Best way to invest £10,000

Discover how you can build wealth by investing £10,000 as a lump sum or as smaller deposits, and explore some of the top strategies for investing your money.

Best way to invest 10k Learn more
Before you invest What to consider first

If you’re reading this, there’s a good chance you have £10,000 or are well on your way to saving up that much. Lucky you! Investing £10,000 wisely can significantly boost your financial portfolio over time. For instance, a lump sum investment of £10,000 with an annual return of 7% could grow to over £40,000 in 20 years, or around £115,000 in 35 years.
This all sounds exciting, but you’re probably wondering where exactly to put a £10,000 investment to work, and what the most practical investment approaches are for investing £10k in the UK.

Best ways to invest £10k

There’s no one-size-fits-all method to invest any sum, including your £10,000. It really hinges on what you’re aiming for, how much risk you can stomach and how long you’re willing to wait. But if you’re after a nudge in the right direction, here are 6 creative ways to invest your £10,000 that could get you on your way to building some serious long-term wealth.

  1. Index funds and ETFs
  2. Robo-advisor platforms
  3. Dividend-paying stocks
  4. Multi-asset funds
  5. Portfolio of shares
  6. Investing with a tax-efficient account

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1. Invest in index funds or ETFs

This is one of the best options for beginner investors, or any level of experience for that matter. If you’re not aware of how these investments work, you should check out our guides on investing in index funds and exchange-traded funds (ETFs).

You could put your £10,000 into an index fund or ETF in one go. Or, you could drip feed in over months to dollar-cost-average (DCA). Typically, it’s wise to consider broad-market tracker funds. This way, you can invest in UK shares with a fund that copies an index like the FTSE 100, or invest in the US stock market with a fund that tracks the S&P 500 index.

Pros
  • Simple. With a single investment, you can get exposure to hundreds (and sometimes thousands) of stocks. It’s a straightforward way to put your £10,000 into the market.
  • Cheap. The majority of passive ETFs should come with extremely low ongoing fees because no active management is involved. This allows you to get the maximum benefit from your £10,000 investment.
  • Accessible. Most of the best trading apps and platforms should provide you access to popular ETFs and funds, meaning you can invest through a variety of providers.
  • Variety of choice. There are loads of ETFs and index funds out there to choose from. You can invest in whole regions, sectors, or themes and build yourself a diverse portfolio.
Cons
  • Pricing. Some ETFs will charge you more for what is essentially the exact same investment. So, you need to be on your toes and keep an eye on the prices to make your £10,000 go as far as possible.
  • Lack of control. Although you get to pick your ETFs, you don’t get to choose what investments are included and excluded.
  • Research. Investing in a single ETF likely won’t mean you’re perfectly diversified. You’ll still need to research which ETFs to hold for your investing strategy.
  • Performance. Most index funds and passive ETFs track whole markets or benchmarks. This means your £10,000 will keep up with the broad market but never outperform it.

2. Robo-advisor platforms

If you’re new to the world of investing, you may want to consider using a robo-advisor platform. These platforms don’t provide advice, but they do help you pick a suitable pre-made portfolio for your £10,000 based on your goals and risk appetite. There are now a bunch of great robo-advisor apps and platforms to choose from with competitive fees.

Pros
  • Straightforward. Once you’ve opened an account and chosen a portfolio, all you need to do is set up your regular £10,000 investment and your investments can (hopefully) grow without any extra effort on your part.
  • Affordable. The cost to use a robo-advisor is pretty low these days and most use a percentage system. So you don’t have to worry about fees eating into your £10,000 nest egg.
  • Ease of use. Because robo-advisors tend to be digital and app-based, the platforms are designed with user experience in mind to make it a pain-free event to put your money to work.
Cons
  • Lack of choice. You often have only a small number of pre-made portfolios to choose from and you usually don’t get to choose the investments being held.
  • Cost. Although robo-advisor fees are quite low, you’re still paying an added fee for the convenience of the platform. Most robo-advisors use cheap ETFs that you could invest your £10,000 in by yourself, for less.
  • Limited learning. Investing with a robo-advisor is quite a hands-off experience. So you’re unlikely to become a more educated investor or learn as you spend more time investing.

3. Dividend-paying stocks

If you’re comfortable with the idea of picking a selection of stocks, investing £10k into stocks that pay dividends can be a great way to build yourself a passive income stream. If you want to invest in dividend stocks, it will take some research and patience, but it’s a time-proven strategy to benefit from compound interest.

