Once - What’s the Best Way to Invest 100k in a Diverse Portfolio?
If you can’t decide what asset type you wish to invest 100k in, it’s possible to split your money across different assets. Depending on the cost of the investments, you could purchase a buy to let property alongside stocks and shares or a cash ISA if you want to combine different investment types and spread your risk across multiple assets.
The best strategy when considering how to invest 100k in the UK is to make an accurate financial plan of how much each separate asset may cost to invest in. While it is possible to use a buy to let mortgage to pay for a buy to let investment, keep in mind that you’ll need to put down a deposit of at least 25% if you get a mortgage deal agreed. If investing in a property worth £180,000, this would mean that you should put down a deposit of around £45,000. Then, the rest of your £100k budget could be spent on an investment in stocks and shares, as long as you seek expert advice and are prepared to accept the higher risks that come from this investment.
If you’re more risk averse, but still want to spread your money across different investments, you might consider buying a buy to let property, either with a buy to let mortgage, cash, or by using a structured payment plan, and then using leftover money to invest in a cash ISA or some premium bonds. This way, you’re still able to diversify your portfolio, but with lower risk investments than stocks and shares. Then, once you begin generating a return on your investment through investing 100k in these two assets, you can think about growing your portfolio with further investments.
I Have £100,000 to invest: What Should I Invest 100k in in 2020?
In 2020, the best way to invest 100k of your money is into the buy to let market. Following the Covid-19 pandemic, the stock market saw one of the largest falls which led many investors to sell their stocks and shares, and instead invest in property. Property is known as a more secure asset, and throughout the last several months, has proven stable despite the uncertainty the economy and property market has faced. Property prices are now rising at record levels, the rental market is booming, and deals and discounts offered by property developers mean that investing 100k in buy to let in 2020 is the most lucrative and attractive option out there.
If I Invest £100,000 in UK Property, What Will it Be Worth in 20 Years?
While it’s difficult to say the exact amount that your property will be worth in twenty years, by looking at past market trends and future predictions, we can estimate how much your property may have grown in value after investing 100k. According to past house price growth trends, the UK average UK property has increased in value by around 174% over the last twenty years. From January 2000 to January 2020, House Price Index data shows that the average property price has grown from £84,620 to £231,857, which is an added value of £147,237.
With high capital growth expected across the UK, with a 15.1% rise predicted for the country as a whole by 2024, and higher growth of 24.1% in the North West region, those who invest 100k in 2020 can expect to see a significant increase in property value over the next twenty years and beyond.
How Can I Invest 100k in UK?
A Summary on What to do With 100k
If you’re still wondering ‘how can I invest 100k in the UK?’, here’s a summary of top tips taken from the points covered in our guide to the best way to invest £100,000 and make money from property investment.
1. Think about how much risk you’re willing to accept. The lowest risk investment with the highest potential is buy to let property, which offers an attractive rate of return on investment through both rental income and capital growth.
2. Think about how you’ll pay for the investment. If investing in buy to let, will you spend the full amount on a property worth £100k or less, or use a buy to let mortgage or payment plan to put a smaller deposit down?
3. Consider whether you’ll use the full amount to invest 100k into one investment, or spread your risk across different assets. Investing 100k into multiple properties at once with the help of a buy to let mortgage is a good idea, especially if you focus on different high-performing areas. If you wish to invest in different assets, the lowest risk strategy is likely to invest 100k into a buy to let property by putting down a smaller deposit, while also using a portion of your funds to invest in a cash ISA.
Find Out How You Can Invest in Merchant’s Wharf, Manchester, with Under 100k
View PropertyHow to Invest 100k With RWinvest
For the best return on 100k investments, explore our current property investment opportunities at RWinvest. If you have 100k to invest in property, our fantastic choice of buy to let investment opportunities is not to be missed.
We have buy to let properties in the best locations and can offer advice on what to do with £100,000 and how and where to invest 100k to get the most out of your money. Property investment opportunities like our newest Manchester investment, Merchant’s Wharf, come with payment plans that allow investors to gradually pay for the property in smaller amounts, which is great for those wondering how to invest 100k or less at a time.
If you’re ready to make the best return on 100k investment with RWinvest, contact us today for a helpful chat with a member of our experienced consultancy team.
DISCLAIMER
The content in this article is merely a guide to the available investment options out there, and should not be taken as financial advice. If you’re looking for personal finance tips and information, it may be beneficial to seek the help of a financial advisor.
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