How to Invest £30k - The Best Ways to Invest £30k in 2023
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As we kick off a new year, you may have it in mind to find extra ways of earning money in 2023. Whether this is for a New Year’s resolution or to try and give yourself financial freedom, you will be happy to know that there are many ways to invest.
If you find yourself with a budget of £30k, this opens up many different investment strategies you can consider.
In this blog post, we’ll break down some of the most popular forms of investing, and explain some of the best ways to invest £30k to help you understand what might be best for you.
Before we do that, let’s get into what you should be asking yourself before investing any money.
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What To Consider Before Investing £30k
Here are some essential questions you should answer, and some vital things to consider before you invest any sum of money.
If you want more specific financial advice related to your personal situation, contact a financial advisor to discuss things in person. They will be able to provide advice related to your financial goals and financial situation.
What Are My Investment Goals?
Every investor, from those starting out to those who have been at it for years, has their own goals and plans for what they want from their investments.
Some investors choose to invest for long-term returns over time, giving them a consistent cash flow of additional income. Others may want one big payout, hoping to strike it big.
Understand what you want to gain from your money, and this will help you decide what types of investments are best for you.
What is My Risk Tolerance?
No investment is risk-free. That is something every investor needs to understand before they put a penny into any kind of investment.
Your risk tolerance is how much risk you are willing to accept from your investment strategy. A high tolerance will mean you are fine with riskier types of investments that could strike big but may lose your money in the same breath.
You need to know and understand the risks that come with investing, and decide how risky you want your investments to be.
What Should I Do With My Money Before I Invest?
To put yourself in the best possible position to invest, there are two main things you should consider doing before you invest any money.
The first thing is to clear any high-interest debts that you may still have, such as credit cards or payday loans. These will eat away at your savings and may affect what investment strategies are available to you.
The second is to set up an emergency fund. £30k is a substantial amount of money, and if the worst happens, losing it will likely hit you hard. Having some money tucked away will mean you can get back on your feet.
The 5 Best Ways to Invest £30k
With all that out of the way, let’s get into what we think are five of the best types of investments for this budget!
Here are some of the best answers for how to invest £30k in the UK.
1. Buy-to-Let Property
Cost: 4/5
Risks: 2/5
Returns: 5/5
Arguably the best way of investing in 2023 is to establish an investment portfolio of buy-to-let investment properties.
This method of investing allows you to earn returns through two different methods at the same time. By collecting rental income from your tenants every month, you will have a consistent cash flow of passive income.
Homelet’s Rental Index currently states that the average rent in the UK is £1,174 per calendar month, with many major cities having higher average rents than the national standard.
As a physical asset, property rises in value over time, so you will also benefit from capital appreciation. In 2022, house prices across the UK rose by 12.6% by October, showing there is potential to make some serious profit.
All this is in combination with a level of security that very few investment strategies can offer. The phrase ‘safe as houses’ really is true, as the housing market has a proven ability to bounce back from serious financial crises such as the COVID-19 pandemic.
For those with a low-risk tolerance, buy-to-let real estate is a great way of achieving high returns while being safe in the knowledge that your investment can endure tough times. Property makes for a great long-term investment because of the security and consistently higher returns it offers.
While you may look at the price of property nowadays and flinch if you are looking to invest £30k, there are several ways of investing in property with this lower budget.
If you are wondering how to invest £30k in real estate, one of the best ways is to invest in off-plan property. These are properties currently in the process of development or construction and are cheaper than traditional investment properties.
Not only can you buy off-plan properties for below-market value prices, a lot of the time, you can set up payment plans to spread out the cost of investing. This way, you can use your budget of £30k to invest in property by putting down a smaller lump sum of cash to secure the investment.
Off-market properties can also often be found in some of the best places in the UK to invest in, such as Liverpool and Manchester. This way you can make the most of some of the highest rental yields in the UK, earning you more returns.
There are also buy-to-let mortgages available, but with how mortgage rates have been rising in recent months, this is not as promising a method of investing in property. You will need to pay more interest than you would have in 2022, whereas with payment plans this is not an issue.
With this in mind, buy-to-let property combines a potent mix of affordability, high returns, and security. This makes it one of the best ways to invest £30k in 2023.
2. Stocks
Cost: 3/5
Risks: 4/5
Returns: 4/5
One of the most traditionally popular investment options, stocks remain a prevalent way to invest in 2023.
The stock market allows you to buy shares, or fractions of ownership, in companies so you can earn returns based on how they financially perform.
