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Best Long Term Investments UK

A list of the best long term investments UK for you to consider this year

23 Min Read
Last Updated May 3rd 2021

Planning to invest in the long term? Well, long-term investing is essential to greater success. We’ve made it easy with our complete guide to the top 10 long term investments UK to consider in 2021. 

Wise long term investments can be a powerful strategy that can steer you towards financial freedom. If done right - this can enable you to build wealth over the passage of time. 

That said, this investment method also needs you to be patient - so that you can benefit from higher returns and thus - avoid short term trading practices. 

In this guide, we offer you some insight into the world of long term investments UK- along with some tips on how you can identify potential opportunities that can pay off in due course. 

We have also listed some of the best long term investments UK for your consideration. 

The Best Long Term Investments UK:

1. Amazon (AMZN)

2. M&G (MNG)

3. BP (BP)

4. Imperial Brands (IMB)

5. Gold 

6. Bitcoin (BTC)

7. Ethereum (ETH) 

8. Vanguard Total Bond Market ETF 

9. S&P 500 Index Fund 

10. FTSE 100 Index Fund

 

If you want to dive into the stock market quickly and easily, with 0% fees, check out the eToro Exchange!

Five Steps to Invest in the Best Long Term Investments UK 

For those who do not have enough time to read our guide in full - here we have a quick look at how you can get started with a long term investment purchase online in the UK. 

  1. Choose an online broker that allows you to buy long term investments without having to pay any dealing fees - like eToro. 
  2. Deposit funds into your online account 
  3. Find the assets you want to invest in for the long term. 
  4. Enter the number of units you are looking to purchase. 
  5. Confirm your selection and proceed to click on 'Open Trade' to complete your long term investment. 

If you need further guidance on buying investments through an online brokerage site - you can find detailed step-by-step instructions towards the end of this guide. 

Contents:

Best Long Term Investments UK 

The Basics of Long Term Investments 

How to Choose the Best Long Term Investments UK?

Why Should you Consider the Best Long Term Investments UK?

Risks of Long Term Investments UK

How to Get Started with Long Term Investments UK on eToro

Best Long Term Investments UK - Conclusion 

 

Long term investments are primarily centered around wealth creation. It is about building the type of portfolio that will allow you to earn income over the course of time. 

When you consider assets for this strategy, you should start by evaluating your investment objectives and long term goals. 

Out of its many benefits, long term investments also eliminate the need for you to concern yourself with short-term market volatility. 

Therefore, it is deemed a great choice for beginner traders. By setting up a diversified portfolio - this approach also allows you to expand your wealth while mitigating the long term risks. 

If you are looking to figure out which assets are best for you, this section will discuss some of the best long term investments UK that you can consider for your portfolio. 

What Are The Top Long Term Investments UK in 2021?

Below you will find the best 10 long-term investments in the UK to invest in 2021 and beyond.

1. Amazon (AMZN)

There are a number of reasons why this US-listed stock is a favourite among UK investors. The company has outperformed the market in many ways - enabling its early investors to make a whopping profit of over 16,000%. 

In 1997, during its IPO - the stock of Amazon was priced at $1.70 (adjusted for various stock splits). Fast forward to March 2021 - and you are looking at a staggering price of $3,046 per share. The company is a great example of a long term growth stock that has delivered on its promises. 

The sudden shift to online shopping as well as streaming services has only reinforced the value of Amazon in the global market. In the first ten months of 2020 - the stock price of Amazon experienced an increase of over 80%. 

However, it is worth noting that Amazon has chosen to reinvest its profits into new endeavours rather than pay dividends. Therefore, if you purchase the shares of this company - it is likely that the only income you earn will be in terms of capital gains. 

2. M&G (MNG)

Investment management company M&G Plc strung out from its parent company Prudential in October 2019. In the following year, the firm went through a rough ride - hitting a stock price as low as 93.65p in March 2020. 

