Wealthify doesn't support your browser

We're showing you this message because we've detected that you're using an unsupported browser which could prevent you from accessing certain features. An update is not required, but it is strongly recommended to improve your browsing experience. Find out more about which browsers we support

How to invest £10,000

Find out how you could invest £10,000 and make it work harder for you.
How to invest £10,000?
Reading time: 5 mins

Is your savings fund failing to fulfil its potential? Our experts tell you how you could invest £10,000 and make it work harder for you.

ISAs are Nicer!

Choosing an Investment ISA (also known as a Stocks and Shares ISA), is the first step you might want to take. The government lets you save up to £20,000 tax-free each year in either a Cash ISA, an Investment ISA or a combination of the two. ISAs are as easy to open as a regular savings account, so it really pays to use your ISA allowance first when you’re thinking about where to put your savings.

DIY or Invest-It-For-Me?

Firstly, it’s useful to decide whether you want to be actively involved in choosing your investments, or whether you’d rather a professional do it all for you, as it’ll make a difference to the investment services you choose.

The advantage in doing it yourself is you’re in the driver’s seat and if you know a lot about investing already, then this may be a good option for you. There are numerous services out there to cater for you and it can be a bit of a minefield deciding which is the lowest-cost route, but using this tool http://www.brokercompare.info/ from our friends at Broker Compare is a good and unbiased place to start.

If you’re less certain of the ins and outs of investing, then an online managed investment service like Wealthify could be the best option for you. With these type of services, you simply specify how much you want to invest and choose an investment style, or risk level, that suits you. From then on, all of the investing is taken care of by professionals, leaving you to get on with the things you enjoy, all in return for a simple, low annual fee.

Keep costs low when you invest

Often people underestimate the effect of fees and costs on their long-term returns. Even a small difference in the fee you pay can make a big difference to your overall return on a £10,000 investment.

For example, paying just 1% extra in fees over a 10-year period could lose you a whopping £1,486! *          

Whether you do your own investing, or get the experts to do the hard work for you, when you sign up to any investment service, make sure you are aware of all the fees and potential additional charges that you might pay. If you’re not sure, ask!

Don’t pick stocks

This might sound like a strange tip for an article about investing, but picking individual stocks and shares is one of the worst ways to approach it. That’s because by only selecting one stock, or a handful of stocks, you are not spreading your risk very evenly – in other words you’re putting all your £10,000 worth of eggs in one basket. When you buy a company’s stock, your fate is linked to that company’s success and if it happens to have a bad year, the share price, and with it, your investment, will fall.

It’s extremely hard to know which stock will be a winner. Every year highly-paid investing professionals try and the vast majority get it wrong. So, if they can’t pick the winners most of the time, it’s better for you not to try either.

The alternative option is for you pick an investment fund. A fund is like a basket of investments (mostly of the same type, like stocks or bonds), all packaged together in a neat bundle. The advantage of them is you buy just one unit of the fund, and in return you will own typically hundreds of stocks.

Choosing which fund to pick is the hard part, which is why managed investment services like Wealthify do it all for you. If you choose the DIY approach, there are plenty of free online resources to help you get started.

Think long term when you’re looking at how to invest £10,000

Smart investing is about being able to see the bigger picture. As an investor, you must be prepared to take some short-term pain in return for long term gain. Stock markets will go down as well as up, this is simply their nature. In periods of falling prices, it’s important not to panic and sell your investments immediately. In fact, if stock prices fall, almost all the experts agree it’s the best time to add more money to your investments, taking advantage of bargain prices, rather than selling them at a discounted price.

There’s no time like the present

Every year, the price of goods and services, like milk, clothes and travel costs, get more expensive – what we call inflation. As things get more expensive, the ‘buying power’ of your savings (i.e. what your money will buy you) reduces. At the moment, inflation is at 1%, so if the interest rate on your cash savings is less than 1%, the real value (or buying power) of your money is shrinking every day.

Therefore, if your £10,000 is sitting in cash savings, you need to act sooner rather than later to protect it by making sure it’s generating higher than inflation returns. Investing is one of the smarter and more sensible ways to generate good long-term growth, provided you have a good, well-balanced portfolio that’s not too risky and you keep your fees to a minimum.

*(this calculation assumes you invest £10,000 in year one and it grows at a rate of 5% per year).


Please remember that the value of your investments can go down as well as up and you can get back less than invested.

The tax treatment depends on your individual circumstances and maybe subject to change in the future.

Share this article on: