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If you lot have come into a £l,000 windfall, investing your money in the stock market tin can offer higher returns than leaving information technology in a savings business relationship.

But there are plenty of things y'all need to consider earlier investing £50k.

In this article we prepare out:

What to think almost before you invest your £50,000
Six things to remember nearly to invest your money wisely:
- What is your financial goal?
- How long is your timeframe?
- What is your mental attitude to risk?
- Which tax-free wrapper should you choose?
- DIY or ready-fabricated investment approach?
- How to mitigate investment risk
What is the best way to invest your £50,000 in property?
Our checklist for investing £50,000
Is it worth paying a financial adviser?

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Woman sitting at table with laptop and mug — Think virtually your goals, timeframe and mental attitude to adventure before deciding where to invest your money

What to consider before yous invest

Investing your unabridged life savings is a very risky move. Y'all should e'er take a safety net in case of emergencies and in that location are other things to consider too:

Build a cash buffer of iii to six months' earnings for emergencies and keep in an piece of cake-admission savings business relationship
Pay off expensive debt like credit cards and personal loans
Gear up aside some extra cash for things y'all might need to pay for in the next few years like a deposit on a house
Contribute to your workplace pension scheme if you lot accept ane, specially if your employer matches your contributions
Make sure yous counterbalance up your options, such as using some of the £50,000 to pay off your mortgage early or renovate your business firm to increase its value.

Once you have considered all these options, you can then think about investing.

We outline the steps to help yous decide how to invest your £50,000.

Half-dozen things to think about to invest your money wisely

1. What is your financial goal?

Think almost what you want to apply the money for.

Are yous planning buy a house or invest in buy-to-let property, or pay for your children's tuition? Perhaps yous are saving for retirement?

The reply to this question is of import because information technology will touch on how long you program to exist invested for, which has a knock-on effect on how you lot invest.

Our beginner's guide to investing is a skillful identify to start if you are new to investing or desire to castor upward.

2. How long is your timeframe?

How long you are prepared to continue your coin tied up in investments will dictate your strategy merely you should aim for at least five years. If you are saving for retirement, it could exist decades.

The longer you leave your money invested, the more risk you can afford to take because y'all have more than time to:

Make returns on your £50,000
Weather any downturns in the market
Permit your returns compound and grow

With a curt fourth dimension horizon, at that place is a big risk that markets will have fallen when you lot need access to your coin. If you lot cash in your investments when markets have dropped, y'all will lock in your losses.

Shorter term: If you are planning to buy a house in the next few years, consider a savings account or a tax-gratis greenbacks ISA instead.

Longer term: If you are in your 20s or 30s and want to invest for retirement in your 60s, you lot can afford to take on more adventure.

In the investment world, people talk most curt-term, medium-term and long-term, so just to analyze:

Brusk term: under v years
Medium term: 5 to x years
Long term: x years or more

3. What is your mental attitude to take a chance?

The farther abroad y'all are from needing access to your cash, the more risk you tin beget to accept because a longer time horizon enables you to weather the inevitable falls in share prices.

With that said, yous need to think about your:

Capacity for loss: how much y'all tin afford to lose
Risk appetite: how you experience about losing money

Manifestly no one is happy losing money, but could you stay cool if your investments fall in value every at present and then?

Over the long term, capital growth is likely to exist higher compared to if you lot'd left your money in a greenbacks savings account. But are you able to breadbasket a bumpy ride?

Stock markets can be volatile, but if you don't panic and sell at a bad time, you could earn an investment return. Is now a good fourth dimension to buy shares? Find out in our article here.

4. Which tax-costless wrapper should you use?

Y'all should employ a tax-free "wrapper" like an ISA or a pension to hold your investments. These shelter your investments from tax.

If you lot don't use one of these revenue enhancement-efficient vehicles, yous might accept to pay dividend and capital gains tax. Find out more hither.

Discover why Vanguard and Barclays came out as acme providers for stocks and shares ISAs in our independent ratings.

Or if y'all are looking for a pension, Allegiance is one of the best for set-made pensions as we explain here.

One time yous have opened your wrapper, you can then select investments to go within your wrapper.

5. DIY or ready-made investment strategy?

Broadly speaking, there are three master ways you can invest:

DIY
Buy a ready-made portfolio
Select your own funds

DIY investing

You can choose to choose your ain shares and bonds, but that takes time and knowledge. DIY investing is only really suitable for confident and experienced investors who accept fourth dimension to enquiry the companies they are investing in.

Also bear in heed that while you aren't paying for an practiced to choose investments on your behalf, it can exist expensive to buy and sell individual shares.

