How to invest £100,000

The complete guide on how and where to invest £100,000, including the best investments for income, returns and risk.

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Hargreaves Lansdown

Open your stocks and shares ISA with Hargreaves Lansdown

  • Invest in a variety of stocks, shares and funds
  • Annual charge is never more than 0.45%
  • Start your ISA from £100 or £25 a month
  • Do it yourself or use ready-made portfolios

Before you invest, think about it

Before you start investing, you should have a firm idea of why you are doing so. Many investors start without any understanding of their overall financial goals, which can lead to poor investing decisions down the line. £100,000 is a lot of money, and if invested correctly, can make a significant difference to your financial situation, and even serve as a source of income.

Having a clear plan about what you want to get out of your investments will make it a lot easier for you to recognise when (or if) you should be taking profit, when you should be reinvesting, and when to rebalance your portfolio. More importantly, it will help determine the types of investments that are most likely to help you reach your financial goals.

Before you start investing, you should keep the following in mind:

  1. Financial goals. Is this money meant to fund your retirement, go towards purchasing a house, or are you looking to use your investments as an ongoing source of income? Having a clearly defined financial goal is the central guiding factor when it comes to investing your money correctly.
  2. Expected return on investment. Are you looking to get a steady, reliable return or happy to take bigger risks in the pursuit of higher returns? Some forms of investing may offer guaranteed but lower yielding profits, whereas others offer substantially higher potential gains, but also the chance that you may lose money.
  3. Your risk appetite. More risk can get you higher returns, but you’re also more likely to lose your money. A lot of providers have a quiz that takes you through your knowledge and experience in investing which often gives you an inkling of what risk profile you ought to go for. It can feel a bit of a faff answering a bunch of questions with loads of words you don’t recognise, but these are pretty helpful. Also, don’t just decide to go with the riskiest option just because you want to make the most out of your money. Do research first and get an idea of how much money you’d realistically be willing to lose.
  4. Timeframe. Are you investing for the short or long term? If you’re likely to need access to the money in the near future, you’ll probably want to avoid riskier investments, whereas if you’re investing £100,000 for your retirement, you’ll be less exposed to short-term fluctuations in asset classes like stocks and property.
  5. Personal circumstances. If you have a family or dependants who rely on your income, you may want to be cautious with how you invest your money. While it may not seem significant at the moment, a change in your personal situation can have a big impact on how you view your money. For example, if you lost your job tomorrow and would then need to rely on the £100,000 to cover your living expenses, it would be irresponsible to lock it up in a long-term bond that you then can’t touch.

Getting independent financial advice

It can be daunting to know what to do with such a large sum of money, so it’s probably worth speaking to a financial adviser before you start investing £100,000. There are platforms that offer advice with their packages or for an additional cost, like Hargreaves Lansdown, Nutmeg and Moneyfarm.

Financial advisers will be able to help you make decisions as they can offer personalised advice. While it can be easy to find general investing advice, it’s unlikely to be perfectly aligned with your own financial and personal situation and investing goals.

By seeking independent advice from a financial planner, you’ll be able to get tailored advice that may better help you reach your financial goals. You can also hire financial advisers to manage your investments for you if you’d prefer not to have to do it yourself.

Best types of investments for £100,000

When it comes to investing £100,000, there’s a huge range of asset classes that you can choose to invest in. All offer potential benefits and drawbacks, and deciding on which type of investment best suits you will largely depend on the factors listed above. We’ve detailed some of the most common investment assets below:

1. Equities (stocks and shares)

One of the most popular retail investment vehicles is buying company stocks or shares. When you buy shares in a company, you’re effectively buying a small portion of the company. Depending on how the company performs, its share price will go up or down over time. If it goes up, you make a profit on your investment, if it goes down, you lose money.

When it comes to investing in stocks and shares, you have three main options:

Trading account. Opening a trading account is the most straightforward way to invest in stocks. Once you’ve found a broker or trading platform you want to use, you’ll need to create an account and deposit funds in order to start trading.

