Best ways to invest £20k

Discover how you can build wealth by investing £20,000 and explore some of the top strategies for investing your money.

Best ways to invest £20k Learn more
Frequently asked questions See FAQs

Saving up £20,000 is a hefty sum and a significant milestone, providing you a fantastic opportunity to give your financial future a serious boost. Picture this, your £20k, if invested wisely at a steady 7% annual return, could swell to over £80,000 in 20 years or approach a handsome £235,000 in 35 years.

With such an impressive haul in hand, you’re probably eager to learn the smartest ways to invest this £20,000 and explore the most effective strategies to maximise its potential. Let’s delve into how you can put your £20k to work in the most productive way possible, setting the stage for a brighter financial future.

Best ways to invest £20k

There’s no one-size-fits-all method to invest any sum, including your £20,000. It all boils down to your goals, risk tolerance, and investment time horizon.

However, if you’re seeking some inspiration or guidance, here are 6 approaches for investing your £20k that could pique your interest.

  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

Best for 0% commission stocks

Finder Award
Go to site
Capital at risk. Other fees apply.
Copy picks from top traders
  • Commission-free trades
  • Get dividend payments
  • Fractional shares

Best for fractional shares

Go to site
Capital at risk. T&Cs apply.
Personalised market updates
  • Commission-free trades
  • Fractional shares
  • 5,400+ stocks/ETFs

Best for US shares

Finder Award
Go to site
Capital at risk. T&Cs apply.
Try Plus free for 3 months
  • 0% commission on trades
  • 3,000+ stocks
  • Real-time live pricing

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 £20,000 into an index fund or ETF in one go or pound-cost-average into a fund by making smaller deposits. Using broad-market tracker funds can be useful. This way, you can invest in stocks and shares with a fund that copies a major index like the FTSE 100 in the UK or the S&P 500 index in the US.

  • Simple. With a single investment, you can get exposure to hundreds (and sometimes thousands) of stocks. It’s a straightforward way to put your £20,000 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 £20k 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.
  • 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 £20,000 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 £20k 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 £20,000 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.

  • Straightforward. Once you’ve opened an account and chosen a portfolio, all you need to do is pay in your £20k and your investment 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 £20,000 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.
  • 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 £20k 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, putting your £20,000 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.

  • 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 £20,000 in.
  • Compounding. Investing your £20k 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 £20k to invest, instead of putting down a deposit, you can get exposure to the sector through a real estate investment trust (REIT) that pays you income in the form of dividends.
  • 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), and they may not be the best choice if you want accelerating growth from your £20,000 investment.

4. Multi-asset funds

This is a somewhat similar option to robo-advisors for investing your £20k, 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 diversification.

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).

  • More flexibility than a robo-advisor. If you want to use a model multi-asset portfolio for your £20k and 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 you don’t have all your eggs in one basket. Asset variety means you can better manage the volatility of your £20,000 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 decision with your lump sum.
  • 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 £20,000.
  • Fewer platforms. Not every investing platform offers multi-asset funds, so this may limit your options when it comes to picking a provider.
  • Too much diversification. Diversity is important, but if you’re investing a relatively small sum like £20,000, 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 £20k 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.

  • Possibility of greater gains. One of the best things about choosing your own shares with £20,000 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 touching 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 £20,000 on trading commissions.
  • 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 part for you.
  • 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 £20,000 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 £20k.

6. Invest with a tax-efficient account

Ideally, you should use a stocks and shares ISA whatever way you decide to invest your £20k. However, there are other tax-efficient options to consider. Sticking the full £20k into a stocks and shares ISA would use up your allowance for the current year, but could still be a smart move.

Alternatively, if you invest using a lifetime ISA (LISA), you’ll get an immediate 25% bonus from the government. This beats most gains you’d likely make during a year of investing. But, you can only put £4,000 each year into a LISA, leaving you with a £16,000 allowance to put in a stocks and shares ISA.

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. The yearly contribution limit is £60,000 (or 100% of your salary), so you’d be well below this.

  • Bonus money. Getting a boost of 20% to 25% with a LISA or a SIPP is an attractive option. In addition, 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 tax burden. With a stocks and shares ISA, not only can your £20,000 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.
  • 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 £20,000 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. And not every provider offers SIPPs, LISAs or stocks and shares ISAs.
  • Lump sum or split payment. You’ll have to think about whether you want to put your full £20k into a stocks and shares ISA, using up your full yearly allowance straight away, or splitting up deposits over a period of time.

What to consider before investing £20,000

Before you start thinking about investing your £20k, 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:

  • Can you afford to lose this money? It might sound odd – after all, who wants to lose £20,000? 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.
  • How long can you commit this money? Think about how long you can do without this £20k. 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 £20k

Before you start thinking about investing your £20,000, 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.

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 £20,000.

