How to Invest £30K UK
Having a lump sum of £30k at your disposal is a huge accomplishment. It therefore goes without saying that you should treat your capital with great care and attention.
As such, before you put your hard-earned money into an investment vehicle, you will need a clear understanding of your financial goals.
If you think that a typical savings account with a low-interest rate does not do proper justice for your money - there are plenty of other options out there.
In this guide, we discuss the best ways of how to invest £30k UK. We will also explore how you can pick the most suitable assets to build a diversified portfolio.
- How to Invest £30K UK in Five Easy Steps
- How to Invest £30K UK - Top 10 Investments in 2021
- How to Invest £30K UK - Choosing the Right Assets
- How to Invest £30K UK - The Importance of Diversification
- How to Invest £30K UK - How to Select your Online Broker
- How to Invest £30K UK on eToro
- How to Invest £30K UK - Conclusion
How to Invest £30K UK in Five Easy Steps
Getting started with online investments has now become easier than ever. Here is a rundown of how to invest £30k UK with an online broker in five simple steps:
- Choose a reliable broker that offers you access to your preferred assets.
- Open an account with your chosen broker.
- Fund your account by depositing money via a credit/debit card, bank transfer, or an e-wallet.
- Find the asset you want to invest in, and enter your investment amount.
- Once you are ready, confirm the trade. And that's it!
In case you need a more detailed explanation, we have included step-by-step instructions in the last section of our How to Invest 30,000 Pounds UK Guide.
As you can imagine, the trick here is to find a suitable broker that can make the process of investing an uncomplicated task.
If you choose an FCA-regulated broker like eToro - you will be able to invest without having to pay any share dealing fees or trading commissions.
How to Invest £30K UK - Top 10 Investments in 2021
When it comes to investments, there is no one-size-fits-all strategy. Instead, the best option for you is to find what works for your short-term or long-term financial goals.
That said, one of the most effective ways to invest smartly is through a highly diversified portfolio. In plain words - this means that you will be investing your £30,000 into a basket of different assets, ideally in separate sectors. This will enable you to keep the risks to a minimum.
With that in mind, let us take a closer look at the ten financial instruments that are most viable in the current market.
- iShares Core FTSE 100 UCITS ETF (ISF)
- SPDR S&P 500 ETF (SPY)
- Vanguard FTSE Emerging Markets ETF (VWO)
- Vanguard Information Technology ETF (VGT)
- Tesla (TSLA)
- eToro Dividend Growth CopyPortfolio
- iShares US Real Estate ETF
- Stocks and Shares ISA
Top 10 Best Ways to Invest 30,000 Pounds UK
If you want to invest £30K pounds in the UK, here's a list of the top 10 investments to consider.
1. iShares Core FTSE 100 UCITS ETF (ISF) - Best Investment for Diversifying in the UK Market
The stock market has the repute of being a well-worn path to growing your wealth. For those unaware, when you invest in stocks, you are buying a portion of a publicly-listed company. These are represented in terms of the number of shares you own.
In return, you are entitled to any capital gains and profits made by the company - in proportion to your stake in the firm.
However, there are thousands of companies listed on public exchanges across the world. So, this raises the question- how to invest £30k UK in the right stocks?
Considering the aspect of diversity, it will be best to distribute your capital into the stocks of multiple companies from different sectors. This can be achieved by investing in an index such as the FTSE 100.
In simple terms, the FTSE 100 is made of the top 100 companies listed on the London Stock Exchange based on market capitalization. The size and stability of this index indicates that your money will be diversified well into the best firms in the UK market.
Additionally, as an investor in the FTSE 100 - you will also be eligible to receive dividend payments distributed by the companies in the index. This allows you to profit from both capital gains alongside regular income.
That said, it is impossible to invest in this index directly. This is where an ETF comes in.
For example, the iShares Core FTSE 100 UCITS ETF tracks the performance of the FTSE 100 index - and is known to be one of the best ETFs in the market. It also gives you the flexibility to cash out your investment at any given point - thus giving you access to liquidity.
If you are wondering how to invest £30k UK into ETFs, you can do so via a regulated broker such as eToro. The platform allows you to start investing in ETFs on a commission-free basis with just $50 (about 37 pounds).
2. SPDR S&P 500 ETF (SPY) - Best Investment for Diversifying in the US Market
Popularly known as SPY in the financial market circles, the SPDR S&P 500 ETF follows the S&P 500 Index and its diversified portfolio of the top 500 large-cap companies in the US economy.
