Seek Independent Financial Advice
Most experts agree that speaking to a financial advisor is a good idea before you invest money and set your financial goals to ensure you have enough investment funds to cover your strategy.
Investments can be far more complex than just the money you need, as your personal finance or other circumstances can impact what sort of investment is right for you.
Your age, tax bracket, marriage status, attitude to investment risk, and investment timescale can all affect your decision.
Talking to an expert can help you explore these options and select the right asset for you.
Consider Active or Passive Investing
Depending on how much free time you have available, you may need to decide whether you should actively or passively invest.
Active investing is when investors take a more hands-on approach. This can include becoming a landlord.
Passive investing is when investors take a back seat and wait for long-term growth.
There’s no correct answer here, and whether or not you choose to invest actively will likely depend on your confidence and skill set.
You may also find that traditionally “active” strategies can be passive.
For instance, you can invest in a property managed by a property investment company.
They will take care of the day-to-day, use their expert experience to determine the best opportunities and help ensure the property is tenanted.
In property terms, this could mean buying a rental property and using a property management company to handle all landlord duties.
Understand Your Risk Tolerance
When deciding how to invest your £100k, you need to consider how much risk you’re willing to take.
Unfortunately, every investment comes with risk, and there’s no way to get a guaranteed income stream, as things can go wrong.
However, some strategies are more high-risk than others.
The trade-off is that typically, the higher the risk profile of the investment, the higher the potential returns. The key is finding the balance between these and researching various market trends. Property investment is a good way to minimise risk while maximising returns in a historically stable market.
Diversify Your Investment Portfolio
While having £100k in your back pocket might give you the confidence to splash the cash on a big purchase, most investors find a diversified portfolio the best way to shield themselves from the various market forces that can affect their assets.
Diversifying your portfolio means investing in several different investment markets.
Someone with £100k could choose a property investment strategy while putting some cash into a savings account to ensure diversification.
By doing this, you’ll limit the impact of one of your investments performing poorly. To create a diversified property portfolio, you can also choose several real estate investment strategies, such as student accommodation and short-term rentals.