  1. Decide on the best way to invest. The best way to invest £20,000 will depend on your circumstances and goals. So think about what method best suits your needs.
  2. Create an investing account. To invest your £20,000, you’ll need to open a trading account with an investment platform. How you plan on investing your £20k may help narrow down the right provider to use.
  3. Choose your investments. After deciding how you want to put your £20,000 to work, you need to find the investments on your platform.
  4. Monitor and adjust when needed. Once your £20k has been deployed into the markets, you can let it begin its compounding magic. If you’re investing with a more active approach, you may want to make some buy-and-sell decisions to try and help your lump sum grow faster.

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 £20k

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 £20,000.

  • If you pick high-risk investments, you could lose significant amounts of your £20k.
  • Getting help or guidance for investing your £20,000 could cost you a big chunk in fees.
  • If you don’t pick the right platform, you might end up paying more than necessary of your £20k 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.
  • £20,000 is a lot of money for some people, so take the time to ensure you’re deploying it the most suitable way.
  • With a sum like £20,000, being tax-efficient becomes even more crucial.

Expert comment: How can I turn £20k into more money?

georgesweeney profile pic
George Sweeney

Deputy editor

There's plenty of options. If you let your £20k sit stagnant, it's going to lose value over time due to the erosion caused by rising prices (inflation). The smartest and easiest way to immediately turn your £20k into more money is with a LISA and a SIPP.

You can put £4,000 of your £20k into a LISA and you will get a free £1,000 bonus (just be aware of the account restrictions). Or, put the full £20,000 into a SIPP and tax relief means it will turn into at least £24,000 (depending on your tax bracket).

But if you want the most flexibility, using a stocks and shares ISA is the best way to put your £20k to work, however there's no government bonuses or boosts, so whether it grows depends on your investment choice.

Bottom line

Injecting a £20,000 boost into your investment portfolio can significantly accelerate your financial growth. Once your finances are neatly aligned and you’re ready to proceed, this £20k could be the jet fuel that helps your financial journey lift off.
Opting for a tax-efficient vehicle like a stocks and shares ISA is a wise strategy to shield your profits from tax, amplifying your returns. Whether you opt for a LISA or a SIPP to capitalise on additional government incentives, it’s crucial to assess your investment comfort level and the dedication you’re prepared to commit. Strategically deploying your £20k in the best way can fortify your finances and guide you towards realising your long-term goals.


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.

George Sweeney, DipFA's headshot
Deputy editor

George is a deputy editor at Finder. He has previously written for The Motley Fool UK, Nasdaq, Freetrade, Investing in the Web, MoneyMagpie, Online Mortgage Advisor, Wealth, and Compare Forex Brokers. He's focused on making personal finance and investing engaging for everyone. To do this he draws from previous work and his Level 4 Diploma for Financial Advisers (DipFA), sharing what he’s learnt. When he’s not geeking out about money, you’ll find him playing sports and staying active. See full bio

George's expertise
George has written 150 Finder guides across topics including:
  • Investing
  • Personal finance
  • Tax
  • Pensions
  • Mortgages
Mark Tovey's headshot
Co-written by


Mark is a freelance journalist whose work has been published in The Motley Fool and The Guardian, among other sites. He's worked as a data journalist and has a BA in Economics from the University of Sussex as well as an NCTJ journalism qualification. See full bio

More guides on Finder

  • How to buy SPDR FTSE UK All Share UCITS ETF Acc

    Ever wondered how to invest in FTAL ETF? Learn more about it now and find out where you can invest in it. Compare ETF brokers to start investing today.

  • How to buy Franklin FTSE United Kingdom ETF

    Ever wondered how to invest in FLGB ETF? Learn more about it now and find out where you can invest in it. Compare ETF brokers to start investing today.

  • How to buy HSBC FTSE 100 UCITS ETF

    Ever wondered how to invest in HUKX ETF? Learn more about it now and find out where you can invest in it. Compare ETF brokers to start investing today.

  • How to buy Flutter Entertainment shares

    Thinking about buying shares in Flutter Entertainment? We explain how to do it and compare a range of providers who will give you access to global markets.

  • How to buy Dettol shares | 4383p

    Sales of Reckitt Bencksier products like Dettol have risen due to coronavirus. Here’s how you can invest in Dettol, by buying Reckitt Benckiser shares.

  • How to buy AT&T shares

    Ever wondered how to buy shares in AT&T? We explain how and compare a range of providers that can give you access to many brands, including AT&T.

  • How to buy Wincanton shares

    Ever wondered how to buy shares in Wincanton? We explain how and compare a range of providers that can give you access to many brands, including Wincanton.

  • How to buy United Utilities Group shares

    Ever wondered how to buy shares in United Utilities? We explain how and compare a range of providers that can give you access to many brands, including United Utilities.

  • How to buy Relx shares

    Find out how to buy shares in RELX, see its share prices over the last three months and check out our must-do checklist if you’re looking to invest.

  • How to buy Reach shares

    Ever wondered how to buy shares in Reach? We explain how and compare a range of providers that can give you access to many brands, including Reach.

Go to site