The Best Way to Invest 100k

If you’re lucky enough to have 100k lying around, you’ll want to be sure to make the money work for you and get the most out of your investment. While there are many things you can do with a 100k investment, the right one for you and the best way to invest 100k safely will depend on your goals and financial situation.

100k is no small amount and invested wisely, you could capitalise on your investment to get an extra lump sum or even find ways to generate ongoing returns.

In this article, we explore the best way to invest 100k, offer some ideas to help you generate maximum returns on your investment and show why investing in a buy-to-let property can be one of the most low-risk and lucrative options.

What’s the Best Way to Invest 100k Safely?

Rather than letting your 100k sit around in a bank account, investing it is a smart decision to make your money grow. 100k offers lots of options and there are multiple ways you can invest it, both wisely and not so wisely. 

Keep in mind that leaving money to sit in your bank account endlessly wouldn’t be so wise of a choice. Inflation will end up eating most of your money away, so choosing a way to put your money to good use is of top priority.

To ensure a safe investment, it is best to diversify your portfolio by spreading your investments across a variety of asset classes. This could include stocks, bonds, mutual funds, ETFs and cash. Additionally, you should always research and understand what you’re investing in.

Before you decide which investment avenue works best for you, it’s prudent to take some time to consider what you hope to achieve through your investment and make sure you invest your money safely and efficiently. Investing your money in a variety of asset classes can be a great way to diversify and get the most out of your money.

Here are some of the main things to consider before deciding what to do with your investment.

How to invest £100,000?- Key Considerations

Consider your Investment Goal

What kind of returns would you like to see on your investment? 

Do you need to generate quick returns or are you comfortable watching your investment grow over a longer time period? Do you want to invest for growth or income?

Whatever your level of investment, you should take some time to think about what you want to get out of it. Maybe you are looking to save for retirement, generate some passive monthly income, or would like to make a quick return. Knowing your goals will help you decide on the right type of investment for you.

For some investments, your money will need to be kept for a longer amount of time while with others it can be taken out quickly.

 What is Your Appetite for Risk?

Some investments are riskier than others. It’s important to think carefully about whether you are prepared to accept a high level of risk to potentially gain more returns or would like to be more prudent with your investment and keep the risk low. 

You should also differentiate between your personal attitude to risk and your risk appetite. Your attitude to risk can often be more emotional, and you may be more inclined to take risks if you feel confident in the investment or if you have a high opinion of yourself and your ability to make money. Understanding the difference between your attitude to risk and your risk appetite is important when it comes to making investments.

As your risk appetite, when it comes to investing your 100k is more about your risk tolerance (how important is stability in your life to you, how much can you afford to lose, etc.)

Every investment comes with a certain level of risk and it’s down to you to determine what you are comfortable with while ensuring your investment venture is beneficial.

High-risk investments are, for example, stocks and shares. Lower on the risk scale are bonds, government bonds and buy-to-let property.

Level of Effort

When investing 100k, some investments will require you to undertake a lot of the work, while with others you can put the money to work with little interference. You should think about whether you would enjoy or be comfortable managing the investment yourself or need the support of an expert.

Investments require different levels of effort and commitment depending on their type and you need to realistically consider the time you have to invest as well as money. Some investments can be totally hands-off, either due to their nature or hiring someone to help you such as a property management company or financial advisor.

Other investments are more hands-on and require more of your time and effort. It is important to understand the different types of investments available to you, and decide which one suits your lifestyle best.

Explore Investment Types and Ways to Invest 100k

When considering the best way to invest £100,000 – whether stocks and shares, investing in property or a cash ISA – there are many different ways to approach an investment.

You need to think about which options will work best for you based on your goal, appetite for risk and level of involvement. It’s a good idea to think about whether you are investing for income or growth (or both) and then figure out which investments can help you to achieve those goals.

Also, you should take into consideration the type of portfolio you want to build for yourself. Having a diversified portfolio of investments is usually a safer and more sensible choice.

It’s also important to bear in mind that the markets can be volatile, so you should seek professional advice from a financial advisor to ensure you are making the right decisions.

