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Many of us want financial freedom but are often left wondering how this can be achieved.
You may have it in your mind that you want to find ways of earning extra money outside of your day job, but deciding what to do can be confusing if you don’t know where to look.
If you have some spare cash you’re able to invest, you’re already off to a good start, and a budget of £75k offers a fantastic opportunity to grow your finances with investment.
If you want to find out how to invest £75k, make sure to keep reading. We’ve put together this guide to help you figure out what investment strategies might be right for you.
£75k is a sizeable amount of money which means you have plenty of options when it comes to investing your money. So, let’s help you find out what the best way to invest £75k is for you.
By submitting your details you agree to allow RWinvest to store and process the information submitted and receive product information and other communication, as stated in the privacy policy.
By submitting your details you agree to allow RWinvest to store and process the information submitted and receive product information and other communication, as stated in the privacy policy.
Before you put any of your money anywhere, there are a few things you need to consider before you decide how to invest £75k.
Your first step is to decide on an investment goal. This could mean investing for high returns or for capital gain, where the value of your investment rises, and could be investing over a short time or investing for a longer period.
Try to make sure you have settled any debts, especially high-interest ones such as credit cards. This can affect what options you have available and can lead to unexpected costs that you might not be ready for if you have invested your savings.
Also, try putting some of your money into an emergency savings fund. There’s no risk-free investment strategy, so if the worst happens and you lose your money, you still want to be able to provide for yourself and your family.
If possible, set aside between 3-6 months’ worth of expenses so you can land on your feet no matter what.
As well as this, work out your risk tolerance. This is a term for how much risk you are willing to accept with your investments and is different for every investor. Do you want to risk it all in hopes of winning big, or be safer with your money and potentially have a smaller return?
Finally, make sure you do your due diligence and adequately research any investment strategy you are interested in. You don’t want to jump in feet first to an investment that turns out bad, so make sure you proceed with caution when investing.
If you want financial advice specific to your situation, talk to a financial adviser. They can help you decide your financial goals and give you a better understanding of your personal finance.
With that out of the way, let’s talk about some of the best ways to invest £75k in 2023!
We’re going to rank five of the most popular types of investment based on a range of criteria, including affordability, risks involved, and potential returns, and then break down how to invest £75k in each of these options.
Property investment might not be seen as the most glamorous method of investing, but it is widely regarded as the most reliable for long-term investment opportunities. There are several options you can consider when asking how to invest £75k in real estate, meaning it is more flexible than you might be led to believe.
The most common way of investing in property is to purchase a buy-to-let investment property and rent it out to tenants. This way, you earn returns through two different methods.
Rental income gives you a consistent cash flow each month to act as an income stream, while capital appreciation means the value of your property grows over time, so if you decide to sell your property, you can make a considerable profit.
One of the biggest strengths of property investment is the stability it offers compared to other investment strategies. Property is a physical asset, which means it does not change in value as rapidly as liquid assets like stocks or cryptocurrency.
This makes it a much better option for those with lower risk tolerance, as you are less likely to lose money on your investment if you are patient.
However, if you are asking how to invest £75k in property, your options may be more limited, unless you are clever with how you invest.
By borrowing a buy-to-let mortgage, you could potentially buy an investment property outside of your budget, but you would need to deal with the high interest rates we are currently seeing with mortgages.
Alternatively, you could invest in off-plan property, where below-market-value prices and affordable payment plans may allow you to avoid a buy-to-let mortgage altogether, saving you money and allowing you to purchase a new build property in some of the best areas to invest in the UK.
Real estate investment is one of the strongest investment options in 2023, offering a potent mix of high returns, low risks and affordable prices.
When you think of investing, chances are that stocks will come to mind pretty quickly. Investing in stocks has historically proven to be a popular way of investing, and this remains the case in 2023.
Stocks are small portions of ownership in a company, that the company can choose to sell as a way of raising funds. The more stocks you own, the larger the stake in the company you own.
For example, if a company has 1000 stocks available to invest in, and you buy 100 of those stocks, you would own 10% of the company.
Stocks rise and fall in value based on how the company performs, so investing in the stocks of a company that is performing well will see your stocks rise in value. You can then sell your stocks for profit or reinvest to increase the number of stocks you own. Some companies will give additional stocks to shareholders in the form of a dividend if they perform well.
Naturally, the opposite also applies. If the company you are investing in performs poorly, your stocks will fall in value and you can lose your money if you are not careful.
Investing in stocks means you need to track the stock market to see how your portfolio is performing, or hire a financial manager to do that job for you, lest you be caught off guard.
Investing in companies that consistently perform well, such as Apple or Disney, is a good way of investing in stocks for those with lower risk tolerance, as you are unlikely to see your investment portfolio fall in value.