If you want to take the DIY approach, at that place are a number of nugget classes you tin invest your money in, including:

Shares
Bonds (both corporate and government gilts)
Property
Precious metals
Cash

Yous could purchase funds instead (where a fund manager picks stocks on your behalf), or you could opt for a ready-made portfolio.

Fix-made portfolio

If yous are not keen on a DIY approach, you could opt for a robo-adviser (which is a digital investment platform)

The platform volition enquire you a series of questions relating to your goals and attitude to hazard. It will then propose a prepare-fabricated portfolio for you.

You are unremarkably given a option between these approaches:

Cautious
Counterbalanced
Ambitious

Robo-advisers are a low-cost option for beginners (or those without the time or inclination to invest themselves).

How do ready-made portfolios work?

Offered by online investment services such as Nutmeg* or Moneyfarm, also known every bit robo-advisers
You are asked a few questions and then given a suitable basket of investments that will exist managed for you
It tin can work out cheaper than picking the investments yourself – although not always
You have less choice as to what goes into that handbasket.

How does a multi-manager fund work?

A multi-manager fund is rather like getting a professional person house-builder to create your home for you. The expert manager volition invest in around 20 to 30 underlying funds across a range of:
- Nugget classes
- Sectors
- Countries
A different mix of these will be offered depending on each client's goals and take chances appetite
Fund managers will periodically rebalance your portfolio for you
Bear in mind that multi-manager funds tend to be expensive

Choose your own funds

This is a bit like a cross betwixt DIY investing and gear up-fabricated portfolios.

Each fund has an investment manager that buys and sells the underlying investments on your behalf. But you have to cull the fund.

Yous can cull between:

An actively managed fund, where a professional investor selects stocks for you
A passive fund, which simple tracks a stock market place like the FTSE 100 or S&P 500. This is the cheaper choice as y'all are not paying a fund manager to choice stocks on your behalf. An exchange traded fund is a type of passive investment.

Fees tin can really cutting into your investment returns. Find out how hither.

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Fidelity Personal Investing

Allegiance Personal Investing

Allegiance Personal Investing Cost Focus portfolio

PensionBee

PensionBee Preserve Portfolio

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6. How to mitigate risk

If y'all are investing with a robo-adviser and are nervous nearly taking on too much risk, you could opt for their "balanced" or even their "cautious" portfolio.

You lot should besides check your portfolio one time a yr (or more often for DIY investors). You might want to make alterations if circumstances change. This is known as "rebalancing" your portfolio.

For instance, if stock marketplace prices fall you lot might want to buy more shares or position your portfolio to do good when markets bounce dorsum. Or you might desire to sell assets to avert being overly exposed to i sector or country.

If you are DIY investor, you lot should diversify by spreading your money beyond different companies, industries, asset classes, and countries.

Have you tried our investing for beginners class? Here'south module 1.

"Avoid jumping out when markets hit rocky waters or yous run the risk of locking in losses."
Tom Stevenson, investment director at the fund manager Allegiance International

What is the best way to invest £50,000 in property?

Broadly speaking, at that place are three ways of investing in the property market place:

Purchase to permit: allows you to generate rental yield. There are costs and commitments of becoming a landlord so practise your homework.
Property development: where you buy and refurbish a belongings earlier selling it for a profit.
Belongings investment funds: a professional fund manager collects and pools money from many investors, putting it directly in property or in commercial property shares. Cheque the fees outset equally this volition affect your earnings.

Our checklist for investing £l,000

Tom Stevenson, investment director at the fund manager Allegiance International, gave us these tips for investing:

one. Keep calm

Staying invested throughout times of volatility is the best investment strategy. Avoid jumping out when markets hitting rocky waters or yous run the risk of either:

Locking in losses on shares
Or missing out on the gains when the shares bounce dorsum.

Investing should be for the long term.

2. Don't go hazard and volatility confused

Rise and volatility are ii different things:

Volatility relates to fluctuations in asset prices
But risk is about the overall quality of the company and its ability to stay competitive. For example, you lot could purchase shares in a startup which would be seen as high-gamble but could requite you high returns if the company does well.

If you aim to greenbacks in your investments in less than 5 years this is where volatility and run a risk become interchangeable. In that instance it'south not recommended y'all invest in the stock marketplace.

3. Market corrections can create attractive opportunities

It's important to keep your eyes open up for opportunities. Exist ready to purchase into funds or company shares that seem to be suffering but likewise look well placed to recover strongly.

