How to Get the Best Return on a £50,000 Investment
Wondering what to do with £50000? If you’re lucky enough to come across it you may be wondering how to get the best return on £50,000 investment. There are a few key options available. Like investing in stocks and shares to putting in into a cash ISA as well as investing in buy-to-let property and many more.
What’s important to keep in mind is your financial goals. Also you need to weigh up the positives and negatives of different investment strategies. As well as the risk of losses and returns and how long you’re willing to invest.
Below we dive into some of the options for getting the best return on a £50,000 investment and why investing in a buy-to-let property might be a strategy to help you meet your financial goals.
What are the Key Things to Consider when Investing £50,000?
£50,000 is no small amount of money, and if you’re not a seasoned investor, considering how to get the best return on that investment can be confusing.
The best investment for £50000 will depend on your situation and before you make any decision, you should carefully think about your expectations and financial status.
Your main considerations before making any investment should include:
- reviewing your current and short-term financial situation, such as whether you have debts or large expenses coming up, and how large you want to keep a nest egg for a rainy day emergency.
- current payments and how 50k can be best put to use, for example paying off your mortgage early, adding more money to your retirement fund or renovating your home to increase its value.
- establish your appetite for risk and capacity for loss. Would you be happy to potentially lose some of your money or do you prefer to be more conservative?
All these factors can begin to give you insight into how you can get the best return on a £50,000 investment. It’s important to remember that investing comes with risks and rewards – so it’s always wise to diversify your portfolio in order to spread out the risk across multiple assets classes. This way, if one asset class performs poorly, other asset classes can potentially offset any losses.
What are the Best Ways to Invest 50k?
When looking at the most popular investment strategies, there are three main options that investors consider:
- investing your 50k in stocks and shares,
- opening a savings account in the form of a cash ISA and
- investing in a buy-to-let property.
The right option for you will depend on your situation, appetite for risk and priorities. It’s important to do your research, consult with a financial advisor if necessary, and carefully consider the pros and cons of each option before making a decision. By investing your 50k wisely, you can set yourself up for long-term financial success and achieve your financial goals.
Below we dive into the pros and cons of each so you can understand how to invest 50k wisely.
How to Invest 50k? Stocks and Shares
Investing in stocks and shares is one of the most common avenues for investors. An investment strategy with high potential returns, it’s also usually simple to exit an investment when you’re ready to take your money out.
Typically, over the long term, investing in stocks and shares is likely to generate higher returns when compared to leaving money in a cash ISA. However, this type of investment does come with drawbacks. There is also the potential to lose what you invest, like:
- No guaranteed returns
- Requires lots of expert knowledge
- Volatile market
What You Need To Know About Stocks and Shares
Markets fluctuate and stocks go up and down in value, which can mean losses. With a longer time frame, your investments can compound and grow, but investors in stocks should be prepared for investments to fall in value every now and again. If you are not prepared to keep your money out of reach longer-term, being forced to take out money when markets are down may result in losses.
Investing in stocks and shares generally requires some specialist knowledge. While there is money to be made, there are inherent risks, especially if you have limited knowledge of the financial world. As such, it’s important to do your research and understand the company you’re investing in before you commit your money. Learning as much as you can about the company’s financial performance, management team, and products or services offered will help you make an informed decision.
Additionally, it’s important to diversify your portfolio and spread out any potential risk by investing in different stocks and industries. This way, if one stock falters, the other investments may balance out any losses you may incur.
Taking the reins on stocks and shares yourself requires time and effort to gain background knowledge and spend time monitoring the markets. Experts with knowledge can help you to make the most of your investment and a wealth manager can do the work for you for some cost.
What to do with £50,000? Cash ISAs
A tax-free ISA is another option if you have 50k to invest. Cash ISAs are less risky than stocks and shares, and are considered a safer safe place to hold cash. In a high-interest savings account, there is no risk and you can generate a cash bonus of 25% from the government if you don’t take the money out for 5 years.
Different options from lifetime to stocks and share ISAs exist, however, most ISAs come with a maximum deposit limit of £20,000 per year, meaning you could not put to work the full amount of your investment all at once.
Another drawback is that it’s unlikely you’ll see massive returns by putting your money in a savings account, as appreciating assets tends to be more effective. ISAs are a good option for those who want to take little risk and have a financial strategy that doesn’t put a focus on large growth.
To sum up the pros & cons of cash ISAs:
Pros of cash ISAs:
- Tax-free withdrawal – which means that any interest earned on your investment is not subject to income tax.
- Highly portable/transferrable – allow you to easily move your investment between providers without incurring any penalties.
- Lower risk – which makes them a good choice for those who prioritize safety and stability over the potential for high returns.
- No age upper limits – which means they are accessible to a wide range of investors.
- You can pass your ISA saving onto someone as an inheritance – which makes them a potentially valuable part of your estate planning.
Cons of cash ISAs:
- Contribution cap – which limits the amount of money that can be invested each year.
- No tax relief – meaning that you cannot claim any tax back on your investment.
- Withdrawn money cannot be replenished – this means that you will lose out on the tax-free status of the withdrawn amount if you want to reinvest it.
- Allowance can not be carried over – meaning that if you do not use it in a given tax year, you lose it.
