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The Best Way to Invest 50k and What not to Invest Into!

If you are looking for the best way to invest £50k but aren’t sure where to start or how to maximise your returns, then you’ve come to the right place.

£50,000 is a great sum of money to grow via investments and if you have identified a financial goal then there is every chance that you could achieve this by investing your money wisely.

Also consider: How to Start Investing

Should you save or invest?

It’s vital that you ask yourself this question before embarking on any type of investment. There are several factors which will influence whether saving or investing is the best option for you including:

What is your appetite for risk?

High rates of inflation, coupled with low-interest rates mean you are more likely to get a better return from investing your £50k than you would in a savings account. However, whilst it is possible to mitigate your risk when investing your money, it is not possible to make investing completely risk-free. Political and economic factors can play a major role in influencing the stock markets, and you should therefore be prepared to see your investments lose value as well as gain value.

How long can you lock your £50k away?

Investing should be thought of more as a marathon than a race. I always recommend that investors be prepared to lock their money away for a minimum of five years in order to ride out any volatility in the marketplace. Remember, the value of your investments can go down as well as up and the best way to ensure you don’t lock in any losses by selling your investments is to have time to wait for any dips in the market to recover.

If you are likely to need your money within the next five years, then you would be best to find a high-interest savings account.

How to find the best interest rates on savings

Due to the aforementioned low-interest rates, there has never been a more important time to do your research in order to secure the best rates on a high yield savings account.

If you can lock your money away into a fixed rate account, these will often provide the best interest rate. You will also need to consider whether you will incur any tax on the earnings you make on your interest. If the answer to this is yes, then you may want to consider a Cash ISA as the best way to invest £50k, although these do tend to offer less interest than standard savings accounts.

Things to consider before you start investing 

Successful investing always starts with robust planning. This can help you avoid some of the pitfalls that come with investing and ensure you stay on track.

What is your financial goal?

Investing should always begin with a defined financial goal corresponding to a specific time horizon. The goal may be a house deposit in five years or retiring in 30 years. Regardless, by identifying your financial goal, you can allow this to become the focus for your investment planning.

How long do you have to reach your goal?

Setting your time frames will help you identify whether your financial goals are achievable, and the level of risk you will be required to assume in order to make your aspirations a reality.

Do you have any debt?

Any debt you have accrued should be carefully considered before you commit to any investments. Debt, especially debt that is earning interest such as credit card debt, can be detrimental to achieving your financial goals and can earn more interest than any gains you could stand to make from your investments.

What is your appetite for risk?

There are three main elements to consider here; your personal attitude to risk, how much you can afford to lose, and how much risk you need to assume in order to achieve your goals.

Assuming too little risk could prevent you from achieving your goals, whereas taking on too much risk could result in your losing more than you can afford. If your appetite for risk is proving difficult to determine then you may benefit from the services of a financial advisor who will take into consideration your income, expenditure, assets, liabilities, and investment timeframes in order to establish your capacity for loss.

What is the safest way to invest?

Firstly there are some steps you can take to ensure you set off on the right foot. Clearing any outstanding debt, having an easy access cash buffer of around six months’ salary, and ensuring you are maxing out your pension contributions are all ways to ensure you won’t need to access your investments ahead of schedule.

Whilst there is no such thing as a completely risk-free investment, you can take steps to ensure you are safely invested.

Don’t put all your eggs in one basket! Remember to stay fully diversified. This means putting your £50k into lots of different assets and asset classes with the intention that should one asset experience substantial losses, the other assets can help buffer the blow.

Drip feed your money into the stock exchange. By doing so you will average out the price that you buy in at, which in turn can help even out any market volatility.

Make sure you have time on your side. Investing should always be considered a long term endeavour, and more time in the market will ensure you have plenty of opportunity to recoup any losses. Remember, it is only by selling your assets that you will lock in any losses.

What is the best investment account for you?

There are several accounts to choose from, each with their own function and advantages. Which one is best for you will largely depend on your circumstances.

Stocks and Shares ISA

A stocks and shares ISA is an investment account where your gains are protected from the taxman. Within a stocks and shares ISA you are able to invest money in a wide range of assets including individual shares, investment funds, bonds, and investment trusts.

In the 2021/22 tax year, you have a maximum ISA allowance of £20,000. Therefore if you are looking to deposit the full £50k straight into an investment account, you will need to consider an alternative account for the additional £30k.

General Investment Account

A General Investment Account (GIA) allow you to invest in the same wide range of assets as an ISA, however, this account is without limitations on the amount you can deposit in any one tax year. Whilst this may initially sound more appealing, any gains made from your investments that are over and above the personal allowance will be subject to Capital Gains Tax as GIAs are taxable investment accounts.


A SIPP is a self-invested personal pension. It represents the most efficient way to grow your money instantly as any contributions you make into your SIPP will attract a government tax relief, in the form of a bonus, paid in at your marginal rate. This means an investor who pays tax at a rate of 40% can deposit just £6,000 and will instantly get an additional £4,000 from the HMRC.

Like the ISA, there are limits as to how much you can pay into a pension in any one tax year. The limit for the 2021/22 tax year is £40,000 so like the ISA, you wouldn’t be able to deposit the entire £50k into the pension account in one year.

However, if you are happy to lock the money away for your retirement, then maxing out your pension would be my top recommendation for investing your cash.

