How to Invest 10k in 2024

Roberto Rivero Sep 9, 2024

These days, it is possible for investors to start investing with a small amount of money. But what if you have 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 to consider beforehand.

What to Consider Before You Invest
How to Invest 10k
How to Invest 10k for Passive Income
Final Thoughts – Best Way to Invest 10k
FAQ

What to Consider Before You Invest

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

Emergency Fund

Any capital invested 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.

Before investing, 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. Therefore, if you have £10,000 at your disposal, you will need to establish first and foremost whether you should save or invest.

Investment Plan

A very common investing mistake among beginners is to start making investments without having a plan in place. It is important 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 is to split the money evenly between a number of different companies.

When picking stocks, it is important to research the companies thoroughly beforehand. It will also 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 which operate in defensive industries may be preferable.

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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 10k in index funds would allow 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.

How to Invest 10k for Passive Income

Different people want different things from their investments. Some people are only interested in increasing their wealth over the long-term, whereas some investors might be looking to generate regular income from their portfolio.

If the latter better describes you, a possible option for investing 10k, or a portion of that money, would be to target investments which generate income.

Investing in bonds can produce regular income for investors through interest payments, but so too can dividend stocks. Dividend stocks are shares of companies which distribute a portion of their earnings to shareholders in the form of a dividend payment.

If you decide to invest 10k in dividend stocks, amongst other things, you should look at a company’s historical record of paying dividends. Dividend investors usually look for companies which have a demonstratable record of, not only consistently paying dividends, but increasing the payments. It will also be important to assess whether the company is likely to be able to continue making dividend payments in the future.

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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FAQ

Can I invest in property with 10k?

It is possible to invest 10k in property 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 Admiral Markets, 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 number of different investing options, such as stocks, ETFs and REITs.