The more stocks in a company you own, the larger your stake of ownership is and the more profit you will make from your portfolio. For example, if a company had 1,000 shares and an investor owned 100 of them, then that investor would own 10% of the company and be entitled to 10% of the company’s profits.
As you earn money based on how companies perform, if their fortunes take a turn for the worse, then so will yours.
There are thousands of companies you can invest in on the stock market, meaning this is a good option if you want to diversify your portfolio.
Having a diversified portfolio means spreading your money around multiple forms of investment.
This is a good way of investing, as if one of your investments fails then you will not lose as much money, which is helpful for those with lower risk tolerances.
Some of the most popular stocks for beginner investors are those of large companies with continued success, such as Amazon, Google and the Walt Disney Company, as these consistently perform well. However, these stocks tend to be more expensive as a downside.
Other investors choose to invest in smaller companies in the hopes that their fortunes will turn and the value of their stock will rise. This way, you can buy more stocks for less money, but it comes at a higher risk.
Once stock rises in value, you can either sell your stocks to make a profit or the company you are investing in may choose to give you more stocks as dividends. This way, you continue to expand your investment portfolio over time, without having to spend any more money.
While all this is well and good, the stock market does come with its level of risks. The value of stocks can change quickly, so you will need to keep an eye on the markets you are investing in or hire the use of a financial manager to manage your stock portfolio.
If you are not careful, you may find your investments losing value fast, and it may not even be your fault. While there is potential to make a lot of money on the stock market, there are also countless stories of those who lose it all as well.
Current industry expert predictions indicate we are in the middle of a bear market. This term refers to when a market sees a prolonged drop in investment prices, which can act as a course correction after inflation.
This means stocks may not be as strong an investment option right now as they have been in the past, as the market recovers from the political turmoil of 2022 and the effects it had on the economy.
For this reason, the stock market is best suited for those willing to accept a higher level of risk. You will need to do your research before you put money anywhere, as you may find the stocks you invest in aren’t for you and could lead to a loss.
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3. Cryptocurrency
Cost: 3/5
Risks: 5/5
Returns: 5/5
One of the newest and most buzzed-about forms of investing, cryptocurrency has set social media ablaze in recent years with celebrity endorsements and stories of investors striking it big.
Online currencies with no centralised structure or organisation, cryptocurrency offers a level of freedom and deregulation, unlike any other form of investment. This means investors can benefit from faster transfer fees, a level of anonymity and fewer restrictions than other investment options.
Most cryptocurrencies work through a form of technology known as the blockchain, which is fairly self-explanatory. Forms of data like transactions are contained in ‘blocks’, which are then spread out across a ‘chain’ of a large number of computers so they cannot be altered or changed.
Because there is no centralised server or location such as with regular money, it is much harder to regulate cryptocurrency. This has led to it becoming something akin to the Wild West of investing.
While there is far more freedom than other investment options, this isn’t always a good thing. There are countless stories of investors getting ripped off, becoming victims of fraud or having their crypto wallets hacked, losing everything in the process.
Unlike other investment options where there are regulating bodies, there is little to no chance you will ever be able to recover your money if this happens to you. As such, cryptocurrency is one of the riskiest investment options you can consider.
That being said, with high risk comes high reward, and there is the potential to make some serious returns by investing in cryptocurrency. In 2016, Bitcoin, the oldest and most popular form of cryptocurrency, cost around £370 for a single unit. Now at the time of writing, one Bitcoin costs £17,210.43.
While Bitcoin is the largest and most successful platform, it is far from the only one achieving success. Ethereum and Tether are two other popular cryptocurrencies which have grown exponentially since their launch, even if they are not at the heights of Bitcoin.
Alternatively, you could invest in a smaller cryptocurrency in the hopes that it will strike it big and launch ‘to the moon’, in the words of crypto enthusiasts. This is a similar investment strategy to stocks but comes with similar risks.
Cryptocurrencies are popular for a reason, as they can make you a large profit in a short time. But the market is so unstable and subject to volatility and can change on a whim, so you are always on a razor’s edge when you invest in crypto.
ETFs
Cost: 3/5
Risks: 3/5
Returns: 3/5
Potential Risks: 1/5
Exchange Traded Funds, or ETFs for short, have been a popular investment option ever since they first launched in 1990.
These are a collection of securities that are indexed against a particular financial market. As the name implies, they’re funds that are traded on specific exchanges, such as the FTSE 100.
