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Best ways to invest £200K

So, you’ve got your hands on £200K, and you’re looking to invest. But where to start? Well, £200K is a solid starting point to begin your investment portfolio. Need some tips on how to invest 200k?

Here are 4 of the most popular methods of investment to help you get started:

Property Investment

Property investment is probably one of the strongest options for investing £200K in the current climate. The UK is seeing record growth in the property market, which is expected to continue for years to come.

Last year, the market saw record-breaking increases, and there is basically zero evidence of it slowing down soon. For example, in May this year, the average UK home was valued at around £254,624, an increase of 9.98% in the last 12 months alone.

Considering that last year the country suffered its most significant economic output drop in 300 years due to COVID-related issues, it’s hard to deny how impressive this is.

With the latest predictions proposing that property will likely rise in price by a further 21.5% in the next five years, it’d probably be a bit silly not to take advantage of this opportunity.

Property value increases over time, so you could sell your property in the future for further profit. Again, this is another lucrative route, with house prices in the UK rising by 10.7% in 2022 alone.

Some things to consider about property investment:

  • Unlike crypto or stocks, the property is not a liquid asset – meaning that you’re unable to immediately sell to see a profit quickly.
  • Property investment could also come with a higher initial cost (for example, the average house price in the UK is currently £278,000.)

However, there are several ways of making it more affordable such as mortgages and investing in areas where properties are below the average price.

Cryptocurrency

A particularly popular option at the moment, cryptocurrency is an exciting yet rather risky option for investors. It involves purchasing units of online currency and holding them as they rise in value (similar to stocks).

There is a wide variety of cryptocurrencies currently available. The most popular being Bitcoin and Ethereum. Cryptocurrency has seen investors receive massive returns on their investment – with a single Bitcoin worth $69,000 in November 2021.

Some things to consider about crypto are:

  • They can fall in value just as quickly as they can rise, with some experts warning of a nightmare’ approaching for crypto investors due to wildly fluctuating markets.
  • Bitcoin alone has fallen to under $19,000 per unit in June 2022, followed by rising back to almost $25,000 and then crashing again due to Elon Musk selling almost $1 billion worth of Bitcoin that Tesla had invested in.

If these potential risks don’t deter you, though, then there’s a possibility of receiving significant returns on your investment.

Stocks

Like crypto, this is a risky option that could see extremely profitable returns (so long as you play your cards right.). Investing in stocks involves purchasing a small part of a company through the stock market.

If your chosen company achieves success, your stocks become more valuable. However, if the company goes through financial trouble, then you may find your stocks lose value.

This allows you to spread your £200k across several companies in various sectors – meaning if one goes under, your investment is not as badly damaged.

Whilst huge businesses like Google or Microsoft have relatively stable stocks, they also come with an expensive price tag. Whereas smaller businesses’ stocks can be bought cheaper in the hopes that they will rise in the future.

The stock market, however, rises and falls very fast, requiring either a wealth manager or yourself to keep a close eye on the market to ensure that you can pull your stocks out before losing any money.

Gold and Silver

Historically, investing in gold and silver has been seen as a very safe method of investment. The reasoning behind this is that the value of rare metal rarely fluctuates that massively.

From buying physical silver or gold bars to investing in funds spread across several mining companies, there are multiple ways of investing in this strategy.

Unlike most assets, gold, in particular, tends to pick up speed during stock market crashes – making it very useful when you need to diversify your portfolio.

The downside is that you do not earn interest or dividends from holding rare metals because the way you earn income from this investment is to hope that it’ll provide you with long-term capital returns.

Of course, there is no way to guarantee this will happen. This is also an expensive venture – especially if you’re holding rare physical metals. You need to consider storage and security, aspects you do not need to do for other investment opportunities.

What’s The Best Way to Invest £200k?

There is no right or wrong way to invest £200k, as each investor has their own goals, needs, and risk appetites to consider when investing.

All of the investment methods listed here have pros and cons, so it’s important to do your research, be smart with your money, and thoroughly investigate every aspect of an investment before diving in!