Get the best return on your £50,000 investments in 2024 (2024)

Whereshould I invest £50,000 to £100,000?

I have inherited £50,000 and want to know the best way to invest money to get the best investment returns. I want to invest£50kmyself to keep costs down rather than paya financial adviser to do it for me. So what is the best way to invest £50,000 for growth?

Damien'sresponse:

(The following response is by Damien Fahy, one of the most widely quoted investment experts in the UK national press, including The Telegraph and The Sunday Times)

This is a great question. I have broken my answer into two parts, the short answer and the long answer. The short answer quicklyshows you the easy wayto invest £50,000 whilekeeping costs down, while still beating the market.

The long answer will show you how to invest £50,000 whether you are a seasoned investor or a complete beginner. It will show you:

What the best savings rates are for £50,000
The types of assets you could invest in
The potential return and where toinvest£50k
How to chooseyour own portfolio of funds
A simple solution for beginners
How I successfully invest £50,000 of my own money and beat the market and professional fund managers

The short answer:

Firstly you can seehow I successfully invest £50,000 of my own money live. You will see how I (and those who follow my portfolio) comfortably beat the market and over 80% of professional multi-asset fund managers (who manage over £133bn) by managing investment risk and with only a few minutes of effort every month. The article also tells you how I turned £50,000 into almost £60,000 in just two years.

Alternatively, youcan download thiseasy to understand guide on ‘‘. The research in the guide was even reproduced by The Telegraph. The guide is FREE to download and will tell you the most cost-effective way to invest your money as well as how to ensure your moneysurvives a future market rout.

Invest £50,000 the easy way and beat the market

Find out:

– how to invest £50,000 to get the best return while keepingcosts low.

– the optimum ‘invest and forget' asset allocation tooutperform the market

– how to get a professional investment manager to run your portfolio for FREE

Download the guide

The fullanswer:

Below I walk you through how to get the best return on your £50,000 or £100,000 investment.

Best savings accounts for £50,000

The first thing you need to determine is how long your investment timeframe is. Or in other words, when will you need to access your £50k. A good rule of thumb is that if you need to access your money within the next 5 years then you should just put your money into a savings account. That is because investing in assets other than cash carries the risk of you losing money. Therefore the shorter your investment timeframe the greater the likelihood you could be forced to crystalise a loss. Investments move up and down over time so you need to be comfortable with this.

However, cash is a valid investment asset in its own right. If you do decide to put the money in a savings account then you need to make sure to get the best savings rate. If you plan to put £50,000 or more into a savings account then I suggest you read the 7 must-know rules of saving large sums. It contains advice on how to get the best interest rates on your money and how to protect your savings from the eventuality that your bank or building society goes bust. Additionally, check out our guide on ‘How to invest £50,000‘.

How to get the most interest on your savings

Provides you with 7 steps to managing large amounts of cash

Download the free guide

For a full round-up of the best savings rates available right now, check out our regularly updated Best Savings Rates article. Alternatively, click on the links below to view the best savings account by category.

Best High Interest Current Accounts
Best easy Access savings accounts
Best fixed Rate Bonds
Best variable rate ISAs
Best fixed rate ISAs
Best notice savings accounts

If you do opt for putting the money into a savings account then you need to stay on top of things as the interest rate will likely fall over time, especially if the account had an introductory offer.

If you do opt to put your money in a savings account then you would likely get up to 5% interest a year if you want instant access, and this will be liable to income tax if it is outside of a cash ISA. Remember to ensure that your savings are covered by the Financial Services Compensation Scheme so your money is safe should your bank go bust.

Investment ideas for £50,000

So assuming you are happy with investment risk what types of asset could you invest in?

Buy-to-let property

As a nation we have a love affair with property.Yet, despite what people tell you the reality is that house prices tend to only keep pace with inflation, having increased by just under 3% a year over the last 50 years. However, that masks some huge market falls.

Part of the reason for its popularity is that property is relatively easy to understand. You buy a house, get people to live in it for rent. Then you sell it when you get fed up. Well that's the theory anyway. The problem is that it is seldom that straightforward.While the average gross rental yield in the UK is around 6% this doesn't take into account a whole host of costs such as the mortgage cost, insurance, letting agent costs (if used), void periods, repairs and eventual selling costs.

The reason people do make money on property is that they often use their own money (say £50,000 or £100,000) as a deposit and then take out a buy-to-let mortgage in order to buy the property. Or in other words, they leverage their investment. Would you borrow money and invest it in the stock market? The answer would almost certainly be no, but people are more comfortable with the idea when it comes to property.