For those who want to take minimal risk while still earning some interest on their savings, cash ISAs are an attractive option. On the other hand, cash ISAs usually offer lower returns than other investment options. Therefore, it is important to compare different options and consider whether an alternative could be more profitable in the long term.
Is investing in Buy-to-Let Property the Best Return on a £50,000 Investment?
For those with a 50k budget, investing in property can be a great way to put your money to use. Despite some upheaval with the COVID-19 pandemic, the UK property market has remained resilient and housing markets across the UK are expected to remain buoyant.
Here’s what experts at Savilles have to say: “With house price growth at 10.4%, 2021 was the strongest calendar year for price growth since before the Global Financial Crisis (GFC) in 2008. House prices rose by 1.0% in December alone, according to Nationwide, and annual house price growth has now exceeded 10% in seven of the last eight months.”
There are many areas of the UK where investors can make substantial gains. Read more about the best places to invest in the UK in 2021.
By investing in property, investors set themselves up to potentially gain attractive returns from both rental income – if the property is for buy-to-let – and capital gains.
Landlords can also use the rent to cover any mortgage payments. Given the UK property market’s resilience and projected future growth, property is a lower risk strategy and has the potential to enable investors to meet their financial goals in the short and long term.
However, just like with stocks, market fluctuations occur, which can affect capital gains when it comes to selling the property. As with any rental property, landlords may experience periods when the property is unoccupied, which can mean loss of rental income if there is low demand from tenants.
Investing in property is still usually a long-term investment and unlikely to deliver fast, high returns until it comes to the sale of the property.
If you’d like to get better a look at the UK Housing Market at the moment, this article is for you!
What you Need to Know about Investing 50k in a Buy-to-Let Property
Whether this is the first property you are considering to purchase, or a second home (read more about our tips for investing in a second property ), location is key to buying a property with potential rental income and capital gains.
In certain areas of the UK, particularly in the North, you can find properties for 50k and it is possible to build a property portfolio with £50k, but investors should keep in mind extra taxes such as stamp duty and income tax on any rental income.
For those looking to get into buy-to-let property investment, this Guide is for you.
Overall, investing 50k in a buy-to-let property can be a great way to generate rental income and potentially earn capital gains over time. However, it’s important to do your research, carefully consider the costs and responsibilities involved, and seek professional advice if necessary. With the right approach, investing in property can be a lucrative and rewarding investment option.
Where to Invest in Buy-to-Let Property with a £50,000 Investment
When it comes to investing 50k in the UK property market, there are a number of areas that savvy investors may want to consider. The key is to look for locations that offer a combination of low house prices, strong potential for capital gains, and a growing rental market due to increasing tenant demand. Here are some of the top areas in the UK to look at:
A Liverpool investment property can offer some impressive returns and there are properties available for 50K. With relatively low house prices and high rental demand, the city continues to remain one-to-watch by property investors.
A mini housing boom in 2021 saw a 6.3% rise in house prices compared to the previous 12 months and in the next five years, property prices are expected to rise by 13.1%.
If inventors consider property in the right area, they can also take advantage of the city’s growing rental demand from tenants, particularly its student sector which produces a pipeline of 30,000 graduates per year. Currently, average rental yields sit at around 5.0%, one of the highest in the country.
With growth potential, relatively cheap property, high tenant demand and strong yields, Bradford is an up-and-coming destination in the North that property investors shouldn’t ignore.
The Average value of property prices in the BD1 area currently stands at £69,988. Bradford was recently named in the top 10 best buy-to-let areas in the UK, and some properties in the BD1 area can offer between 8 – 10% rental yields.
With relatively affordable house prices, strong capital growth potential and attractive rental yields, now is a great time to invest in property in Nottingham. Student rental property is in high demand and can be a lucrative investment.
Private investors have been attracted by high yields and low vacancy rates, and the fact that many of these students stay on in the city after graduation, contributing a pipeline of talent to the city’s economy and providing additional rental opportunities.
Rental yields are a key consideration for any property investor, and Birmingham’s rental yields offer a strong return on investment sitting at 5.4 – 6 %, comparable to destinations like Liverpool. B4 postcode areas near the city’s east side can reach up to 11%.
Since 2019, rents in Birmingham have grown by 28% and are set to grow by 10% over the next four years. The affordability of housing makes the city particularly appealing for first-time investors due to lower initial costs – Birmingham is one of the UK’s most affordable places to invest in property relative to its size.
The average house price in Leeds is around £267,740 which is an 10% increase from the previous year.
Leeds currently offers some of the highest rental yields in the country at around 4.29 %. Apartments in particular can mean investors can expect to see decent property growth in the coming years.
Of course, these are just a few examples of the many locations across the UK that may be of interest to buy-to-let investors. It’s important to do your research and consider a range of factors, such as local property markets, population demographics, and economic trends, when making investment decisions.
If you want to learn more about the Best Buy-to-Let Areas in the UK, we’ve got the article for you.
We’ve outlined some of the best ways to invest 50k and if you’re wondering how to get the best return on a £50,000 investment, stocks and shares, cash ISAs and investing in buy-to-let property are all options to consider. Investing in a buy-to-let property is generally lower risk and gives you an appreciating asset as well as potential rental income. The key is to carefully consider the right areas of the UK for your property investment. To find out more about how to build a property portfolio with 50k, get in touch with our experts today.