ETFs are a welcome alternative to stocks as they comprise several different stocks in a single bond, so you have a diversified portfolio right from the off by investing in ETFs. This means they are more secure than investing in individual stocks, as you run less of a risk of them failing thanks to the diversification.
While they are similar to mutual funds, which also collect a wide array of stocks in one single fund, ETFs are considered more tax-friendly for several reasons. They pass through fewer capital gains as they typically have a lower turnover.
They cover most major asset classes, so you get to spread out across a wide range of businesses and sectors to help make this investment strategy more secure. This way if one stock that the ETF is comprised of fails, its value is not damaged as badly as a portfolio of individual stocks would be.
Another benefit of ETFs is that they are often more affordable than competing investment options like mutual funds, as their operating expense ratios are lower. This means they are cheaper to be managed and run.
However, because they are traded on markets the same way stocks are, ETFs will run similar kinds of risks. In times of economic uncertainty or doubt, ETFs may not be the best way to invest £30k as market values are likely to drop.
For those interested in stocks but who want a lower-risk alternative, ETFs may be the way to go. The highs may not be as high, but you are less likely to experience the lows.
Savings Accounts
Cost: 2/5
Risks: 1/5
Returns: 2/5
The option best suited for those who are risk-avoidant, savings accounts are the safest way to invest £30k but are also the least likely to net you high returns.
Depositing your money with a bank or credit union means it will be secure for the long term, which can be useful if you are not sure what to do with your money. By putting it in a savings account, you can buy yourself time to decide without having to worry.
Savings accounts are reliable and secure, with your money being protected by the bank you choose to deposit it with. You earn returns by collecting interest on the money you have deposited.
It is also easier to protect your money from the taxman through savings accounts. You can secure up to £5,000 in savings accounts that are tax-free each year, and you can use cash ISAs to secure more of your savings. This way you can keep £25,000 of your money tax-free.
However, this security also comes with a lower ceiling for returns.
The current average interest rate for savings accounts in the UK is 0.22% APY. With rates this low, you will struggle to earn any level of high returns in a short time and will need to leave your money alone for years and years to achieve any level of meaningful profit.
FAQ’s About Investing £30,000
How Can I Double My Money?
Doubling your money is a matter of time, learning and effort when it comes to investing. There are numerous investment options which could see you double your money over time, some faster than others.
You will need to balance your risk tolerance with how fast you want to make money, with options like property investment offering a solid balance between the two for most investors.
Is £30,000 A Lot of Money?
Yes, £30,000 is a lot of money. This is a solid budget to begin investing in, as it opens up a lot of different strategies for you to consider.
It is not an overly large sum of money though, so you may need to be savvy in where you choose to invest it depending on the strategy.
Does Money Double Every Seven Years?
This refers to the Rule of 72, a common way investors work out how long it will take for their investment to double in value. If you divide 72 by the fixed rate of return, this will give you a rough estimate of how long it will take to double your money.
You will need a rate of return of 10% or over on your investment to double your money in seven years.
This is not an exact science, however, so do not treat it as gospel.
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What’s the Best Way to Invest £30k?
Given the variety of investment strategies out there, we cannot say there is one single way of investing £30k that is the best for everyone.
With that being said, we believe that buy-to-let property investment offers the best combination of high returns over time and low risks to appeal to the majority of potential investors. With a budget of £30k, you can find premium off-plan properties that will net you strong returns for years to come.
Here at RWInvest, we have over 18 years in the property investment industry, helping our clients find the best investment properties on the market.
Our dedicated sales teams are experts in some of the best areas to invest in the UK, meaning our portfolio of properties consistently achieves high rental yields, affordable prices, and luxury quality that appeals to a wide range of tenants.
We pride ourselves on helping those who choose RWInvest through every step of the property investment journey, with hard-working Post Sales and Client Care teams there to help you understand the ins and outs of property investment.
If you are interested in learning more, why not contact us today, and talk to one of our expert salespeople about how to invest £30k in property?
Alternatively, we have a range of free guides available on our website. If you want to learn more, read our guide to UK property investment and why it is currently thriving.
If you already know the ins and outs of buy-to-let investment, try our 2023 property market predictions, where we break down what we think are some of the key trends the new year will bring us.
Have a larger investment budget? Read our guide on how to invest £50k and how to invest £100k to better understand what to do with your money.
John Brady
John is a property writer here at RWinvest. With a close eye on property market news and updates, John writes detailed and informative articles on a range of topics that are helpful for anybody looking to invest in UK property.
