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How to Invest 200k (the Smart Way)

If you’re lucky enough to have inherited £200k or be in a position to invest 200k, you’ll want to make sure your investment decisions will bring about positive returns. 200k is a lot of money that could bring you even more in returns, but bad investment decisions or bad luck can also mean the investment might be a loss.

Before making any investment decision, it’s important to do your research. In this article we look at some of the ways to invest 200k, key information on what to consider before investing your money and how to choose the right investment based on your circumstances and appetite for risk.

What you Need to Know Before Investing 200k

Before deciding on how to invest 200k, here are a few things you should consider:

  • Do you have any debts?

If you have any high-interest debts, you should ideally pay those off with any extra income you have. Compound interest is one of the highest forms of interest so should be paid off as soon as possible. Loans with lower interest, such as mortgages do not need to be paid off straight away. 

  • Do you have an emergency fund?

It’s a smart idea to always have a runway of funds should the worst happen. Ideally, an emergency fund should cover six months’ worth of expenses. Putting some of your investment into a savings account can be a smart idea. 

  • What are your financial goals?

Before you invest £200k, you should consider what you want to get out of your investment. Keeping in mind your financial goals will help you to narrow things down to the right option for you. Would you like to receive regular passive income from your investment? Are you more focused on a larger lump sum down the line? Do you want to invest for the long-term or do you prefer something with a quick turnaround? 

  • What is your attitude to risk?

All investments come with risk, but some are riskier than others. Those that bring high returns usually carry the largest risk and are dependent on fluctuating market trends. It’s important to ask yourself what you are comfortable with and how you would feel about making a loss.

For example, investing in the stock market makes it possible to achieve annual growth from a portfolio of equities, but there is some risk as a portfolio would certainly be subject to the ups and downs of the market. When the pandemic hit, the stock market dropped by over 30%, while the market has somewhat recovered, you need to consider how you would feel if something like this happened and what it would have meant for you financially. 

To minimise risk you can always introduce a portion of non-equity investments into the portfolio – these include things like bonds and gold, which are less volatile, but give lower returns. 

  • Do you want long-term or short-term investments?

If you have 200k to invest, you need to ask yourself whether you’re looking for a long-term or short-term investment. 

  • Short-term investments 

Short-term investments are generally considered to be those made for a period of less than five years. When considering the short-term option, many people put their money into cash savings accounts rather than investing it.

However, saving and investing are different. Saving is tucking away money for a future expense, allowing you to get your hands on the money instantly. The downside is that the interest rates are usually extremely low. On the other hand investing is putting money away for a minimum term of 5 years. 

  • What are long-term investments?

Long-term investments usually come with better interest rates. Interest allows you to draw out income while leaving the original sum untouched while continuing to earn interest on future income. If you are looking to create steady income, a longer-term investment is the way to go. 

  • Why is it important to invest 200k for 5 years or more?

As well as diversifying how you invest your 200k, another way to lower risk is to invest for more than 5 years. Investing in the short-term can mean that the stock market might be depressed and your investments lose value. The longer you can invest in something like the stock market, the less likely you are to get caught out and make a loss. 

  • Is now the right time to invest?

The market is currently in a more volatile state than previous years. However, the market rises and falls and it’s basically impossible to predict when it will do so. Because you can only really generate healthy profits with long-term investments, you shouldn’t overly focus on the short-term movements of the market. 

If you are investing in the stock market, investing in established companies in a mix of industries then holding them for a long time will ensure you take a safer approach. When the market is volatile, it’s also a good idea to gradually invest the money over a period of 3-6 months. Even if you hold investments over a long-term period, you’ll still need to rebalance anything in your portfolio based on economic change. 

Where Can I Invest 200k in the UK?where to invest 200k

There are plenty of places to invest £200k in the UK. Here are some of the most popular places to put your money:

  • Cryptocurrency 

In recent years investing in cryptocurrency is all anyone seems to talk about and it’s an investment option that has picked up significant steam. There are many kinds of cryptocurrency available, from Stellar to Bitcoin to Ethereum, and most people hold on to these online currencies until they rise in value, much like stocks.

While crypto has delivered some investors huge returns, particularly those that were early to become aware of this type of investment, this type of investment comes with huge risks. Crypto can fall in value just as quickly as it can rise and the markets can wildly fluctuate from day to day. For those that are more risk-averse, investing in crypto is probably not the best option. However, if you are unafraid of the potential risks, there is the possibility to generate significant returns on your £200k through crypto.