However, the company has quickly found its footing and has climbed backed nicely., In March 2021 - M&G shares are being traded at 207.30p on the LSE. This translates to an increase of over 122% in its stock price. 

But what is even more impressive is the high dividend yield of 9% it pays to its shareholders. The company plans to expand its operations and generate excess capital of £2.2bn in the next three years. 

If passive income is a priority for you - there is no reason why M&G wouldn't make for an excellent consideration for your long term investment portfolio. 

3. BP (BP)

Previously known as The British Petroleum Company, BP has a long-standing reputation in the UK economy. Although the oil and gas industry faced many challenges in 2020 - BP has managed to rise above its competitors in a tough market. 

The company had been performing consistently well before the pandemic hit and is expected to recover quickly. As oil prices continue to trend higher, BP shares will likely follow suit. 

In addition, the company recently announced that it is entering the renewable energy sector - and aims to reach 50 GW in production by 2030. This has the potential to push its stock price further ahead. 

4. Imperial Brands (IMB)

This tobacco company is another interesting long term investment choice for those that want to focus on dividend income. The firm is among the world's largest manufacturers of tobacco and cigarettes. 

Today, the company pays out a dividend of 8.4% annually - making the stocks of Imperial Brands a core holding for generating passive income. 

Based on its history, the company is likely to continue increasing its dividend yield in the future. At the time of writing, Imperial Brands stocks are available for purchase at 1,493p per share. 

5. Gold 

This highly-valued metal has always held a strong allure for investors - making it one of the most preferred long term investment choices among UK traders. It also holds the reputation of being one of the best assets to hedge against market downturns. 

For those who are unaware - in order to invest in gold, you do not have to purchase the metal in its tangible form. Instead, you can take ownership through an online broker. 

If you are seeking an easy way to make safe long term investments in gold - it would be a good idea to purchase an ETF. For instance, the SPDR Gold ETF is a prominent fund backed by physical gold. The provider will take care of the logistics of your gold investment - leaving you entirely free of worrying about storage and transportation.  

An additional perk of gold ETF is that investments in this metal are 100% liquid. This is because ETFs are listed on public stock exchanges - so you can sell the asset at any time and cash out your profits. 

Check Out: How Much Will Gold Be Worth In 2021 And Beyond?

6. Bitcoin (BTC)

Until now, we have focused only on traditional assets available in the investment arena. In the last decade or so, the alternative market of cryptocurrency has been gaining a lot of attention from investors. 

Bitcoin is undeniably the best performing financial instrument - not only among cryptocurrencies but also as an asset class globally. Its journey started at less than $0.01 per coin but has since surpassed over $58,000. In layman's terms, this translates to a growth of almost 580 million percent. 

In the world of cryptocurrency, long term investment strategies are often referred to as ‘HODLing’. Meaning, you will 'buy and hold' a digital asset - hoping to earn a profit in many years to come. For many UK investors, the main obstacle regarding Bitcoin is the lack of understanding concerning its technology. 

However, today, with online brokers such as eToro - it is easier than ever to buy cryptocurrencies on a commission-free basis. Moreover, the platform is also regulated by the FCA, meaning your investments will be well-protected. 

7. Ethereum (ETH) 

If you are interested in the alternative investment scene, apart from Bitcoin - Ethereum also deserves your attention. Some investors might argue that Ethereum makes for a better long term investment than the former. 

This digital coin ranks second to Bitcoin when it comes to market capitalization and mass awareness. But, that is not all. While Bitcoin is primarily an alternative monetary system - Ethereum has established itself as a foundation for monetizing smart contracts. 

While Bitcoin is preferred for speculative purposes, Ethereum tends to be more stable in comparison. Furthermore, the rise of DeFi and dApps has the potential to drive the value of Ethereum further up in the future.

8. Vanguard Total Bond Market ETF 

Many of the best long term investments UK we mentioned here revolves around equities. That said, seasoned investors prefer to set aside a part of their capital on alternatives such as bonds. Crucially, this will bring you a steady flow of income. 