Stocks and shares ISA. Also known as an individual savings account, a stocks and shares ISA lets you buy and sell stocks as you would with a general trading account, but you won’t have to pay tax on any profits you make.

Pension. A self-invested personal pension (SIPP) lets you invest your income or savings in order to save for retirement. While you won’t be able to touch the money in your SIPP until you reach retirement age, you’ll benefit from government tax contributions in the meantime.

All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

Build (or choose) a portfolio

One of the best ways to manage your risk and reward balance is to build a diversified investment portfolio. A portfolio is basically just a collection of investments, and you can either build your own from scratch, invest in a pre-built portfolio, or use the information in a pre-built portfolio to create a personalised version.

Many pre-built portfolios are diversified. This means that they have a variety of different types of assets that carry different amounts of risk. Think of it like throwing a Van Gogh (pretty wild in the art world) into your portfolio as well as a (maybe safer) Leonardo Da Vinci piece. It just means not putting all your eggs in the same basket.

Choose a low-fee option (big tip!)

One of the hidden dangers of investing large amounts of money is the erosion of your capital due to fees, whether it’s account fees, trading fees or fund fees. Even a small reduction in your fees can mean a huge difference in your overall profits, especially over the long-term.

Research by the London Business School found that a portfolio with an annual fee of 2.1% would return 35.5% less over a 40 year period than the same portfolio with a 0.5% fee. When it comes to investing £100,000, this could mean a difference of tens-of-thousands of pounds.

2. Commodities

You may also want to consider investing in commodities like oil or gold, either directly, via exchange-traded funds, or using derivatives like futures contracts.

Table: sorted by promoted deals first
Data indicated here is updated regularly
Name Product Price per trade Frequent trader rate Platform fees Brand description
Fineco
£2.95
£2.95
Zero platform fee
Your first 100 trades are free with Fineco, T&Cs apply.
Fineco Bank is good for share traders and investors looking for a complete platform and wide offer. Capital at risk.
eToro Free Stocks
0% commission, no markup, no ticket fee, no management fee
N/A
Withdrawal fee & GDP to USD deposit conversion
Capital at risk. 0% commission but other fees may apply.
IG
0% commission on US shares, and £3 on UK shares
From £5
£0 - £24 per quarter
IG is good for experienced traders, and offers learning resources for beginners, all with wide access to shares, ETFs and funds. Capital at risk.
Hargreaves Lansdown Fund and Share Account
£11.95
£5.95
No fees
Hargreaves Lansdown is the UK's number one platform for private investors, with the depth of features you'd expect from an established platform. Capital at risk.
Degiro Share Dealing
£1.75 + 0.022% (max £5.00)
£1.75 + 0.022% (max £5.00)
Portfolio transfer fees (in & out)
Degiro is widely seen as one of the best low-cost share brokers, for people who are looking to trade regularly. Capital at risk.
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Compare up to 4 providers