Pros
  • Investment options. You can pick your dividend-paying stocks and earn a passive income from a vast range of companies you want to invest your £10k into.
  • Short and long-term benefits. Income from dividend stocks is one of the best ways to start getting short-term returns from your £10k with regular dividend payouts, and you can reinvest this income to continue building on your £10,000 investment.
  • Compounding. Investing your £10,000 into dividend stocks is an excellent way to benefit from the magic of compound interest.
  • Stability. Many companies that pay dividends tend to come with a certain level of stability and there are lots of blue-chip stocks to choose from.
  • Property ownership. If you want to own property and have £10k to invest, don’t despair. You can still get exposure to the sector through a real estate investment trust (REIT) that pays you income in the form of dividends.
Cons
  • Lots of research. If you want to pick your dividend stocks, this can involve plenty of time and research finding the best options.
  • No guarantees. Dividends are a way to reward shareholders when a company makes a profit and the payments aren’t guaranteed. Dividends can be cut, paused or stopped altogether.
  • Lack of growth. Paying money out as dividends means companies have less money to invest in growth or share buybacks. Dividend stocks tend to grow at a slower rate (if at all). May not be the best choice if you want accelerating growth from your £10k investment.

4. Multi-asset funds

This is a somewhat similar option to robo-advisors for investing your £10,000 lump sum, but with a key difference. A multi-asset fund contains a variety of assets (not just stocks) and the main benefit of this option is choice.

Picking your own fund means you get a straightforward investing approach, but also greater control over what you’re invested in (instead of just being assigned a portfolio).

Pros
  • More flexibility than a robo-advisor. If you want to use a model multi-asset portfolio for your £10,000 but want to be more actively involved, this way you can be more flexible.
  • Diversified. Using a variety of assets provides you with more diversification so that you don’t have all your eggs in one basket. Asset variety means you can better manage the volatility of your £10k investment.
  • Simplicity. The great thing about this type of investment is that you get the benefits of diversification while only needing to make one investment with your lump sum.
  • Fees. Investing in one single fund is efficient and saves you paying multiple fees or commissions that you may have to pay if you were to buy all the underlying assets separately.
Cons
  • Researching the right fund. The flipside of having more control is that you need to research and pick a fund that suits your investing approach. This can be tough if you’re a beginner.
  • Investing costs. Some multi-asset funds are excellent value but others tend to fleece their investors, so always check the associated fees first as many will have ongoing fees that will eat into the returns of your £10,000.
  • Fewer platforms. Not every investing platform offers multi-asset funds, so this may limit your options when it comes to picking a share trading provider.
  • Too much diversification. Diversity is important, but if you’re investing a £10,000 sum, you don’t want to spread yourself too thinly across lots of assets, because this may limit your growth potential.

5. Pick a portfolio of shares

If you want to be heavily involved with your monthly £10,000 investment, you may want to think about building your own portfolio of shares from scratch.
Buying shares will take a decent amount of research and legwork on your part, but it can be extremely rewarding – in terms of enjoyment and profit.

Pros
  • Possibility of greater gains. One of the best things about choosing your own shares with £10k is that you have the potential to make outsized gains if you invest in the right stocks.
  • Complete control. Picking your own portfolio means that you get to decide exactly which companies you invest in, and the ones you want to avoid with a barge pole.
  • Low cost. Individual stocks don’t come with ongoing costs like funds, ETFs and robo-advisors. Also, if you use a platform with 0% commission, you can avoid spending part of your £10k on trading commissions.
Cons
  • Time-consuming. Picking your own portfolio of stocks can take a lot of consideration, and still more time to manage. No one is going to do this for you (unless you pay them a fee).
  • Expensive without the right platform. If you don’t use a platform with low (or no) trading commissions, you could end up forfeiting a chunk of your £10k just to cover these fees.
  • Greater risk potential. Although there’s the possibility of higher rewards when picking your own portfolio, the flipside to this is that this can be a riskier option for your £10,000.

6. Invest with a tax-efficient account

Ideally, you should use a stocks and shares ISA whatever way you decide to invest your £10,000.

However, there are other tax-efficient options to consider. If you invest using a lifetime ISA (LISA), you’ll get an immediate 25% bonus from the government, although you can only contribute £4,000 per tax year into this scheme. Still, 25% is more than what most make during a year of investing. Or if you use a self-invested personal pension (SIPP), you’ll get tax relief, which means a government top-up of at least 20% on your investment.

Pros
  • Bonus money. Getting a minimum boost of 20% to 25% with a LISA or a SIPP is an attractive option and the best way to guarantee short-term returns from your £10k. The fact that stocks and shares ISAs protect your investments from tax also means not having to pay tax in future, meaning more money left for you.
  • Tax advantages. Along with government top-ups for LISAs and SIPPs, your investments can grow free of a tax burden. With a stocks and shares ISA, not only can your £10,000 investment grow without tax, but money withdrawn doesn’t count towards your yearly income when you start using funds.
  • Plenty of options. There are now more options than ever of excellent providers offering stocks and shares ISAs, SIPPs and LISAs. More providers make it more likely to find the best account with the investments you want.
  • Leftover allowances. Contributing the maximum £4,000 to a LISA still leaves you with £6,000 to invest elsewhere. Or if you put the whole £10k into a stocks and shares ISA, you’d still have £10,000 left in the year to use with a cash ISA, LISA, or add to your £10k lump sum throughout the year.
Cons
  • More complex. The UK tax system can be changed by the government and sometimes there are a lot of rules to wrap your head around. So it takes a bit of time and effort to be aware of everything.
  • Restrictions and penalties. With a SIPP, you can’t access any of your investments until you reach 55 (rising to 57 in 2028). With a LISA, you can only use £4,000 of your £10,000 investment towards your first home or for retirement. If you want to access your LISA for anything else, you’ll end up paying a penalty.
  • Limitations. Depending on the provider you use, there may be limitations on the investments you can choose or the amount you can invest. Also not every provider offers SIPPs, LISAs or stocks and shares ISAs.