The three major sectors in the S&P 500 are technology, healthcare, and communication - which make up about 50% of its portfolio. You will notice several famous household names in this index - such as Microsoft, Apple, Amazon, Berkshire Hathaway, Facebook, and others.
When you are investing in this ETF, you will be essentially purchasing a portion of each of the companies listed in the S&P 500. However, the size of your shares will depend on the weighting of each stock.
For instance, let's say Apple has a weighting of 6% in the ETF. This means that if you invest £1,000 into this SPDR S&P 500 ETF, £60 will be invested into the shares of Apple.
Similarly, the size of the rest of your investments will also be spread out according to the weighting of the ETF.
Looking at capital gains, the S&P 500 is also one of the best-performing indices in the market. In the past year, since April 2020 - the value of the index has increased by nearly 49%.
You can invest in this ETF through the FCA-regulated broker eToro without having to pay any commission.
3. Vanguard FTSE Emerging Markets ETF (VWO) - Best Investment for Global Exposure
While the two ETFs listed above focus on the UK and US markets respectively, some of you might also be interested in the global economies.
If that's the case, it is worth looking into the FTSE Emerging Market Index - which tracks the performance of large and mid-cap stocks in the emerging markets. You will find companies located in different countries around the world - including China, Brazil, India, Taiwan, Russia, and so on.
The Vanguard FTSE Emerging Markets ETF allows you to gain access to stocks of over 5,000 companies in the up-and-coming markets. The total net assets of this portfolio are valued at over $108 billion.
Some of the most prominent companies include Taiwan Semiconductor Manufacturing, Alibaba Group Holding in Hong Kong, Reliance Industries in India, and more.
Investing in the VWO will grant you broad exposure and wide diversification across the various global economies.
4. Vanguard Information Technology ETF (VGT) - Best Investment for the Tech Industry
Over the past few decades, investors have come up with several strategies to classify stocks into different categories. While some prefer to put their money into blue-chip stocks, others choose to invest in new and promising sectors.
With that in mind, technology stocks have found their way to many portfolios - making the Vanguard Information Technology ETF one of the best choices for investing in the tech sector.
This allows you to gain exposure in the industry without having to research individual companies and singling out the best opportunities.
Instead, you can spread out the risk by investing in a large basket of tech stocks. We are talking about software companies, hardware specialists, and electronic payment processors, and more.
A few popular constituents in this ETF include Dell Technology, Adobe, Autodesk, Visa, Mastercard, Dropbox, PayPal, and more. Although there are over 324 stocks in the ETF's portfolio, Apple and Microsoft together account for over 35% of the total weighting.
The past year has been a particularly good one for tech-heavy portfolios. In 2020, this ETF yielded a capital return of 46.20% - which exceeds the gains of both the FTSE 100 and the S&P 500 Index.
However, it is important to remember that this ETF focuses only on one sector. Therefore, it is recommended that you invest only a portion of your £30,000 in order to mitigate the risks in case the wider tech market takes a hit.
5. Tesla (TSLA) - Best Growth Stock for Long-Term Investments
Looking past ETFs, you can also choose to invest your £30,000 into multiple individual stocks. One way to go about this is to capitalize on growth stocks. -These are relatively young companies that are expected to grow at a faster rate compared to the rest of the market.
Tesla is one such company that has been receiving a lot of attention from investors in that regard. This US-based electric car maker is one of the best-performing equities of 2020. Over the past 12 months, the value of the shares has increased by nearly 400%.
As such, had you invested £30,000 in April 2020 - today, your investment would now be worth £120,000.
As a long-term investment, Tesla has demonstrated even more potential. At the time of its IPO in 2010 - Tesla shares were worth approximately $3.84 (adjusted for stock splits). At today's price of $738 per share - the value of Tesla stocks has increased by over 19,000%.
Moreover, the company's involvement in the renewable energy industry also suggests that its share price could continue its upward trend for the foreseeable future.
6. eToro Dividend Growth CopyPortfolio - Best Investment for Passive Income
eToro is one of the most popular online brokers in the financial space. The platform has introduced CopyPortfolios, which allows you to invest in a collection of investments selected based on a predefined set of criteria.
These portfolios are entirely managed by the eToro team - and allows you to make passive investments. Once you invest in a CopyPortfolio, you can trust the eToro team to handle your capital.