However, this is a more expensive method as those stocks are of higher value, so you will not be able to own as many stocks as you would by investing in smaller or riskier companies.
You can set up a shares ISA which can help you invest some of your £75k in stocks tax-free, although you will likely not be able to avoid paying taxes on all of the investment funds.
Thanks to the variety of options you have, stocks are one of the best ways to invest £75k as different options can appeal to a wide range of goals and investors.
Arguably the most exciting and talked-about investment strategy of recent years, cryptocurrency has burst onto the scene to become one of the buzziest investment methods in 2023, but does it live up to the hype?
Cryptocurrencies are a form of online currency, most of which operate on a technology known as the blockchain, which means they are decentralised and contained on a series of servers.
Because of their decentralised nature, there are little to no regulations surrounding cryptocurrencies. While this is a selling point for many, it is also a huge risk.
Crypto has become known as the ‘Wild West of investing’, as there is little to protect investors from scams and hackers who could take their crypto wallets.
Cryptocurrency is often seen as a boom or bust investment strategy, as while there are significant risks and stories of investors being ripped off, there are also tales of people striking it big.
Bitcoin, the longest-running and highest-valued cryptocurrency, was valued at around £370 for a single unit in 2016. At the time of writing, a single Bitcoin is currently worth £18,560, a growth of over 4000%!
Other cryptocurrencies may be cheaper than Bitcoin but can rise and fall in value just as fast. Much like stocks, you will need to keep an eye on your crypto wallet to make sure you don’t lose money.
With this in mind, they are often useful as a short-term investment, allowing you to buy low and sell high.
While there are high risks with cryptocurrency, there are also potentially high rewards. It is an investment strategy best suited for investors with higher risk tolerance, and the time to maintain a crypto wallet.
Exchange Traded Funds, or ETFs for short, have been a popular alternative to stocks since 1990.
Similarly to stocks, ETFs are a collection of securities indexed against a specific financial market and are sold on exchanges like the FTSE 100.
Unlike stocks, investing in an ETF is a collection of stocks in one security, which makes them far more secure and less risky if one stock falls in value then the others in the ETF aren’t affected thanks to the diversification of the ETF.
Having a diversified portfolio is important, as it means you run less risk of losing money on your investments.
While they are similar to mutual funds, as they collect several stocks in one single fund, ETFs are more tax-friendly as they pass through fewer capital gains due to a lower turnover.
You can find ETFs that cover most major asset classes, so you can spread your money across a wide range of sectors and businesses to help with the diversification of your portfolio and lower the risks of the volatility that come with stocks.
Another benefit of ETFs compared to mutual funds is that they are cheaper to invest in, as their operating expense ratios are lower.
However, because they are operated similarly to stocks, they also run similar risks. In times of economic doubt, ETFs might not be the best way to invest £75k as they could lose value rather quickly.
For those who want a low-risk alternative to stocks, ETFs might be the way forward if you want to invest £75k.
The safest method included on this list, savings accounts are the best way of investing for those wondering how to invest £75k with as few risks as possible.
By storing your money in a savings account, you are securing it for the future by depositing it with a bank. You can also save up to £25,000 of your money tax-free through savings accounts and ISAs, through different kinds of funds such as investment accounts.
You collect returns on savings accounts via the interest you earn from the money deposited in savings accounts. However, the security that savings accounts bring comes hand in hand with lower returns compared to other investment strategies.
The average interest rate for savings accounts in the UK is currently 0.22% APR. This means you will need to leave your money alone for a long time to see any considerable returns.
If you are looking for the best way to invest £75k for a pension pot, savings accounts may be right for you, but if you want to earn more money from your investment, you might want to consider other options.
You have two main options with that amount of money – save or invest. If you want to try and increase your funds, investing is the way to go! Property investment is considered one of the best ways to invest £75k of your money for a high return on investment.
With a budget of £75k, you have several choices when asking how to invest £75k in property.
You can borrow a BTL mortgage and use £75,000 as your deposit, or invest in off-plan property and use a payment plan with smaller cash installments to help spread the cost of investing over time.
With over 18 years of experience in the property market, RWInvest can help you achieve financial freedom through real estate investment!
We have helped thousands of clients through their investment journeys, guiding them through their specific financial situations to help them achieve high returns and satisfaction with their investments.
With exciting opportunities in hotspots like Manchester and Liverpool, we have some of the best properties currently on the market in the UK available to investors right now!
If you are interested in learning more, why not chat with one of our property consultants today to talk about our range of investment options?
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.
Disclaimer: This guide was updated in Q1 2023. Depending on when you read, data may be outdated and no longer accurate. Always do your own research to get the latest figures.
By submitting your details you agree to allow RWinvest to store and process the information submitted and receive product information and other communication, as stated in the privacy policy.