  • Stocks and Shares

When investing in stocks, you purchase a small part of a company. Stocks rise in value the better a company performs. However, while the value of stocks can rise, they can also fall. If you are looking to invest £200k in the stock market, it’s a good idea to spread your investment across several companies and industries to minimise risk. If one industry is facing difficulties, this means that your total investment will not be completely impacted. 

The stock market can change extremely rapidly. If you are managing the investment yourself, you’ll need to not only be knowledgeable but keep a close eye on the market to be able to pull out or change your investments quickly should they begin to lose money. 

  • ISA and savings Accounts

An option with the least risk is to put your £200k in a savings account. This is a straightforward way of earning interest while making a return on your investment. 

There are different types of ISA accounts. A normal savings account may require that you deposit a certain amount of money each month and allows you to withdraw money whenever you want. 

ISAs are another place you can put your money. Up to a certain limit, your money will not be taxed. Investors are allowed to invest £20,000 per annum and any interest on those investments will be tax-free. 

The drawback with ISAs and savings accounts is that they are unlikely to deliver returns as high as other investment methods. ISAs are better viewed as a way of offering protection from tax.

  • Property Investment

Property is one of the most popular ways to invest £200k in the UK. It is seen as a relatively safer investment when compared to the stock market or cryptocurrency and can deliver much better returns when compared to ISAs.

Property prices have reached record rates in the last couple of years, and rent is also seeing some of the strongest growth ever recorded. There is currently a shortage of housing stock in the UK, which is pushing up rents, and with property prices at record levels, people are renting for longer to save for a deposit. 

If you rent a property out to tenants, you can earn a consistent monthly income. At the same time, you can also make significant capital gains if the property rises in value when you come to sell it. 

A drawback with property is that it is not a liquid asset and you cannot immediately get your money out, which you can do with stocks and crypto. When wondering how to invest £200k, property can be a good option. If you invest in more affordable cities like Leeds, Liverpool or Manchester, there is the possibility to generate high rental yields with the right property. 

  • Buy a Business 

You may want to use your money to buy an already-established business. If you invest in the right type of business it can provide a good source of income over the coming years. Something to keep in mind is that this may require more work than you are willing to put in, so it’s important to understand the requirements. Businesses can also lose money or fail, so you’ll still need to assess the risk associated with the business and your chosen industry. 

  • Invest in Gold

Investing in gold is a good way to hedge against inflation. Commodity purchases tend to stand the test of time and carry less risk. At the same time, less risk usually means less reward and you may get a lower return than with other types of investment.

Where to Invest 200k Now for Incomewhere to invest 200 000 pounds

What is the best investment for 200k if you are looking to generate ongoing income? If you’re looking to invest 200k for income, we think that property is one of the best places. If you rent out your property you can generate immediate monthly passive income from rent. With your rental property, you should be sure that any rent you generate is enough to cover expenses. Such as the mortgage, maintenance and other fees. The amount of rental yield your property generates will depend on the price you pay for it and the amount of rent you can charge. A good rental yield is usually above 5%, but the higher the better. 

With an investment of 200k, it’s certainly possible to find a profitable property. As well as generating a stable monthly income from tenants, you should be able to gain a lump sum from the increase in value of your investment property when the time comes to sell it. 

Here are some of the things to consider to make your property profitable:

  • Location 

It’s important to get the right property to ensure you can generate income immediately. Location is one of the most important factors, and making sure your property is close to sought-after amenities like restaurants, transport connections and good schools can all ensure you make a good profit. 

  • Rental Demographic 

You should also carefully consider the rental demographic you want to target. Rental yields can be as much as 20% higher if you target the student market. While there are drawbacks, such as added wear and tear, higher yields mean your investment may be more profitable. 

  • Consider Costs

Investing in a property requires upfront costs. You may need to refurbish or redecorate the property or invest in new kitchens or bathrooms to attract tenants. You should be aware of other fees like solicitors fees, legal costs or a property management company if you do not live in close proximity to the rental property. 

What Is The Best Way To Invest 200k UK?

When it comes to the best way to invest £200k, there’s no right or wrong answer. Every investor has their own goals, financial situation and appetite for risk. Every investment has pros and cons, and no investment is completely risk-free.

Out of all of the investment options, property is still one of the most popular and secure. Property offers a good balance between risk and reward. It also offers the opportunity to generate passive income from rent. Also, the potential capital gains down the line can make for an exciting investment opportunity. 