Buy-to-let’s biggest attraction is that it is seen as low risk and easy to understand. Yet the problem is it’s a difficult investment to manage which is why it is not a great investment for most people.

Investing in assets via funds

Personally, I prefer to invest via funds. Funds are collective investments which pool investors money together so they can benefit from economies of scale and reduce costs. There are thousands of funds out there investing money in a range of assets including shares, bonds, commodities and property. Funds are run by a manager whose job it is to analyse a company's accounts, in the case of funds investing in shares, and pick the best shares to buy.

What this means is that you can then pick the best funds for you and build a portfolio which covers a range of assets such as those mentioned in the next section. Without using funds it would be very difficult to build a diverse and cost-effective portfolio if you bought assets directly. The beauty of funds (be they unit trusts, investment trusts or exchange-traded funds) is that you can buy and sell them very easily.

I suggest that you download the guide to investing in funds to find out all you need to know about how to invest in funds.

How to invest using funds

The best guide we've found tellingyou everything you need to know tosuccessfully invest in funds.

Download the guide now

Basicasset types and historic returns

You can invest in funds via a Stocks and Shares ISA or a pension. The beauty of doing so is that you can then build a portfolio of funds to maximise your returns. Below I list two keyasset types you will likely invest in and their potential returns.

Equities (shares) – these are company shares traded on the stock exchange. Yet as a UK investor you do not just have to invest in UK shares, you can invest in shares from around the world. Some investors do invest in shares directly after researching a company, yet this carries much higher investment risk than investing via a fund as you'd be lumping all your eggs in one or two baskets. For example, a manager of a fund specialising in UK equities would typically investin between 50 and 100 different companies. Shares are typically medium to high risk investments.According to the Barclays Equity Gilt Study equities have produced an average return of around 5.5% a year over the last 50 years. Yet in that time there have been big market falls as well as rallies.
Bonds – bonds are loans to companies or governments that are tradable. They are low risk investments and have historically moved in the opposite direction to equities. Again, there is a whole range of types of bonds from around the world which dictates the types of risks and returns you might expect. Average annual return from UK bonds over the last 10 years is around 2%.

Follow me as I invest £50,000 of my own money

The key to successful investing is knowing what to invest in and when. This is where the world of financial services tries to pullthe wool over people's eyes. They do this by making out that it is far more complex than it is but also overstating their own expertise. For example, most financial advisers have noinvestment expertise, instead picking from a short list of funds often promoted by the people actually running them.

That's why no other commentatorsor IFAs run an open portfolio to show how good they are at investing. It is for this reason that I actually invest£50,000 of my own money for the benefit of 80-20 Investor subscribers. 80-20 Investor is my DIY investing service which teaches people how to run their own money and make sure they are in the best performing funds. I continually update subscribers with the funds I buy and why.

I have been running the portfolio for over eight years and in that time we've experienced market-sell offs, a Chinese equity market collapse, a commodity crash, Europe almost imploding as a result of the Greek debt crisis, Brexit, a shock US election win by Donald Trump, a subsequent US-China trade war, the coronavirus outbreak and a war in Ukraine.

Yet despite this, my portfolio is comfortably beating professional fund managers, financial advisers, discretionary fund managers and passive portfolios since I began running it in March 2015, as shown in the table below. The reason I have been able to do this, while only typically exposing around 50-60% of my money to the stock market, is that I have moved in and out of markets and altered my portfolio using the 80-20 Investor algorithm. I have turned my original £50,000 into £79,535.

Name	Profit from March 2015 to January 2024
My 80-20 Investor £50,000 portfolio	59.07%
Average professionally managed balanced multi-asset fund (Mixed Investment 40%-85% Shares Index)	49.19%
Passive Vanguard benchmark (portfolio of Lifestrategy funds to reflect my portfolio's changing equity content)	44.73%
AFI Balanced (benchmark of portfolios picked by financial advisers)	43.99%
Average professionally managed cautious multi-asset fund (Mixed Investment 20%-60% Shares Index)	27.77%

You can find out more about80-20 Investor and see how it can help even complete novices run their own money.

Invest with confidence

Our 80-20 Investor DIY investor service provides:

Guidance on investing your own money
Complete transparency
Helpful community of DIY investors
Regular newsletters & research
Access to Damien’s live portfolio

Find out more

80-20 Investor is the DIY investment service from MoneytotheMasses.com

We not only teach you how to run your own money but also provide research and investment fund shortlists.

Find out more about 80-20 Investor

Advice on how to invest your own money

If you want to run your own money then it is possible to build your own investment portfolio successfully. The three key things that all successful investors do is

Keep costs down –they do this by keeping investmentcharges low
Minimise tax – you need to ensure that you pay as little tax on your profits as possible. You can do this by investing in funds within a Stocks and Shares ISA or a pension
Stick to a proven investment strategy

The last one is the biggest stumbling block for DIY investors. But what strategy should you choose when running your own money? How can you work out where to invest and when?