If it ways picking up promising assets at bargain prices, volatility can be your all-time friend.

4. Drip-feed your portfolio

One way to mitigate uncertainty is to remain committed to investing set amounts of money on a regular basis. So rather investing your unabridged £50,000 lump sum, y'all should drip feed money into the investments.

This way you remove the hazard of committing a large amount just before markets plunge and you take abroad the temptation to endeavour and time the market.

You also create the opportunity to benefit from pound-price averaging past picking up more units in your investments when prices are depression.

v. For income seekers, dividend-payers are the manner to go

Dividends are by and large based on visitor functioning, and so y'all tin can still expect a payout even when markets are volatile.

The second advantage is that dividend-payers tend to exist robust, global brands that generate profits from a range of products and services. This ways they are less vulnerable to the movements in a detail market and too add some diversification to your portfolio.

half-dozen. Reinvest your income

This allows yous to do good from the power of compounding works. This is the snowball upshot where you reinvest your returns and allow them grow and generate their ain returns.

This can significantly heave your portfolio, turning modest but consistent financial commitments into a considerable amount of money over time.

vii. Don't be swayed by sweeping sentiment

Following the herd can work against yous. Just like trends in manner and music, investment themes can fall in and out of favour, so can investment trends.

Investors should be selective and not let their judgement go clouded past the euphoria of the market.

For more tips on setting upward an investment portfolio, read our beginner'southward guide to investing

**Find out more than: Tom who slowly taught himself how to invest via his ISA**

Is information technology worth paying a financial adviser?

If you lot are confused about what to do with your £50,000, y'all could always speak to an independent financial adviser.

An adviser tin can benefit yous by:

Looking holistically at the current and hereafter state of your finances to meliorate suggest you lot
Knowing more than about what options are available and suitable to you lot
Helping yous to grow your coin, while saving yous fourth dimension, effort and worry
A fiscal adviser might rebalance your investments for you

Financial advisers aren't only for the rich, although some simply offering their services to those with a minimum level of assets. They do cost money, just the financial advice should be worth it in the long run.

Websites like Unbiased and Vouchedfor are a good place to observe an adviser, although do your ain inquiry too and inquire friends and family for their recommendations.

How to Invest £100,000

Should you discover yourself with even bigger sum of money, there are additional things you will demand to consider.

While the principles for investing £50,000 and £100,000 are broadly similar, says Susannah Streeter, Senior Investment and Markets Annotator at Hargreaves Lansdown, "arguably the greater sum offers the opportunity for more flexibility over your investment horizons."

Y'all could, for example, choose to invest a larger sum in emerging markets, says Streeter. These are seen as higher risk as they are at an earlier stage of development, however they offer significant long-term growth potential, as they are continuing to evolve and compete with their western counterparts. You can read more than about investment trends 2022 here.

Yous still need to ensure, that you:

Accept an investment horizon of a decade or more
Won't demand immediate admission to your coin
Accept an overall portfolio that is well diversified
Are comfy with the level of adventure

The importance of diversification

"Don't put all your eggs in one handbasket in terms of geographies and sectors," warns Streeter. One way of looking at it is "viewing individual stocks as side dishes to your well diversified master plate of investments.

"With a big windfall information technology offers the chance to diversify fifty-fifty more than, particularly past investing in more funds and potentially expanding your portfolio from passive funds which aim to rail the functioning of an alphabetize, to active funds which are chosen and run by a professional fund manager."

Other options

Before investing all your coin into the stock marketplace, there are other options that it might be wise for you to consider first:

Repaying whatsoever expensive debt
Having a cash buffer of 3-six months of essential expenses in an piece of cake access business relationship (1-iii years worth if you are a retiree)
Topping upwardly your pension
Paying off some of your mortgage, especially if yous are not locked into a longer term low interest rate

Getting financial advice

If you feel you don't have the time, noesis or confidence to manage your investments yourself, then it might be worth paying to speak to a fiscal adviser.

"When faced with a big windfall, there may be a temptation to exist influenced by tips on swirling on social media and to speculate with some of the money," says Streeter.

"It's very of import that yous seek out data from regulated platforms and sources. Don't but follow herd instincts merely look at investing every bit a long term strategy, rather a chance to make a bet to achieve a short term gain."

The products mentioned in this article accept been independently chosen by Times Money Mentor. If a link has an * by information technology, that means we may earn coin. This helps fund the website and keeps information technology gratis to use. We practise not allow whatever commercial relationship to impact our editorial independence.

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Source: https://www.thetimes.co.uk/money-mentor/article/how-to-invest-50k/