What to consider before investing £10k

Before you start thinking about investing your £10,000, it’s important to get yourself set up with an emergency fund and make sure the rest of your finances are looking healthy. If you owe money on a credit card, you’re most likely better off paying down that debt before you invest.

Here are some other key questions to ask yourself:

  1. Can you afford to lose this money? It might sound odd – after all, who wants to lose £10,000? But understanding how you’d feel if you lost this money can really help you figure out how much risk you’re comfortable with. You may get out less than what you put in when investing.
  2. How long can you commit this money? Think about how long you can do without this £10,000. If you might need it soon, for something like a house deposit or a wedding, it’s wise to steer clear of riskier investments. Then again, if you won’t need the cash anytime soon, you might choose to take on a bit more risk, aiming for a bigger return.

How to invest £10k

If you’ve got your personal finances under control and you’re looking to put away some funds for the future (at least 5 years), here’s a step-by-step guide for how to invest your £10,000.

  1. Decide on the best way to invest. The best way to invest £10k will depend on your circumstances and goals. So think about what method best suits your needs.
  2. Create an investing account. To invest your £10,000, open a trading account with an investment platform. How you plan on investing your £10,000 may help narrow down the right provider to use.
  3. Choose your investments. After deciding how you want to put your £10,000 to work, you need to find the investments on your platform.
  4. Monitor and adjust when needed. Once your £10,000 is up and running like clockwork, you can let it keep ticking over in the background and only change if your circumstances alter. If you’re investing with a more active approach, you may need to be more hands-on.

Investment tracker

To get a better idea of how various investments perform over time, check out this graph showing how various strategies can compare.

The risks of investing £10,000

Investing any amount of money comes with a certain level of risk. Here’s a summary of the key things to be aware of when investing £10k:

  • If you pick high-risk investments, you could lose significant amounts of your £10,000
  • Getting help or guidance for investing your £10,000 could cost you more in fees.
  • If you don’t pick the right platform, you might end up paying a big chunk of your £10,000 towards fees or commissions.
  • You should be happy tying up your money for at least 5 years, so don’t use funds you need to access easily.
  • With a smaller amount of money, you might be tempted to take on more risk but it’s better to start small and be consistent than reach for unrealistic gains.

What’s the best way to invest £10,000 for short-term returns?

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George Sweeney

Deputy editor

When it comes to investing, you should ideally be thinking long term. However, if you’re wondering about the best way to make a short-term return on your £10k, there are a couple of solid strategies. First is using an investment LISA or a SIPP. Investing £4,000 into a LISA means an immediate 25% boost to £5,000.

Or, in a SIPP, you’ll get a tax relief boost of 20% or more on your whole £10,000. However, both these methods involve locking your funds up to some extent. A more flexible option is to invest in a fund or stocks paying dividends with a stocks and shares ISA. This is riskier, but means you could start getting dividend payments in a short timeframe.

Bottom line

Dropping a £10,000 lump sum into your investment pot is like hitting the fast-forward button on your wealth-building playlist. Once you’ve got your financial ducks in a row and you’re ready to roll, this tidy sum opens the door to a whole new world of investment adventures.Using a tax wrapper like a stocks and shares ISA is a smart move to protect your earnings from taxes, enhancing your gains.
Whether you choose this or another tax-efficient account for extra government perks, it’s key to think about your investment comfort zone and the effort you’re willing to put in. Deciding on the best approach for investing your £10,000 will help you build a stronger financial foundation and set you on a path to achieving your long-term goals.

FAQs

Finder survey: What proportion of Brits invest, or would consider investing in, stocks and shares, funds or ETFs?

ResponseYorkshire and the HumberWest MidlandsWalesSouth WestSouth EastScotlandNorthern IrelandNorth WestNorth EastGreater LondonEast of EnglandEast Midlands
I wouldn't consider it36.47%27.83%31.82%31.88%29.8%34.21%50%35.54%26.19%13.89%35.63%37.5%
I would consider it30.59%38.26%28.79%31.88%39.74%31.58%29.17%36.36%45.24%49.07%35.63%30.68%
Not sure23.53%14.78%24.24%23.19%16.56%15.79%8.33%16.53%7.14%12.04%12.64%14.77%
I already do9.41%19.13%15.15%13.04%13.91%18.42%12.5%11.57%21.43%25%16.09%17.05%
Source: Finder survey by Censuswide of 1032 Brits, December 2023

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.

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