Data indicated here is updated regularly
Name Product Minimum deposit Maximum annual fee Price per trade Brand description
Interactive Investor stocks and shares ISA
Any lump sum or £25 a month
£119.88
£7.99
Interactive Investor offers everything most investors need. Its flat fees makes it pricey for small portfolios, but cheap for big ones. Capital at risk.
Moneyfarm stocks and shares ISA
£1500
0.75%
£0
Capital at risk.
Hargreaves Lansdown stocks and shares ISA
£100
0.45%
£11.95
Hargreaves Lansdown is the UK's biggest wealth manager. It's got everything you'll need, from beginners to experienced investors. Capital at risk.
Nutmeg stocks and shares ISA
£100
0.75%
£0
Nutmeg offers three types of portfolios. Choose the one that goes with your investment style. Capital at risk.
Saxo Markets stocks and shares ISA
No minimum deposit requirement
0.12%
£8.00
Saxo Markets offers a wide access to a range of stocks, ETFs and funds. Capital at risk.
AJ Bell stocks and shares ISA
£500
0.25%
£9.95
AJ Bell is a good all-rounder for people who to choose between shares, funds, ISAs and pensions. Capital at risk.
Fidelity stocks and shares ISA
£1000 or a regular savings plan from £50
0.35%
£10.00
Fidelity is another good all-rounder, offering a good package at a decent price. Not suited for trading shares. Capital at risk.
Legal & General stocks and shares ISA
Legal & General stocks and shares ISA
£100 or £20 a month
0.61%
N/A
Legal & General is a big financial services company which offers insurance, lifetime mortgage, pensions and stocks and shares ISAs. Capital at risk.
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Data indicated here is updated regularly
Name Product Minimum investment Choose from Annual fee Brand description
Interactive Investor Pension
Any lump sum or £25 a month
Over 3,000 funds
£10/month
interactive investor is a flat-fee platform, which makes it cost effective for larger portfolios. Capital at risk.
Moneyfarm Pension
£1,500 (initial investment)
7 funds
0.35%-0.75%
Moneyfarm has pensions that are matched against your risk appetite, goals and planned retirement date. Capital at risk.
AJ Bell Pension
£1,000
Over 2,000 funds
0.05-0.25%
AJ Bell has two different pension options, a self managed pension and one that is managed for you. Capital at risk.
PensionBee Pension
No minimum
7 funds
0.5% - 0.95%
Pension Bee is a newbie in the pension market. It helps consolidate your pension plans into one place. Capital at risk.
Hargreaves Lansdown Pension
£100 or £25 a month
2,500 funds
0-0.45%
Hargreaves Lansdown is the UK's biggest wealth manager. It's got three different retirement options. Capital at risk.
Saxo Markets Pension
Saxo Markets Pension
£10
Over 11,000 funds
No annual fee
Saxo Markets gives flexibility and control over your investment strategy. Capital at risk.
Penfold
Penfold
No minimum
4 portfolios
0.75-0.88%
Moneybox Pension
£1
3 funds
0.15% - 0.45% charged monthly
Manage your money with an easy-to-use Moneybox app. Capital at risk.
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All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.

3. Cash and bonds

While most consider cash as the default when it comes to holding your money, leaving your capital in cash is still an investing decision. By investing in a cash ISA, you can even avoid paying tax on any interest you earn on your money.

However, with interest rates currently at historic lows, leaving your money in a basic savings account will give you very little return on your investment. When you factor in inflation, you may even end up losing value in real terms.

Generally, the only way to come out ahead is with a longer fixed term account, which offers higher interest rates, but means you won’t be able to touch the money for a certain period of time.

Another alternative to consider is fixed rate bonds, which also require you to lock up your cash for up to five years, but offer more competitive rates than regular savings accounts. As the name suggests, one potential downside to using fixed-rate bonds (along with the low rate of return) is that your interest rate is locked for the duration of your term. If the Bank of England base rate increases during your fixed term, you’ll miss out on any additional interest you would have received from the higher rate.

How to invest £100,000 in cash (AKA in a savings account)

If you’re looking to invest your £100,000 in cash, you’ll first need to decide whether you want to put your money in a cash ISA, savings account or fixed-term bond. You can compare a range of cash investing products below:

Table: sorted by interest rate, promoted deals first
Data indicated here is updated daily
Name Product Account type Withdrawals Min. opening balance Interest rate Apply link
NatWest
Cash ISA
Instant access
£0
0.01% AER variable

View details
Gatehouse Bank – 5 Year Fixed Term Cash ISA
Gatehouse Bank
Cash ISA
Instant access (penalty applies)
£1,000
1.3% AER fixed for 5 years

View details
Shawbrook Bank
Cash ISA
Instant access (penalty applies)
£1,000
1.25% AER fixed for 7 years

View details
Shawbrook Bank
Cash ISA
Instant access (penalty applies)
£1,000
1.25% AER fixed for 7 years

View details
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Data indicated here is updated daily
Name Product Account type Withdrawals Min. opening balance Interest rate Apply link
Clydesdale Bank
Variable rate
Instant access
£1
0.2% AER variable

View details
NatWest
Variable rate
Instant access
£0
0.01% AER variable

View details
NatWest
Variable rate
Instant access
£0
0.01% AER variable

View details
NatWest
Variable rate
Instant access
£0
0.01% AER variable

View details