How To Invest 10k And Make Money

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Want to know how to invest £10,000? The stock market can offer much higher returns than leaving it in a savings account.

While you should make sure you have an emergency fund of between three and six months' earnings, after that you might want to consider investing.

In this article we explain:

What to consider before investing
The best way to invest £10,000
Where is the best place to put £10,000?
How to invest £10,000 wisely
Ways to spread investment risk
How do you double up £10,000?
Checklist for investing £10,000

Image of a tree in the shape of a pound sign — Investing a lump sum – rather than keeping it in a bank account – can help your money grow faster

Should I invest?

The decision to invest will depend on what else is going on in your life, so here are some things you should think about:

If you're planning a big life change such as having a baby or moving house? Keep some money in an easy access savings account.
Paying back expensive debt such as money owed on credit cards? You may well be better off putting your £10,000 towards that and switching to the best 0% balance transfer credit card.
Homeowners might consider overpaying their mortgage to save hundreds or thousands of pounds in interest.

If you are concerned about the risk involved with investing £10,000, remember most banks offer paltry rates on savings accounts.

Find out more: Should I invest in a cash ISA or stocks and shares ISA?

If investing ticks the boxes, read on.

Is £10,000 a good investment amount?

Yes, £10,000 is a good amount to invest. But you should be prepared to leave your money invested for at least five years.

This will give it enough chance to grow.

Learn more in our beginner's guide to investing

What is the best way to invest money?

1. Invest for a minimum five years

To get a decent return, you should invest for at least five years.

The longer you invest your £10,000, the longer you have to:

Accrue returns on your investment portfolio
Ride out any market downturns
Let your returns compound (grow in a snowball effect over time as returns get reinvested)

2. Choose a low cost platform

We have outlined some of the best ones for cost and customer service here.

Fees can erode your pot over time.

According to investment platform Vanguard, if you invested your £10,000 for 30 years assuming investment growth of 5% a year:

A 2% fee, would give you a pot of just over £24,270 after 30 years
A 0.5% fee would turn your pot into £37,450 over the same time period

Watch out for early exit charges to access money within a few years of investing. These can run into the hundreds of pounds.

3. Choose a tax-efficient wrapper

You should use a tax-free wrapper to protect your investment returns from the taxman.

There are different types of tax-free financial products for you to consider, such as:

Pensions: find the best ready-made pension providers here
A stocks and shares ISA: we outline the best ones
Lifetime ISA (the stocks and shares version): here's our list of top providers

Within these products, you would then choose what to invest in. Here are tips on how to choose investment funds.

Where is the best place to put £10,000?

As mentioned in the previous section, there are tax-free wrappers you should use to invest. Which one you choose depends on your investment horizon:

Short term (between five and ten years):

If you are investing money and think you will want to access it in five to ten years time, one of the best ways to invest £10,000 is in a stocks and shares ISA.

Medium term (ten to 20 years):

A stocks and shares ISA is likely to be most suitable (unless you will turn 55 within 20 years, in which case a pension might be a better tax wrapper for you).

Long term (20 plus years):

The best way to invest £10,000 for the long term is in a pension. It comes with substantial tax perks that will increase your pot size:

Invest in a pension and you get tax relief from the government
Workers get free cash from employers if they are invested in a workplace pension scheme

Important: You can't get your hands on a pension until you are 55 (rising to 57 in 2028). Check out our pensions guide for more on this.

If you are self-employed, consider a self-invested personal pension or ready-made personal pension. Ask your pension provider if you're allowed to increase your contribution, or even pay a one-off sum into it.

If you are shopping for a pension, Fidelity is one of our top-rated providers. Find out why here.

How to invest £10,000 wisely

Invest according to your attitude to risk. To work this out you need to consider your "capacity for loss" and your "risk appetite".

Capacity for loss = how much you can afford to lose
Risk appetite = how you feel about losing money

You should ask yourself these questions first:

Are you happy for your £10,000 investment to fall in value every now and then?
Do you want higher returns compared to if you'd left your money in cash?
Can you resist the urge to panic and sell your investment if it falls below what you paid for it?

If you answered yes to the above, it sounds like you would be comfortable investing.

Find out more in our beginner's guide to investing.

How to spread investment risk

Many investment experts recommend a 60/40 mix. That is an investment portfolio invested 60% in equities (company shares) and 40% in bonds.

