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.

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 investment 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.

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.

Name Product Finder Score Min. initial deposit Price per trade Frequent trader rate Platform fees Offer Link
Finder Award
FREE TRADES
eToro Free Stocks
4.3
★★★★★
$100
£0 on stocks
N/A
£0
Go to site

Capital at risk. Other fees apply.

Platform details
XTB
4.4
★★★★★
£0
£0
£0
£0
Earn up to 5.2% interest on uninvested cash.
Go to site

Capital at risk

Platform details
interactive investor Trading Account
4.1
★★★★★
£0
£3.99 (free regular investing)
£0
From £4.99 a month
Get £50 free trading credit when opening a Trading Account by 30 June. Capital at risk. T&Cs apply.
Go to site

Capital at risk

Platform details
Finder Award
OFFER
CMC Invest share dealing account
4.4
★★★★★
£0
£0
N/A
£0
Earn up to £1,000 when you transfer a minimum of £25,000 into your CMC account, plus get your first 3 months free when you upgrade to Plus plan. T&Cs apply. Capital at risk.
Go to site

Capital at risk

Platform details
Saxo Share Dealing Account
4.3
★★★★★
£0
£3
N/A
0.12% per year
Go to site

Capital at risk

Platform details
Hargreaves Lansdown Fund and Share Account
4.2
★★★★★
£1
£11.95
£5.95
£0
Get back up to £100 of online trading fees until 21 June. Capital at risk. T&Cs apply.
Go to site

Capital at risk

Platform details
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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.

Table: sorted by interest rate, promoted deals first
1 - 4 of 531
Name Product Interest rate Minimum investment Interest paid Withdrawals Deposit protection Open via Incentive Table product description Apply link
Plum – Plum Cash ISA
5.17% AER variable (on balance over £100) (includes a 0.86% bonus )
£1
Monthly
Instant access
FSCS logo
protected
Open via: mobile app
Go to site
View details
Chip – Chip Cash ISA (powered by ClearBank)
5.1% AER variable
£1
Monthly
Instant access
FSCS logo
protected
Open via: mobile app
Go to site
View details
Kent Reliance – Cash ISA - Easy Access - Issue 50
4.86% AER variable
£1,000
Monthly
Instant access
FSCS logo
protected
Open via: branch, website
Go to site
View details
Kent Reliance – Cash ISA - Easy Access - Issue 50
4.86% AER variable
£1,000
Yearly
Instant access
FSCS logo
protected
Open via: branch, website
Go to site
View details
loading
Table: sorted by interest rate, promoted deals first
1 - 4 of 564
Name Product Account type Withdrawals Open with Deposit protection Interest rate Open via Incentive Table product description Apply link
Plum – Plum Cash ISA
Cash ISA
Instant access
From £1
FSCS logo
protected
5.17% AER variable (on balance over £100) (includes a 0.86% bonus )
Open via: mobile app
Go to site
View details
Santander – Santander Edge Saver (Issue 1)
Variable
Instant access
£1 - £2,000,000
FSCS logo
protected
7% AER variable (on first £4,000) (includes a 2.47% bonus )
Open via: branch, website
Go to site
View details
Additional account needed
OFFER
Chase – The Chase Saver Account - 5.1% AER until Jan 16 2025
Variable
Easy access
Up to £1,000,000
FSCS logo
protected
5.1% AER variable (includes a 1% bonus )
Open via: mobile app
Chase Saver Boosted Rate Offer - 5.1% AER
Limited offer: 5.1% AER (4.98% gross) variable until 16 Jan 2025, including a 1% AER fixed boost until 16 Jan 2025 on top of the standard variable saver rate, currently 4.1% AER (4.02% gross). Available to new customers and to existing customers with no saver or less than £50k in total across all savers at end 2/5/24. 18+, UK residents. Chase current account required. Limited offer: may be withdrawn at any time. 1 boosted saver account per customer. T&Cs apply - see Chase website.
Go to site
View details
Chip – Chip Cash ISA (powered by ClearBank)
Cash ISA
Instant access
£1 - £85,000
FSCS logo
protected
5.1% AER variable
Open via: mobile app
Go to site
View details
loading
Table: sorted by interest rate, promoted deals first
1 - 4 of 662
Name Product Interest rate Invest Interest paid Withdrawals Open via Deposit protection Open via Incentive Table product description Apply link
Mizrahi Tefahot Bank Ltd – Raisin UK - 3 Month Fixed Term Deposit
Mizrahi Tefahot Bank Ltd – Raisin UK - 3 Month Fixed Term Deposit
5.22% AER fixed for 91 days
£1,000 - £85,000
On maturity
Withdrawals not permitted
Website, mobile app
FSCS logo
protected
Open via: website, mobile app
Go to site
View details
Al Rayan Bank – Raisin UK - 1 Year Fixed Term Deposit
Al Rayan Bank – Raisin UK - 1 Year Fixed Term Deposit
5.2% AER fixed for 1 year
£1,000 - £85,000
On maturity (compounded annually)
Withdrawals not permitted
Website, mobile app
FSCS logo
protected
Open via: website, mobile app
Go to site
View details
Mizrahi Tefahot Bank Ltd – Raisin UK - 1 Year Fixed Term Deposit
Mizrahi Tefahot Bank Ltd – Raisin UK - 1 Year Fixed Term Deposit
5.15% AER fixed for 1 year
£1,000 - £85,000
On maturity
Withdrawals not permitted
Website, mobile app
FSCS logo
protected
Open via: website, mobile app
Go to site
View details
Al Rayan Bank – Raisin UK - 9 Month Fixed Term Deposit
Al Rayan Bank – Raisin UK - 9 Month Fixed Term Deposit
5.1% AER fixed for 274 days
£1,000 - £85,000
On maturity (compounded annually)
Withdrawals not permitted
Website, mobile app
FSCS logo
protected
Open via: website, mobile app
Go to site
View details
loading

4. Property

Property is often considered a relatively safe investment, and housing prices have generally outpaced inflation over the long-term. This is especially true in regions with high demand such as London.

If you’re looking to invest your £100,000 to create a source of income, then using buy-to-let property may be an attractive option. However, property is a relatively illiquid investment, meaning your capital will be locked up in the house and not easily accessible if you want to use or reinvest it. Investing in property often requires additional capital to cover things like property agents, repairs and renovations.

Warning: The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results. *Disclaimer: The offers compared on this page are chosen from a range of products Finder has access to track details from and is not representative of all the products available in the market. Unless indicated otherwise, products are displayed in no particular order or ranking. The use of terms “best”, “top”, “cheap” including variations, are not product ratings and are subject to our terms of use. You should consider seeking independent financial advice and consider your personal financial circumstances when comparing products.

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Written by

Tom Stelzer

Tom Stelzer is a writer for Finder specialising in personal finance, including loans and credit, as well as small business and business loans. He has previously worked as a freelance writer covering entertainment, culture and football for publications like FourFourTwo and Man of Many. He has a Master of Media Arts and Production and Bachelor of Communications in Journalism from the University of Technology Sydney. See full profile

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