What assets you should invest in 

Now that we have established the right sort of account for your investments, the next step will be to select what you invest in. There are several options and the best one for you will depend on your individual circumstances, as well as the amount of time you can remain invested and your appetite for risk.

Investing £50k in stocks and shares

A stock is essentially a share in a company. If you own a share, and the company does well in terms of profit, your stock will go up in value. Equally, if the company you own stocks in does badly, or the entire sector suffers a setback, your stock will in turn lose value.

In this way stocks and shares can be a risky endeavour, however, owning multiple stocks, in multiple companies, across a variety of different sectors can help to mitigate this risk.

Investing £50k in ETFs (Exchange Traded Funds)

ETFs are investment funds that are traded in an exchange market. They can cover a wide range of sectors, however, more often than not an ETF will track a specific index and hold a mixture of stocks, bonds, and commodities from within that index.

This can lead to exposure should that index suffer a setback, however, by investing in a range of ETFs, in different sectors, you can mitigate this risk.

Investing £50k in Mutual funds

Mutual funds are suitable for all investors, even beginners as they require very little experience. A mutual fund is usually managed by an experienced fund manager who will include a range of assets such as stocks, bonds, and other assets within the fund.

By pooling your resources together with other investors and having them managed by a professional, you can remain actively invested and diversified. This is a popular option among investors, however, when selecting a mutual fund, it is important to know that past performance is not a reliable indicator of future performance.

Investing £50k in Bonds

For short term investments, Bonds are considered one of the safest options. Bonds are a company or government debt, whereby you as the investor or ‘lender’ will earn an agreed interest on that debt.

Bonds will usually pay the interest on the debt annually with ‘gilts’. Government bonds represent the least risky option and high-yield bonds are at the riskier end of the spectrum.

Investing £50k in peer-to-peer lending

Like Bonds, peer-to-peer lending involves loans, however, these take place directly between the two parties and do not involve the banks. Peer-to-peer lending is usually conducted via a platform and offers the opportunity for the investor to earn interest on the amount loaned.

There are some tax advantages to this kind of investment, with the first £1,000 of interest made being completely tax-free for basic rate taxpayers. In addition, the interest rates from this kind of loan are considered fairly lucrative.

This is considered a riskier option than Bonds, as there is no Financial Services Compensation Scheme (FSCS) cover should the loan fail, however, this risk is mitigated by P2P companies spreading your money across several borrowers.

Investing £50k in Annuities

Should you be in a position to give up any access to your cash permanently, then an annuity will provide you with a guaranteed income for the set amount of time that the annuity runs for. This is an easy, hands-off approach and provides guaranteed returns for additional security.

Investing £50k into property

Investing in buy to let property is considered to be one of the most profitable investments during times of economic turbulence such as we are experiencing today. It provides returns in two forms, the rent you collect from the property investment (rents are currently at a record high) and the capital appreciation as the value of the investment property portfolio increases over time.

Of course, there are several factors that can influence both these returns and the property market can suffer dips, however, these have always recovered well historically.

When investing money in property you will have to factor in Capital Gains Tax and income tax which can be sizable should you own more than one property.

Investing £50k into cryptocurrency

For investors with a big risk tolerance, cryptocurrency can yield excellent returns. However, there is also a good chance of losing some or all of your money.

Cryptocurrency is still in its infancy in the investment markets, however, it has gained momentum quickly and is now one of the most popular investments, especially for younger investors.

Cryptocurrency is basically a digital form of currency which is bought and sold via online platforms. The Times reported that Bitcoin investors made a 500% profit in 2021 which may sound tempting, however, there is a high chance of losing all your money. Investing in crypto is so volatile that many investors consider it to be more of a gamble.

Mistakes to avoid

Avoid the pitfalls of investing with these tips.

Take costs into consideration. 

There is usually a cost associated with any kind of investment, and these can start to eat away at your gains. If you are investing through an online platform, then it is best to ensure that you fully understand all the costs, including platform fees, fund management fees and dealing charges.

Understand your exposure to tax 

Ensure you utilise all the available tax wrappers such as ISAs. However, be careful never to exceed your ISA limit.

Stick to your investment strategy and don’t make emotional decisions. 

The stock market can be volatile and you are likely to incur losses at some point. The key component is to hold onto your assets until the stock market has recovered, thus avoiding locking in any losses sustained to your investment portfolio.

Make sure you have an emergency fund. 

Avoid being forced to sell your assets in times of market downturn by having access to an emergency fund. This should be around six months’ salary.

Understand your limitations as an investor. 

Successful investing requires a considerable amount of research and a careful eye on the market. If you don’t have the time or inclination to do your own research, you may be more comfortable investing in an actively managed fund whereby a professional can continually adjust your investments in line with fluctuations in the marketplace. If your financial situation is in any way complicated, you may benefit from independent financial advice.

Best way to invest 50K FAQs

What is the safest investment with the highest return?

Generally speaking, shares or equity funds will provide you with the highest return on your investment, however, they also come with a high degree of risk.

This is why investment experts generally suggest investing in 60% equities or shares, and 40% bonds. The allocation of bonds in your portfolio is to mitigate the risk of the shares. Remember to also invest in a diverse range of asset classes, sectors and countries.

What is the best interest rate available in the UK?

At the time of writing, the best interest rate available is with First Direct who are currently offering 3.50% interest on their Regular Saver Account. This requires you to deposit between £25 to £300 per month for a fixed term of 12 months.

Please note

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

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