However, buying bonds can be a challenging process. The better alternative will be to invest in an ETF - that tracks a range of bonds.  For instance, the Vanguard Total Bond Market ETF tracks almost 10,000 individual bonds. 

If you invest with Vanguard, you gain access to nearly $300 billion worth of bonds - that spans across public and private sectors. In summary, it is a great strategy for you to diversify your long term investments at the click of a button. 

9. S&P 500 Index Fund 

The S&P Index fund tracks stocks from the 500 largest publicly-listed companies in America.  For decades, the S&P 500 has been considered the benchmark index against which other equities are measured. 

Since its inception in 1957 - the index has managed an average annual return of 10%.  The S&P 500 primarily includes large-cap companies listed on the NYSE and NASDAQ - giving you access to top players in the US economy. 

In turn, you get the opportunity to diversify your capital into multiple industries and markets. For instance, we are talking about companies such as Apple, Amazon, Facebook. Berkshire Hathaway, Alphabet, and more. 

As you can imagine, there are many upsides to choosing the S&P 500 Index as your long term investment asset. To begin with, when you buy this equity, it means that you are gaining access to the shares of 500 different companies - in diverse sectors. 

Secondly, once you invest your funds into this index, you no longer have to worry about the market or constantly watch its performance. The primary reason for this is that the S&P Index is rebalanced every three months - making sure that all the companies on the index justify its position. 

In other words, the S&P 500 Index readjusts itself to include only the best-performing equities in the US market. As such, it is particularly suited for those who simply want to invest in the stock market without having to do hours of research. 

Now, when it comes to capital generation - the S&P 500 Index can help you achieve this in two ways. Firstly, you can benefit from the capital appreciation of the 500 stocks. Secondly, you will also receive dividend payments paid out by the individual companies. 

10. FTSE 100 Index Fund

The FTSE 100 Index can be considered the UK counterpart of the S&P 500. As you can imagine, the focus here is on the 100 top-performing UK companies that have stood the test of time. 

Investing in an index fund that tracks the FTSE 100 is one of the best ways for you to dip your feet in the wider UK economy. It will allow you to own shares of companies such as the Royal Bank of Scotland, Barratt Developments, Berkeley Group Holdings, Imperial Brands, AstraZeneca, BT, BP, and more. 

In terms of its underlying framework, the FTSE 100 works more or less the same as the S&P 500. In simple terms - a single investment means that you will be able to take ownership of shares of 100 different companies. 

This will also mean that you are entitled to receive dividend payouts. More importantly, the FTSE 100 is also evaluated and rebalanced every quarter.  That said, it is worth noting that the S&P 500 index has a better performance track record compared to the FTSE 100. 

For instance, in the past year, from March 2020 to March 2021, the S&P 500 has grown over 57%. In comparison, FTSE 100 increased only by 14%.  However, if the UK market is your priority, the FTSE 100 can be an excellent way to tap into diversified stocks with little to no effort. 

That said, it is important to understand that neither the S&P 500 nor FTSE 100 are immune to risk. But, over the course of time, both funds have proved to be reliable in terms of growth. 

If you are ready to begin by investing in the S&P 500 or FTSE 100 Index, the best option would be to do so through an ETF at a reputed online broker such as eToro. 

Read Also: Top FTSE 100 Stocks To Buy

The Basics of Long Term Investments 

Typically, long term investments span over a minimum of 12 months. However, when it comes to the financial markets, it is best to hold on to your assets for at least five years. 

By viewing your investments as a long term journey, you increase your chances of attaining financial security.  The main advantage of opting for a long term investment strategy is that you do have to be worried about the short term volatility of the market. 

There is no need for you to put hours into analyzing the performance of stock prices - as you are looking only at the sustained growth of your chosen asset. 

As we have mentioned earlier, the best long term investments UK also allow you to merit on two fronts. For example, not only can the value of your assets grow over the years, but you also stand the chance to earn a passive income in terms of dividend payments or bond coupons. 