For higher returns the best investment for £10,000 are shares or equity funds (which are made up of shares). Remember these are higher risk than bonds.

The best way to invest £10,000 is to diversify it across:

Different asset classes like shares and bonds
Different sectors and countries like developing countries (such as China) and developed countries (such as the UK)

Spreading your investments this way can help level out any fluctuations or falls in prices, so you weather the bad times and benefit from the good.

Find out more in our free five-part beginners course to investing

Should I choose a ready-made portfolio?

If you aren't confident enough to buy and sell investments, you could let an investment manager do it for you. It's now possible to invest with low-cost robo-advisers which make all the decisions on your behalf.

Some good examples of robo-advisers include Nutmeg and Wealthify. We outline the best robo-advisers.

In order to select a ready-made portfolio, the robo-adviser will ask you a number of questions to establish your:

Timeframe
Risk profile
Investment goals

Robo-advice can be one of the best ways to invest £10,000 because it is cheaper than the DIY approach.

Find out: How to invest £50,000

Which ISA is right for me?

ISAs work best when you pick the right one for your savings goal. Take this short survey to find out which ISA is right for you.

It only takes a couple of minutes
No personal details required

How do you double up £10,000?

The best way to double £10,000 is by investing for the long-term, rather than trying to get rich quickly.

Consider what returns you are looking to make and over what time period – but be realistic, you're unlikely to double £10,000 in a few years.

As tempting as it may be when you see some of the promised rates of returns on high-risk products or the rise of bitcoin, these are best avoided unless you absolutely know the risks and are happy to take them on.

Find out more: Should you invest in bitcoin?

Can you turn £10k into £100k?

Yes, this is possible but it would take decades.

You should probably expect investment growth of about 4% every year, so at that rate it would take about 60 years before your £10,000 pot grew to £100,000.

The key here is to remain invested for a long period of time and invest in assets with a high chance of return (like shares) in order to grow your pot to £100,000.

Another tip is to drip feed money into your pot over time to give it the best chance of growing. Here's how to invest with little money.

Find out more in our beginner's guide to investing

Are Premium Bonds a good investment?

You won't earn interest on your £10,000 but there is instead a monthly prize draw where you can earn a tax-free prize of up to £1m.

Find out more: Are Premium Bonds a good investment?

You can choose to invest more in line with your ethical values

How can I invest ethically?

If you don't want to invest in companies involved in industries like gambling, tobacco or alcohol production, consider ethical investing.

Find out more in our guide to ethical investing.

The best way to invest £10,000 in property

You could put a £10,000 windfall towards a deposit on a house, though that's unlikely to be enough given that house prices are so high.

If you're looking to invest in property as a buy-to-let landlord, £10,000 definitely won't be enough. This is because you need a large deposit as we explain here.

Property funds could be an option. Fund managers buy properties then pass on the income and capital growth to the investors who buy into those funds.

Most property funds invest in commercial property, such as retail parks and office blocks.

We recommend investing in real estate investment trusts (REITs).

These are similar to funds in that you invest in a pool of commercial property investments but don't have the same liquidity issues (where a fund can suspend trading if lots of people cash in their investments).

Find out more in our guide to property investment

How to review your investments

Markets go up and down, so investors should check their portfolio occasionally. But only make alterations if their circumstances change, or to rebalance their portfolio.

Rebalancing might mean buying more shares when stock markets fall to be in a position to benefit when markets bounce back.

Find out more: Investing for beginners course: module one

Checklist for investing £10,000

Know your goals: Are you investing £10,000 for the long-term, perhaps for retirement, or a short term saving like for a house deposit?
Do your homework: Have a look at the track record of the fund manager or investment platform you are considering using
Check the costs: Platform fees and fund costs are one of the few things investors can control. Every pound you pay in fees is a pound less for your investment to earn a return.
Invest tax efficiently: Pay into an ISA and you're free from income and capital gains tax. Pay into a personal pension and you also get tax back from HM Revenue & Customs.
Make the most of a employer contributions: A workplace pension gets you three bites at the cherry: you contribute and it gets topped up by both your employer and the taxman. Some employers even match your contributions.
Diversify: Spread your cash across different asset classes, sectors and countries to level out any fluctuations in prices.
Keep it simple: A well-diversified portfolio of shares and bonds is all most investors need.
Keep a calm head: Investors have to manage their emotions. Once you've set up your low-cost, diversified portfolio, it is a matter of being patient and staying the course.

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