If you’ve got £50,000 to invest but are unsure what to do with it. You’ve got goals you want to achieve, but you need to know where and when to invest your money, and how to compare cash ISA vs Stocks and Shares ISA accounts. It’s time to make your money work harder for you.
Best Way to Invest 50K: Summary Table
|🏦 Should I save or invest 50K?||It depends on your risk tolerance, financial goal, and withdrawal flexibility|
|🗓️ Ways to invest 50K safely today?||You can invest in the stock market, real estate, and cryptocurrency|
|📣 Best way to invest 50k short-term?||•High-interest savings account|
•Money market mutual funds
•Short-term corporate bond funds
|💸 Is 50K a lot of money?||Yes, 50K is a lot of money|
When it comes to investing, it’s a marathon, not a sprint. Time is your secret weapon, as long term investments can make the difference between a budget day trip or an international city break.
The sooner you learn how to invest 50K and start investing, the longer your money can benefit from market movements. You can also take on more risk with your money, as you’ll have longer to recover from any short-term fluctuations. Risk tolerance investing means potential for higher returns, although markets go down as well as up – of course.
What to consider before investing £50,000
If you’ve paid off any credit card loans, have an emergency cash fund and are comfortable with your financial security, it could be time to consider how to invest 50K with a view to getting the best return.
You can do it yourself, but this takes time, skill and extra money to cover the cost of trading. It can also be difficult to separate your emotions, financial goals and lifelong dreams from your day-to-day portfolio management.
After all, £50,000 is a lot of money. Taking the leap and making your first investment can be daunting, and managing an amount like this yourself can be stressful when it’s for your family’s future.
Unfortunately, the traditional wealth management industry can command expensive fees for its services, which can eat into investor profits. Digital wealth managers like Moneyfarm have created lower-cost opportunities for investors looking for help preparing for the future.
Is it better to save or invest?
Is it better to save or invest 50K? Well, saving is putting money away for short term goals via one-off or monthly payments. Usually, you save up to pay for things like holidays, homes, and emergencies. Savings accounts are safe because the Financial Service Compensation Scheme protects them. Saving money is essential because you’ll be in debt if you spend more than you earn.
Investing is another way to save money, but it can be very risky due to the stock market’s volatility. You could lose money if things go wrong. But there are ways to protect yourself from losing money. You can learn how to invest 50K and set up an investment plan that protects you from bad luck. Also, You can diversify your portfolio to spread out your money among different types of investments while practising portfolio management.
A significant difference between saving and investing is the interest rate on each account. Savings accounts have low-interest rates, while investment accounts have higher interest rates. So while your money is safer in a savings account, the low rate of returns means that inflation might erode the purchasing power of your money.
When making the decision to either save or invest 50K, you need to consider several factors such as your risk tolerance, financial goal, and withdrawal flexibility. You have access to the money in your savings accounts, but the funds in investment accounts are locked for a period of time.
How to invest 50k wisely and safely
We’re all different when it comes to investing – whether it’s our investment goals, family makeup, or financial background. Our investments should reflect and complement this diversity.
Before you start, you need to know what you’re investing for and when you’ll need your money. This will help you build an investor profile that reflects your risk tolerance and will influence what’s in your investment portfolio.
Investing is all about balancing risk and return; if you want blockbuster profits, you’re going to need to take on more risk – although this means your money has further to fall too. On the other hand, if you’d instead protect your initial investment than chase after high returns, you’ll take on less risk to try and limit any losses.
It can be difficult to truly understand your risk tolerance before you start investing, especially if you’re transferring from a cash ISA. That’s why Moneyfarm does that hard work for you.
All you need to do is fill in a questionnaire, and Moneyfarm matches you to an investor profile and portfolio that’s built and managed by experts to help you achieve your goals.
What to invest in today
There are several investment vehicles to sink your money into nowadays. Some people believe in property investments. Some investors regard a property investment as an asset that appreciates, and they can earn regular income in the form of rent by leasing the property.
Others invest in cryptocurrency and the stock market. However, both come with high risks if you choose to invest.
Whilst your investor profile will influence what you invest in, you should still look to diversify your investments to manage the risk in your portfolio.
By spreading your £50,000 across different asset classes and geographies, you hope to offset any losses with gains made elsewhere in your portfolio.