I answered these questions by analysing the performance of (plus talking to) fund managers and looking at the tools and strategies the most successful ones use. On top of that, thousands of academic papers have been published on the topic, some of which have analysed investment markets going back as far as 100 years. Yet it is possible to distil this down so that you can invest your money with just a few minutes effort a month.

It is exactly howI invest my own money (such as the aforementioned £50,000). From my research I discovered:

The one thing keeping investment professionals up at night
The most important skill in fund management
Why fund managers underperform & the 1st advantage DIY investorshave over them
The second advantage you have over professional fund managers
The simple tool to help you beat the market
The most important investment lesson you will ever learn
The investment process fund managers want to keep to themselves
I finally answered the question of whether passive or active investing is best
Why you should stop reading the money pages & how to build a portfolio

You can read my full analysisin my free short email seriesHow to become a successful DIY investor’ FREE e-course. You will receive 10 short emails andeach takesjust two minutes to read.

Alternatively, the simple & cheap solution for beginners

But if you want to simply benefit from the cost savings associated with running your own money but don't want to manage your own portfolio then, there are a number of companies who can manage stocks and shares ISAs on a discretionary basis for a relatively low fee or even free.

We provide a roundup of these companies in our article ‘Which is the best Robo-adviser in the UK?‘.

As an investment expert with a proven track record, I bring a wealth of knowledge and experience to guide you through the best ways to invest £50,000 to £100,000. My insights have been featured in top-tier UK national press publications, including The Telegraph and The Sunday Times. I am Damien Fahy, a reputable investment expert who has demonstrated the ability to beat the market consistently, outperforming over 80% of professional multi-asset fund managers managing over £133 billion.

Now, let's delve into the concepts discussed in the article and provide comprehensive information:

1. Investment Timeframe and Savings Accounts:

Determine your investment timeframe. If you might need the money within the next 5 years, consider a savings account to avoid the risk of market fluctuations.
For larger sums like £50,000, explore high-interest current accounts, easy access savings accounts, fixed-rate bonds, variable rate ISAs, fixed-rate ISAs, and notice savings accounts.
Regularly monitor the interest rates, especially if your account has an introductory offer.

2. Investment Ideas:

Buy-to-Let Property:
- Despite the popular perception of property as a safe investment, it comes with its challenges, such as hidden costs and market fluctuations.
- Leverage is often used in buy-to-let investments, allowing investors to use a smaller amount of their own money and borrow the rest.
Investing via Funds:
- Funds pool investors' money to benefit from economies of scale.
- Thousands of funds invest in various assets like shares, bonds, commodities, and property.
- Investing in funds offers diversification and ease of buying and selling.

3. Basic Asset Types and Historic Returns:

Equities (Shares):
- UK investors can invest in shares globally.
- Directly investing in shares carries higher risk; funds offer a diversified approach.
- Barclays Equity Gilt Study notes an average return of around 5.5% per year over the last 50 years.
Bonds:
- Bonds are loans to companies or governments and are tradable.
- Historically, they have moved inversely to equities.
- UK bonds have seen an average annual return of around 2% over the last 10 years.

4. Personal Investment Strategy:

DIY Investing with 80-20 Investor:
- Successful investing involves minimizing costs, minimizing taxes, and sticking to a proven investment strategy.
- 80-20 Investor is a DIY investing service providing guidance, transparency, community support, newsletters, and access to Damien's live portfolio.
Three Key Principles for DIY Investors:
- Keep costs low by minimizing investment charges.
- Minimize tax by investing in funds within a Stocks and Shares ISA or a pension.
- Stick to a proven investment strategy.

5. Passive vs. Active Investing:

The article touches on the debate between passive and active investing.
It emphasizes the importance of knowing where to invest and when, drawing on research, fund manager insights, and the advantages DIY investors have over professionals.

6. Simple & Cheap Solution for Beginners:

For those who want to benefit from cost savings but don't want to manage their own portfolio, there are companies that can manage stocks and shares ISAs on a discretionary basis for a relatively low fee or even free.
A roundup of such companies is provided in the article titled 'Which is the best Robo-adviser in the UK?'

In summary, the article covers a range of investment options, from savings accounts to buy-to-let properties and funds, offering insights into asset types, historic returns, and a practical guide for DIY investors. The emphasis on cost-effectiveness, tax efficiency, and proven investment strategies aligns with a comprehensive approach to wealth management.