As you can guess, the Dividend Growth CopyPortfolio focuses on the stocks of best-performing companies that pay out dividends. At the time of writing, the portfolio is made of 40 firms. This includes Unilever, PepsiCo, McDonald's, AT&T, IBM, and more.
Currently, the minimum investment required for this specific CopyPortfolio is set at $2,000 ( about 1,450 pounds).
The key difference between eToro's CopyPortfolio and ETFs is that there are no fees involved here. When the broker pays out dividends, this will be deposited into your eToro trading account. In addition, you will also be able to benefit from capital gains.
7. iShares US Real Estate ETF - Best Investment for Real Estate
Exchange-Traded Funds are not limited to stocks alone. In fact, you can find an ETF that represents virtually any investment vehicle - including real estate.
Investing your £30,000 into a property in the traditional sense will require a lot of work. However, today, you have the choice to put your funds into a Real Estate Investment Trust (REIT).
These organizations purchase and manage properties on behalf of investors. In return for your investment, you will receive capital gains, as well as additional earnings from rental income, interest from mortgage payments, and more.
As such, REITs are considered a smart investment choice in order to generate regular cash flow.
Now, you can always choose to invest in one REIT and reap the benefits. However, when we factor in the need for diversification - it is best to disperse your £30,000 into a group of REITs - tracked by an ETF.
The iShares US Real Estate ETF has the reputation of being one of the best in this market. It will give you exposure to property investments in different sectors - including residential, hospitality, commercial, and more. This should ensure that if one market does not perform well, the other will help you mitigate the losses.
In the past year, since April 2020 - this ETF has made a total return of over 30%.
8. Gold - Best Commodity for Hedging
Gold has a long-standing reputation of being considered one of the safest investments in the financial world. It is a commodity that often recovers its value quickly during economic downturns.
As such, gold would make for a good addition to your investment portfolio - to hedge against other assets.
More importantly, you no longer have to buy gold in its physical form. Today, investments in gold is made easier through an ETF. Much like the ETFs that track a stock index, in this case, your chosen gold ETF will reflect the price of this precious metal.
Some of the best gold ETFs available in the market today are the SPDR Gold Shares, iShares Gold Trust, and VanEck Merk Gold Trust. You can start investing in gold ETFs through eToro on a 0% commission basis - with a minimum investment of only $50.
Read Also: Gold Price Prediction
9. Bitcoin - Best Investment with High Reward Potential
Cryptocurrencies present a great investment opportunity that allows you to gain direct exposure to the demand of the alternative financial market. This includes digital coins, as well as the other businesses facilitated by the blockchain.
Bitcoin is, unquestionably, the most popular cryptocurrency available in the market today. The digital asset recently reached its all-time high price of over $63,000 per coin. Over the course of last year alone, the price of Bitcoin has increased by over 700%.
As a long-term investment, Bitcoin has plenty of room for growth. For one thing, the supply of this coin is limited - which should drive its price upwards in the future.
Secondly, Bitcoin is gaining much more traction in terms of utility. It is no longer merely a tradable instrument. You can stake Bitcoin to receive interest, lend it out to borrowers, and even use it to make purchases online.
As the demand for the digital coin rises in the future, so will its price. After all, there is only a limited number of Bitcoin to go around.
10. Stocks and Shares ISA - Best Tax-Free Investments for the UK
Individual Savings Accounts or ISAs are specially designed to be a tax-free investment option in the UK. When you invest your funds into an ISA - this will defer you from the obligation to pay taxes on any capital gains or dividends.
This can save you up to 20% in capital gains tax - which can make a huge difference in how much profit you keep for yourself. In the UK, you can invest a maximum of £20,000 into an ISA per year.
If you want to receive tax exemption on your entire £30,000 investment - you can do so by making two investments - one worth £20,000 in the first year and the second worth £10,000 in the following year.
That said, when investing in an ISA - you will be entirely responsible for picking the assets for your portfolio.
In other words, you will have to do your own homework in finding out the best investment opportunities. However, you have the flexibility to invest in both the UK as well as international assets - including stocks, bonds, ETFs, index funds, and more.
Check Out: Top UK Stocks Could Double Your Money
How to Invest £30K UK - Choosing the Right Assets
Finding the right investment options for your financial portfolio can be challenging. After all, you have to balance the risks and rewards while ensuring that you have access to liquidity when needed.