The best way to invest 50K is to ensure that you don’t invest your entire $50K in one investment. You can learn how to invest £10,000, then move up to investing £50,000. If you put all your money into one investment, your performance is completely reliant on this investment. If it does well, congratulations; if it does very badly, you could lose your entire £50,000.
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Diversification is difficult and expensive to get right if you do it by yourself. You have to have specialist knowledge of all markets and know how to value investments.
Investors look to discretionary management for cost-effective diversification in their portfolios. Exchange-traded funds can help investors achieve diversification and transparency at a low cost.
Best way to invest 50k in the short-term
Investing isn’t a quick fix to grow your money. If you’re going to need your money within 12 months, it’s better to keep your money in tax-free cash ISAs.
However, if you want to protect your money for a milestone that’s over 18 months away, investing might be for you. Of course, the further away your goal is, the more risk you can take with your investments, as you would hope any short-term fluctuations will recover over time.
The closer your investment goal, the more risk-averse your portfolio will be. This means you will have a higher proportion of bonds as investments than equities. But, if you want to dive into equities and still be on the safe side, investing £50,000 in exchange-traded funds with more exposure to bonds is the way to go.
If you’re investing for your retirement that’s decades in the future, you can afford to take on a bit more risk with your investments, whether you’re investing in a pension or tax-free ISA such as stocks and shares ISAs. This will increase your potential for higher returns, although markets can go down as well as up.
Whatever your time horizon, maximise your returns by investing part of your £50,000 in a stocks and shares ISA. You can put up to £20,000 in an ISA each year. Any income or growth in the value of your ISA investment will be protected within a tax wrapper.
Get the best return on your £50,000 investment
When we invest, we do it for a number of reasons. Primarily, we want to protect our wealth for the future – this is particularly important in times of low interest and high inflation. If it’s held in cash, the real value of a savings account can go down over time. So, a lot of savers turn to investment in the markets to hold their cash.
In terms of the best way to get returns on your £50,000 investments, it ultimately comes down to your attitude towards (and ability to absorb) risk. Generally, if you are investing long term, you will be able to create a portfolio with a higher level of risk – you’ll absorb any unfavourable fluctuations over the longer time period, in theory. If you’re investing for only a few years, on the other hand, you’ll want a portfolio that holds fewer risky assets to aim for more consistent, steady growth over time.
Another important thing to note as you gain an understanding of how to invest 50K is diversification. A fully diversified investment portfolio is vital to give your savings the best chance of generating steady, consistent returns over any given time period. This is where employing the services of a wealth manager can pay off in the long run. When deciding how to invest 50K, it’s a serious figure that requires care and monitoring to ensure it performs – a good wealth manager will offer this and more.
You only have to look at the difference in the returns of the top digital wealth managers to get an idea of how much difference good management can make. Moneyfarm, for example, was found by Boring Money to have performed best over three years compared to 14 other top wealth managers. You can see the full breakdown of the study here, and of course, past performance is no indicator of future returns, but you’ll see how much returns can vary.
Five tips for investing £50,000
So, you have £50,000 to invest, and you’re ready to put it to work. There are, however, some key things to remember before you start investing your money and growing your wealth. It’s possible to make mistakes when investing, and investors often stumble at some easily avoidable hurdles when they’re just setting out on their financial journeys.
Here are our key tips to know before you start investing:
Pay off your debt
Make sure you’ve paid off any credit card loans and have a rainy day cash fund in case of emergency.
Invest for you
Build an investor profile and match it with a portfolio that will help you get one step closer to your financial goals.
Spread your money across asset classes and geographies to manage risk in your portfolio.
Maximise your returns in an ISA
Invest £20,000 a year and protect any income and capital growth with your ISA wrapper.
Let a discretionary fund manager do the hard work for you
Investing for your family’s future can be difficult, so hand the reins over to a fund manager who is an expert so you can enjoy the important things in life.
Can I beat inflation by investing?
Yes, you can beat inflation by investing wisely. Always diversify your investments to minimize investment risk.
Which 50K investment is best against inflation?
How to invest 50K against inflation involves investing in assets used to hedge against inflation including gold, commodities, real estate and real estate investment Trusts (REITs), and S&P 500 ETFs.
What is a common hedge against inflation?
Gold and other precious metals such as silver and copper.