How Can I Invest 200k in Property?how to invest 200k pounds in property

If you have decided on a 200k investment in property, one of the first places to begin is to get in touch with a property investment company. They can advise you on the different opportunities available. Property investment companies will give you first-hand advice on the market and the best opportunities available for your budget. 

If you are looking to invest in property, there are two major avenues to pursue:

  • Buy-to-sell property investment

If you have £200k to invest, putting it into a buy-to-sell property can be one of the more lucrative avenues to invest with lower risk than many other investment types. With £200k, there are markets across the country where you can find a good property to generate returns. 

When investing in buy-to-sell, an investor will buy a property and undertake renovations and repairs in order to boost its value before reselling it at an opportune time. This is also known as flipping. To maximise profit, investors will buy a property at a low price and try to boost its value through savvy renovations, making a lump sum profit. 

When flipping a property, you’ll need good knowledge of the area and market trends. Investors need to know the renovations that will lead to the most increase in value as not all renovations will increase a property’s market worth.

  • Invest in a buy-to-let property

The second option when it comes to investing in property is choosing a buy-to-let property. A buy-to-let investment will let you generate two types of returns. First, you’ll gain regular recurring income from monthly rent. You’ll also receive a lump sum from the property’s increase in value when you come to sell it.

Buy-to-let can be a good option for investors looking to generate ongoing passive income. Investing in bricks and mortar delivers higher returns than investing in cash ISAs. It is also less risky than cryptocurrency and stock and shares. To minimise risk, you’ll need to be sure to invest in a property where there is good demand from tenants. As well as make sure that the property is in an area where it is likely to increase in value.

To maximise the profitability of a rental property, you should closely consider the following:

  • Rental Yields

You’ll need to focus on the rental return the property will deliver each year. You can calculate the rental yield by adding up the annual rental income of the property then dividing it by the price paid for the property before multiplying that figure by 100.

For example, if you invest in a property for £200,000 and the annual rental income is £10,000, the property would generate yields of 5%. Generally, landlords should look for rental yields of 5% or higher. This is to ensure that the monthly rental income covers the cost of the property. With expenses like mortgage repayments, wear and tear and repairs and taxes, it’s important that the property can pay for itself. This ensures the investment will remain profitable. 

Read more about what good rental yield is here.

Why Invest in Property?what's the cost of investing in property

People always need a place to live and property is seen as one of the more lower-risk investments that can deliver good returns. House price growth has soared in recent years to a 19-year high of 15.5%. Rent is 10% higher than 12 months ago and currently £1,171 per calendar month on average. Brick-and-mortar investments can be a reliable and well-performing asset even during times of economic uncertainty. 

The average price of a property in the UK is at an all-time high of £290k. Of course, property values change depending on the market and where you invest. Nevertheless, it’s certainly possible to find good-performing properties with £200k or less to invest.

What is the Cost of Investing in Property?

Property is a long-term investment. So you’ll need to let the asset grow in value to ensure you get the best returns. While property is seen as a good place to put your money, investors need to be aware of the costs involved:

Ongoing Costs when investing in property:

  • Mortgage repayments 
  • Property management fees
  • Maintenance and repair costs
  • Income tax on rental income
  • Insurance like property and contents insurance
  • Corporation tax if you form a limited company

Property Exit Costs:

As well as ongoing costs,there are also fees associated with property when you want to sell it, these include: 

  • Legal fees 
  • Estate agent fees
  • Capital Gains Tax

Tip to Invest 200k in property

Before you invest in any property, you should understand the different types of property you can invest in. As well as residential property, student property is one of the most popular types of investment.

  • Student Property 

Student property often generates higher rental yields and student accommodation is usually more affordable to purchase than residential property. Often student property is managed by a dedicated property management company, allowing investors to be completely hands-off. 

Student property falls under two main categories HMOs and purpose-built student accommodation:

  • HMOs: HMO is a property where tenants share facilities like the bathroom and kitchen and has at least three tenants with individual tenancies.
  • Purpose-Built Student Accommodation: This is a property that has been specifically built for students and can include halls of residence and flats. 

While student accommodation can deliver good ongoing monthly income, it does not appreciate in value as much as residential properties. If capital appreciation is an investment goal, investors will be better off investing in different types of property. 


If you’re wondering how to invest 200k the smart way, there are plenty of investment options to consider. From cryptocurrency to stocks and shares to ISAs to property, the investment avenue you choose will depend on your goals, appetite for risk and how long you want to invest. Out of the investment options, property is one of the lowest risks that can deliver good returns. To find out more about investing in property, get in touch with our experts today.