In this section of our How to Invest £30k UK Guide, we will explain what to consider when creating your own investment portfolio.
Potential Returns on Investment
There is no sure way to accurately predict how much money you can make from any particular investment.
That said, by doing fundamental research of your chosen asset, you can get an idea of what returns you could potentially expect.
For instance, if you want to invest in the stocks of a company, it is always recommended to study its balance sheet, current financial standing, and market capitalization.
Moreover, some assets are also known to yield higher returns when compared to others. Securities such as stocks, or cryptocurrencies might yield you more profits when compared to a fixed-interest bond. Having said that, it is crucial to not forget that such investment vehicles also attract more risk.
Level of Risk
Typically, in a financial market - risk and reward go hand in hand.
In simple terms - if you want to target high returns, then you should be willing to take more risk.
To give you an example, we mentioned that Bitcoin is one of the best performing assets currently available in the financial market. That said, it is also known for being one of the most high-risk investment options.
To elaborate further, the cryptocurrency market is still deemed relatively new and is considered to be highly volatile. The regulations associated with this sector are always changing.
As such, at any point, the market could take a hit - compromising the value of your investment. Additionally, there are security concerns regarding the safe storage of digital coins - so this again adds to the risks involved with this particular asset.
At the opposite end of the scale are the UK savings accounts. These attract an annual interest rate of about 1% - however, there is little to no risk involved in this investment scene.
As you know, each investment has its own level of risk - which is often correlated with your potential returns. It is thus important to find a balance between assets that can maximize your returns while diversifying the rest of your funds to minimize the risks.
Timing the Markets
Being a successful investor means knowing when to buy an asset and when to cash it out. Many seasoned professionals base their investment decisions on the wider market sentiment.
For example, the pandemic had an unprecedented effect on the financial markets in 2020. While the majority of stocks took a hit, tech companies such as Amazon, Facebook, and Tesla have been soaring.
To many experienced investors, this indicated that tech stocks might thrive for the foreseeable future.
On the other hand, there are also investors who wanted to capitalize on the discounted price of many blue-chip stocks that ocured during the market dip. They will cash out these investments when the stocks eventually recover their value - thus making a profit in the process.
Put simply, if you are wondering how to invest £30k UK in the best way possible - you should also make sure to find smart investment opportunities in the market.
Alternatively, there is also the option to invest in instruments such as eToro's CopyPortfolios. This way, there is no need to worry about timing the markets. The experienced financial experts at eToro will do the leg work for you to identify the best investments to maximize your gains.
How to Invest £30K UK - The Importance of Diversification
As we have pointed out several times already, diversification is of the utmost importance when it comes to investments.
In simple terms, the purpose of diversification is to ensure that you spread out your investments into multiple assets and sectors. By not putting all your money into one security - you stand the best chance to avoid unwanted risk to your capital.
This will help you even out negative returns from one asset with the positive performance of another. For instance, let's say the value of one of your investments goes down - leading you to heavy losses.
However, the other assets in your portfolio have gone up in value - this will allow you to offset any risks that you have incurred.
With £30,000 at your disposal, you have the option to diversify your investments into not just multiple assets but also different sectors as well. We are talking about a portfolio balanced between stocks in diverse industries, commodities, and potentially cryptocurrencies.
Alternatively, you can also choose to invest in ETFs - through which you can easily diversify into a plethora of different assets and markets.
How to Invest £30K UK - How to Select your Online Broker
The most important part when contemplating how to invest £30k UK is finding a suitable online broker. With dozens of options in the market today, it can be a tough decision to make.
To offer you some assistance, below we break down the different factors you need to consider before signing up with a UK brokerage platform.
License and Regulation
If you are thinking of investing in the financial markets, the support of a regulated broker can be invaluable in ensuring the safety of your capital.
Regulated brokers are monitored by financial authorities in the respective jurisdictions - such as the FCA in the UK. This means the brokerage platforms have to comply with the established guidelines of quality control enforced by these regulatory bodies.
For example, as an FCA-regulated broker, eToro is required to regularly submit for audits and have segregated accounts for client funds. In addition, UK residents can also benefit from the FSCS scheme.
Apart from the UK, eToro also holds licenses from ASIC and CySEC - making it one of the most reputable brokers in the online space.
Support for Assets
When considering how to invest £30k UK, you want to be able to buy different types of assets - preferably within both the UK and international markets. Not every broker can grant you access to global exchanges and an assortment of ETFs.