You should also look into the different tax implications of each investment type and ensure that you are taking advantage of any tax breaks available. Finally, you should check fees and charges associated with each investment to make sure you are getting the best value for money.

What can you do with a 100k Investment in the UK?

 If you have 100k to invest in the UK, there are many different ways you can make the investment work for you to generate some good returns.

 Cash Accounts and ISAs

Cash ISAs are a form of high-interest savings account. Unlike other accounts, ISAs usually have a set term before you can take out the money and you’ll need to pay a fee if you want to access the funds early. Some Lifetime ISAs only allow you to access the funds upon retirement.

ISAs are generally low risk because, as with any bank account, you will not lose your money. While risk is low, generally so are the returns, and you’re unlikely to see high gains when putting your investment into this type of account.

What are the likely returns on your investment with a cash ISA? 

The amount you can generate in returns will depend on the type of ISA you choose. Be aware that there are limits on what you can invest in an ISA, capped at £20,000 per year. If you have a low appetite for risk and perhaps want to save money for retirement, an ISA could be the way to go. If you are looking for higher returns it’s probably best to explore other options.

Although, one thing that should be kept in mind when investing in ash ISAs, is inflation! In order to keep your money from losing its value, the inflations rate should be kept at 2% by the Bank of England, which is not currently the case. So you could potentially end up losing money in the long run. 

Stocks and Shares

Investing in the stock market is one of the most popular investment methods chosen by those looking to gain returns. You purchase stocks and shares in a company that you think will increase in value.

It’s possible to do some research and choose the stocks yourself if you have the time and knowledge to do so. You can also hire an expert such as a financial advisor, stockbroker or a robo advisor to help you manage your investment or invest on your behalf. 

Stocks and shares can come with high returns if you are savvy enough to choose the right ones. The amount of return you will get depends on how much you invest and the stocks you choose to invest in. 

Out of all the investment options, stocks and shares probably come with the highest risk. To succeed in the stock market, you need to consider whether the idea of possibly losing your money is something you can accept. 

Share prices can go down as well as up, and it’s possible to lose all or part of your investment if the market suffers a downturn. If you are comfortable with risk, this could be a good option to maximise your investment, however, if you prefer less risk, you might want to look at the other options available to you.

Investing in stocks and shares can potentially help you beat inflation & some big returns on your investment, but if the company you invested in underperforms, you also need to face the risk of losing everything you invested.

Investing in Assets

Putting your money in assets, like a property, is a good way to put 100k to work. You might want to spend the full amount on a property worth 100k or less to buy it outright or use the sum as a deposit to buy a property of higher value and take out a mortgage to fund the rest.

In some areas of the UK, it is possible to get a strong performing buy-to-let property from as little as 50k (read more about how to get the best return on a £50,000 investment here). This can be a great way to get a steady income from rental yields, as well as capital growth over time.

The rental income you get from the property can be used to cover mortgage payments, and any increase in house prices will provide an additional return on your investment. When it comes to selling a property, you can expect to make a profit if the value of the property has gone up since you bought it.

At the same time, you don’t need to put all your eggs in one basket. It’s possible to spread your investment over different assets which may help you lower the risk as long as you choose high-performing areas.

Read more about the best places to buy property in the UK, here. And if you need more property search tips, this article is for you!

Another option is to split the costs across investment strategies. For example, placing some in a cash ISA and some into a buy-to-let property to spread the risk and boost the types of returns you can get for your money.

 Buy-to-Sell Property

Property investment is one of the most lucrative avenues to invest 100k with lower risk than other investment types. Whether you want to invest 50k or 100k, there are markets across the country where you can find a good property to generate returns.

Most investors will either invest in property to sell – known as flipping, or wholesale real estate investing – where they buy a property and undertake repairs or renovations in order to boost its market value and then resell it at the right time. The key is to buy a property at a low price and sell it for profit after undertaking renovations.

When it comes to flipping a property, most investors will need some knowledge of the area and to undertake the right amount of research to understand market trends. Not all renovations will lead to an increase in property value and it’s important to understand the factors that can boost rental income before sinking money into a venture.

It’s important to note that this type of investment, is not recommended to property investment beginners, as your repair costs will most probably run higher than your initial investment, and you’ll end up losing money rather than earning any.