Now, there are many types of assets that can make a good case for a long term investment. 

Take a look at the financial instruments listed below that have the potential to generate capital gains over the course of time:

  • Stocks
  • ETFs
  • Index and Mutual funds
  • Bonds
  • Gold
  • Bitcoin

Although it might seem as if long term strategies can be applicable for every asset-class, it might not be well suited for all markets. For instance, not every stock is ideal as a long term investment. Some might perform underwhelmingly, moving against your predictions - resulting in you losing your capital.  

Before you start your journey into long term investing, it is important that you know how to choose the right asset for your financial goals. 

How to Choose the Best Long Term Investments UK?

There is no deficit of choices when it comes to long term investment options. However, it also makes it a daunting task to find which asset is the best fit for your portfolio. 

In order to be successful with long term investment strategies, you not only have to keep an eye out for certain indicators - but should also remain disciplined and focus on your goals. 

Here we have put together a list that will help you pick the right long term assets. 

Scope for Capital Appreciation 

As with any other investment, your aim here is to make sure that you generate returns on your capital. One way to predict the future performance of an asset is to study its past. 

The longer you can go back, the better for your research. But we would recommend that you go through the performance history as far back as 10 years at the least. 

For instance, as we discussed in the earlier sections, some assets have performed exceedingly well over the past decade - such as Bitcoin or Amazon. However, that might not be the case for low-risk instruments such as government-issued bonds in the UK - which rarely yields over 2% per annum. 

Current Value 

The chances are, you are entering the investment arena with a budget. With that in mind, it might not be possible for you to get your hands on an asset if its value exceeds your available capital. 

In this case, it is best for you to look for undervalued assets. The impact of the pandemic has led to many top-performing firms seeing their shares trade at a discount. This is particularly the case for companies in the construction, travel, and real estate sectors. 

Alternatively, you can also look into fractional shares. 

As the name suggests, when you invest in fractional shares - you will be owning only a fraction of a single share - instead of a full stock. This permits you to get your hands on highly-priced companies such as Amazon. 

The only thing you need to remember is to find an FCA broker that can give you access to fractional shares - like eToro. 

Access to Your Preferred Assets 

If you are not a professional investor, then some assets might be a little difficult to access - such as the likes of emerging shares and bonds in the global marketplaces. 

Therefore, once you have narrowed down which assets you want to invest in, you need to make sure that you have seamless access to them. 

You can also consider ETFs in case you are not able to invest in a specific financial instrument-such as gold or non-UK corporate bonds directly. 

Financial Goals

As we have emphasized throughout the article, one of the defining factors when choosing the best long term investments UK is weighing what type of returns you seek. For instance, while some investors prefer capital appreciation over time - others favour assets that can deliver passive income. 

For those who want the best of both worlds, it will be wise to consider an ETF that tracks an index fund. This way, you can benefit from the increasing value of the respective stocks, as well as receive dividends every three months. 

Why Should you Consider the Best Long Term Investments UK?

Long term investments might appear as a safer strategy when compared to short term approaches. However, the catch is that you should keep your cool throughout the ebbs and flows of the market. 

In other words, if the market drops suddenly - you shouldn't scare yourself and sell out for a quick profit. 

For instance, when the pandemic hit the financial markets, the S&P 500 also experienced a deep drop in value. However, it soon picked up - since gaining over 69% in value and subsequently hitting an all-time high in early 2021. 

If you had panicked and disposed of your assets during the market plunge, you would have missed out on significant gains. 

As such, focusing on the long term means that you have to commit to holding the assets through the market dips. This way, you will be able to avoid the short term noise that often dissuades the average investor. 

Risks of Long Term Investments UK

More often than not, the global financial markets are riddled with uncertainties. Meaning - it is nearly impossible to accurately predict how an asset is going to perform in the long run. 

As such, every speculation you make regarding an investment always carries a certain risk factor. However, it is common knowledge that the more you are willing to risk - the higher your profit potential is. 

