How to Invest £10k and What to Consider Beforehand

Roberto Rivero

These days, thanks to increased accessibility, it is possible to start investing with a relatively low initial sum. But what if you had a larger sum at your disposal? Say, for example, £10,000. What would be the best way to invest £10k? In this article, we will explore a few options of how to invest £10k and what you need to consider beforehand.

What to Consider Before You Invest

Before you start thinking about where to invest £10k, there are a few important factors which you need to consider. We have narrowed these down to two main considerations, each of which we will outline in the following sections.

Emergency Fund

Any capital which you invest in the financial market is at risk of being lost. Furthermore, in order to get the most out of your investments, they should be made with a long-term mindset, meaning that you should be prepared to leave your investments undisturbed for at least five to ten years.

Therefore, before investing £10k, it is important to set aside an emergency fund of savings to protect yourself from an unanticipated circumstance, such as losing your main source of income.

Investment Plan

A very common investing mistake among beginners is to start making investments without having a plan in place. It is important, especially from a risk management perspective, to take time and create an investment plan in order to properly consider the best ways to invest £10k. Some things to consider are:

  • What are your investment goals?
  • What is your appetite to risk?
  • What financial instruments will you target?
  • Will you invest actively or passively?

How to Invest £10k

As an investor in today’s world there really is an overwhelming choice of investment opportunities available. However, if you are considering how to invest £10k over the long-term, you might want to look at using stocks, bonds and index funds.

Stocks and Bonds

One way to invest £10k would be to construct a portfolio consisting of stocks and bonds, the traditional approach being to allocate 60% to stocks and 40% to bonds. However, particularly with younger investors, this approach has lost popularity, with more emphasis being given to stocks in recent years.

Therefore, younger investors, with a longer time horizon, opting for this approach may prefer to gear their portfolio more heavily towards stocks, perhaps by allocating 80% to stocks and the remaining 20% to bonds. On the other hand, older investors with a shorter investment horizon may prefer to have more of their portfolio allocated to bonds.

There is no right or wrong approach here as it depends on your investing goals and appetite to risk. But don’t take the decision lightly. Investing £10k primarily on stocks may provide higher potential returns but will come with significantly more risk.

Investing £10k in Stocks

For investors looking for the best way to invest £10k in stocks, a possible approach might be to split the money evenly between five to fifteen companies.

When picking stocks, it is important to do research the companies thoroughly beforehand. How are their fundamentals? What are their future prospects? What are the prospects of the industry within which they operate?

It will be important to develop a well-balanced and diversified portfolio, avoiding overexposure to any one industry.

Again, the choices you make here will largely depend on your attitude towards risk. For those who are more risk averse, a portfolio which focuses on the shares of well-established companies with a large market capitalisation will be preferable. These types of companies also tend to pay dividends which could create the opportunity to earn additional income from your investment.

Fractional Shares with Admirals

If you are looking for the best way to invest £10k in stocks, you may want to consider fractional shares. Fractional shares allow you to buy portions of individual shares, meaning that you can choose exactly the amount you want to invest in a company without being limited by share price. Click the banner below to find out more!

Fractional Share Investing

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Index Funds

One of the most popular methods of investing, particularly amongst beginners, is using index funds. These investment products mirror the performance of an underlying index, such as the UK’s FTSE 100.

Investing in an index fund allows investors to gain exposure to a large proportion of the market through a single investment. Thanks to this instant diversification, investing in index funds is generally considered lower risk than picking individual stocks. It can also provide considerable returns over the long-term thanks to the compounding effect.

There is a wide variety of index funds available to invest in, so you can choose one which best represents how you want to invest £10k. If you are interested in gaining exposure to the US stock market, you could choose a fund which tracks the S&P 500. Alternatively, you could opt for a fund which tracks the global stock market or divide your money between several different index funds.

Final Thoughts – Best Way to Invest £10k

The best way to invest £10k will depend largely on your appetite to risk and your individual investment goals. In this article, we have briefly outlined a few options of how to invest £10k, but this is by no means an exhaustive list.

Whatever you end up picking to invest in, remember that investing carries the risk of losing money. That is why it is important to minimise this risk as much as possible through planning, research and portfolio diversification.

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Investing £10k - FAQ

Can I Invest in Property with 10k?

Although it may seem out of the question to invest in property with this amount of money, you can do so by buying shares in Real Estate Investment Trusts (REITs).

REITs are companies which use investor money to buy or develop and manage a portfolio of income-generating properties, such as apartment buildings, shopping centres or office blocks.

I Have 10k to Invest What Should I Do?

Before investing in anything, it is important to firstly create an emergency fund of readily accessible savings to sustain yourself throughout any unforeseen circumstances. Next, create an investment plan based on what you want to achieve from your investing journey.

Don’t buy any assets without analysing them first. Make sure your investments suit your goals and that you are fully aware of the potential risk and reward involved.

What Can I Invest in with 10k?

These days, you don’t need a huge amount of money to start investing in the financial markets. For example, with Admirals, you can open an investing account and start investing in fractional shares with as little as €1.

The figure of £10,000 is a large sum which will open up a fairly large amount of investing options, such as stocks, ETFs and REITs, all of which you can invest in with Admirals.

How to Invest 10k for Passive Income?

A possible option for investing £10k would be to target investments which generate regular income such as dividend stocks, REITs and bonds.

Other articles you may find interesting:

About Admirals

Admirals is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.


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