Read more about How to Earn Money from Property Investment, here.

Buy-to-Let Property

The second option is investing in a buy-to-let property. This type of investment lets you generate two types of returns – both capital gains from the property’s increase in value when you come to sell it, and monthly income from your 100k investment by renting the property out to tenants.

Buy-to-let is generally a lower risk investment than avenues like stocks and shares and will generate higher returns than investing in cash ISAs. The main risk is that the property market experiences a crash, and if there is low rental demand or demand for purchasing property, this could make a bad return on investment. 

However, right now the UK property market is performing well and by 2025 property prices are expected to grow by 21.1%. The key is to carefully consider rental yields and do enough research to invest in an area that is likely to see property prices increase.

If you need some help, here’s our Buy-to-Let guide to get you started and here you’ll find the Best Buy-to-Let Areas in the UK.

The type of property and investment location will impact both the rental income and capital gains you receive on your investment. Cities like Liverpool are currently considered one of the best places to invest in the UK due to rising property prices and demand for rental accommodation. Properties are still affordable and it is possible to get something with a 50k investment.

Monthly Income from 100k Investment in Property

When it comes to any investment, focusing on returns is an important factor for being a savvy investor. What returns can you expect from a buy-to-let property? The first thing is to look at rental yields.

Rental yield is the rental return an investor will achieve on a property each year. To calculate the rental yield, take the annual rental income of the property then divide it by the price paid for the property before multiplying the figure by 100. As an example, a rental property bought for £100,000 and bringing in an annual rental income of £5,000 would have a 5% rental yield.

A good average yield for a buy-to-let property in the UK is 5% or higher. This should allow the property to pay for itself and cover ongoing wear and tear, taxes and other expenses. Rental yields vary by location and just because one area of the UK has high monthly rent, doesn’t necessarily mean that a property will be more profitable and deliver higher yields. 

When looking at monthly income from a £100k investment in property, it is important to consider all associated costs. These include mortgage payments, insurance, maintenance and taxes.

It’s possible to boost rental yield by making improvements to the property to help it stand out in the market. Read more about what makes a good rental yield.

Where to Invest 100k in Property in the UK?

What are some of the areas presenting strong prospects for investors with 100k to invest?

Leeds

The best way to invest 100k could be in a Leeds property. Leeds offers highly attractive rental yields that sit at around 5% and with a strong opportunity for buy-to-let student properties, yields can in fact be much higher. 

By 2024, rents in Leeds are expected to rise 18.8%, making investing in Leeds property a good idea. Some properties in Leeds can be had for a bargain too.

One of our properties, Sky Gardens, in the much sought-after Southbank can be had for 15% discount, giving investors that sweet spot of a low property price and strong rental yield. 

Other good news about Leeds is that it will most likely become the UK’s number one city for capital growth. By 2024 house prices are due to rise by 28%, meaning investing your 100k in a Leeds property could bring great returns down the line.

Nottingham

Nottingham is forecasting 25.5% property price growth over the next five years and offers some attractive yields, particularly because housing demand is outstripping supply. New developments in recent years have focused on the student market and this has resulted in a lack of new developments in the city centre for other residents and young professionals. 

The average property price in Nottingham is around £240,526. One property that can deliver attractive yields is The Wells Nottingham, tipped to deliver rental yields of 7.5%.

Manchester

For investors looking to invest 100k and get a decent monthly income, properties in Manchester perform well. In the coming years, Manchester will experinece some of the highest sale price and rental growth in the UK. 

The average rental income on a two-bedroom Manchester flat is £1,145. Additionally, properties are increasing in quality indicating that rents will certainly rise. For investors looking for the best way to invest 100k, Manchester Waters is set to offer strong yields of 6%. The property consists of studio and one and two-bedroom properties.

If you’re looking for the best way to invest 100k, be sure to carefully consider your goals and appetite for risk. While there are many investment avenues, we think investing in buy-to-let property is a no-brainer. Also, it can deliver both monthly passive income and a lump sum in capital gains when you come to sell. To find out more about the best way to invest 100k, get in touch with our advisors.