The only way to tackle this is by educating yourself about your chosen asset. Although you don't have to hover over the market constantly - you should also be well aware of the fundamental aspects that can impact the value of your long term investments. 

Moreover, some assets, such as Bitcoin, are inherently riskier than others. Therefore, you need to do your research, evaluating your risk tolerance before you take the plunge.

How to Get Started with Long Term Investments UK on eToro

Thanks to the internet, now you can start your long term trading journey right from the comfort of your home - with all the guidance available at the tap of your fingers. 

Before we conclude this guide, we provide an overview of how you can get started with your long term investments UK in no time with an online broker. 

The steps we have described below are based on eToro - an FCA-regulated platform that gives you access to a wide range of assets across multiple global marketplaces. More importantly - eToro allows you to make long term investments without having to pay a penny in commission or UK stamp duty. 

Step 1: Create your Online Brokerage Account 

Head over to the eToro website and begin the account opening process. 

You will need to submit your personal information - including your full name, contact details, and national insurance number. 

If you want to deposit more than $2,250 - you will also be required to complete a KYC process - by uploading a copy of your passport or driver’s license. If you skip the KYC process now, it does need to be done before you can make a withdrawal.

Step 2: Deposit Funds

Fund your eToro trading account using a bank card or an e-wallet such as Neteller or Skrill. You can also opt for a bank transfer - but this is likely to take more time to process. 

Step 3: Search for your Chosen Asset

If you already have a long term investment in mind, you can search for it on eToro. For instance, if you want to invest in Bitcoin - you can enter ‘Bitcoin’ and click on the matching result to be redirected to the investment page. 

Step 4: Invest in Your Chosen Asset

At this stage, you can enter the amount you want to invest in the asset in question. Clicking on the 'Open Trade' button will complete the purchase for you - free of any commission. 

Best Long Term Investments UK - Conclusion 

Long term investments can be an excellent strategy to build your wealth over time. Crucially, you can generate much better yields than a UK savings account pays. 

You will, however, need to ensure that you avoid obsessively following the market every day - as long term investments should be considered on at least a 5-year basis 

If our guide has made you feel confident about long term investments - you can start your journey by signing up on eToro. Make it a point that you do your research to find the right asset that aligns with your trading goals. 

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Read More: 

7 Best UK Stocks to Look for in 2021 and Beyond

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FAQs

How to find the best long term investments UK?

The best long term investments will depend on a number of considerations. This includes your preferred asset class, your risk tolerance, and your financial goals. For instance, you might opt for growth stocks to target above-average capital gains or choose high-yielding dividend stocks. 

Can you give some examples of the best long term investments?

Long term investments are available in a plethora of markets, including - stocks, ETFs, index funds, gold, and Bitcoin. 

Should I pay tax on earnings from long term investments?

Yes. Regardless of which investment method you choose - you are liable to pay tax on any profits you make. This is mandatory for both capital gains and any dividends. Note that in the UK, residents can also get tax allowances via a Stocks and Shares ISA. Additionally, at eToro, you can buy shares listed on the London Stock Exchange without paying any stamp duty (usually 0.5% of purchase amount).

Which is the safest way to buy long term investments?

When it comes to investments, there is no way to avoid risk altogether. However, you can reduce your risk by performing due diligence and buying your assets through an FCA-regulated online broker such as eToro. 

Which long term investments yield the highest earnings?

The best-performing asset over the past decade in terms of annual returns is Bitcoin. That said, it is also one of the most volatile financial instruments in this space. If you favor a less fluctuating market, blue-chip stocks might be worth considering. 

Where can I find guidance to start making long term investments?

The internet is full of resources that can educate you about the many different financial instruments, trading strategies, and more. You can find these in the form of tutorials, videos, articles, or extensive guides such as ours. Moreover, you can also benefit from doing your own research rather than relying on third-party advice. 

Is it possible to benefit from long term investments in a passive manner?

Yes, this can be achieved by investing in dividend-paying stocks, bonds, or ETFs. 

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