On the other hand, if you choose a broker such as eToro - you will be able to easily get your hands on thousands of different assets across multiple economies. Most impressively, you will be able to buy all these securities without having to pay any stamp duty.
Fees and Commissions
Brokerage firms charge you an assortment of fees to cover the cost of their services. At the top of this list is trading commissions - which vary from one broker to another.
While some brokers charge you a flat commission for all your positions, others allow you to purchase assets at a 0% commission rate.
As you can imagine, choosing a commission-free broker such as eToro will allow you to save significant amounts in terms of trading fees.
Apart from commissions - you should also look into the deposit and withdrawal fees charged by your chosen broker.
Support for Payment Methods
Your brokerage platform should also be able to facilitate easy deposits and withdrawals of your capital. It is always recommended to make sure that your chosen broker supports your preferred payment method.
On brokers such as eToro - you will have the option to choose between instant bank transfers, debit/credit cards, and various e-wallets.
Best Broker to Invest £30K UK
How to Select the Best Online Broker for your 30,000 Pounds Investments UK
In the final part of our How to Invest £30k UK Guide, we will take you through the procedure of getting started with your investment account.
We will use the FCA-regulated broker eToro as a reference - as the platform gives you access to thousands of assets without having to pay any trading commissions.
By following these steps - you will be able to make your first investment in less than 10 minutes.
Step 1: Open an Account and Upload ID
You will first need to visit the eToro website to create a new account with the broker.
This will require you to provide a set of personal information - including your name, home address, email, and date of birth. To offer you better service, eToro will also ask you some questions regarding your prior investing experience.
The next step is to verify your identity. This is a necessary step as per the KYC requirements of all FCA-regulated brokers.
You can finish this step by uploading a copy of your passport or driver's license. In order to provide proof of your residence, you can submit a utility bill or a recent bank statement.
Step 2: Deposit Funds
In the second step, you will have to deposit some funds into your investment account.
eToro accepts debit/credit cards and e-wallets such as PayPal to facilitate transactions on the platform - all of these will support instant funding.
Step 3: Buy Investments
When you have funded your account, you can search for the security you are interested in buying. You can browse all supported assets under the tab 'Trade Markets.'
If you already know which asset you want to invest in, you can merely search for it on the website. Once the desired result shows up, click on the 'Trade' button on the right-hand side.
On the trading page, you can enter the amount you want to invest in the specific asset.
Remember that on eToro, this amount needs to be entered in USD.
Press on the 'Open Trade' button when done - and that completes your 100% commission-free investment.
eToro – Best Broker to Invest 30K Pounds UK
eToro have proven themselves trustworthy within the industry over many years – we recommend you try them out.
67% of retail investor accounts lose money when trading CFDs with this provider.
How to Invest £30K UK - Conclusion
In summary, if you have £30k at your disposal, there are many investment options that offer attractive returns on your capital.
However, figuring out how to invest £30k UK will depend on several factors - such as your financial goals, risk tolerance, and the time frame you have in mind.
With that said, regardless of which assets you choose - you should always make it a point to invest in a diversified mix of markets. This is crucial in ensuring that your portfolio is not weighted towards a single sector - thus minimizing your risks.
If you are ready to start investing - it is best to work with an FCA-regulated online broker. The social trading platform eToro will allow you to invest without paying any commission or stamp duty tax.
Which is the best way to invest £30,000 without risk?
If you are searching for the lowest-risk investments - you can consider savings accounts or government bonds. However, the returns for these investments are currently very low - at around 1%.
Is it possible to lose money if I invest in shares?
It is not always possible to accurately predict the right asset. Therefore - your investment in shares could incur profits or losses, depending on market conditions. One way to keep your losses in check is to diversify your assets. You can do so by purchasing stocks of companies in different sectors or by investing in an ETF.
Is gold considered a safe investment option?
Gold is considered a great investment option to hedge against market downturns. However, the main drawback is that you will not make returns in the form of interest payments or dividends.
Which investments provide the best returns?
There is no right answer to this question. Each asset comes with its own risks and rewards. Growth stocks are considered to be highly profitable in the long run- but these are best suited for those with a higher-risk tolerance.
How much should I invest in shares?
When thinking of how to invest £30k UK - you should always focus on building a diversified portfolio. As such, it is best to divide your funds between shares, ETFs, commodities, bonds, and cryptocurrencies.