Until March, InvestEngine is offering investors the chance to win £50,000 in our prize draw. If you won, what would you do with the money?
Here’s what you need to consider, whether you’re investing £50k from a prize draw, or any big lump sum you might have received.
Leaving £50,000 in cash may feel low risk, but over time inflation can reduce its real value. Investing is one way people aim to grow their money and protect its spending power over the long term, although returns are never guaranteed.
This guide explains how investing £50,000 works in the UK, the key decisions involved, and what to consider before getting started.
Should you invest £50,000 or keep it in savings?
Cash plays an important role in personal finance. It provides stability, instant access, and certainty. Many people keep savings for emergencies or short-term spending.
However, holding a large sum like £50,000 in cash for many years can come with drawbacks:
Savings rates may not keep up with inflation. When inflation is high, it takes a significant savings rate to keep pace. Most banks don’t offer these, so for anyone wanting to preserve the value of their cash, other options might be needed.
Growth potential is limited compared to investing. Cash is great. It’s predictable and you can almost always access it easily. It does have extremely limited growth potential, however. Those seeking higher growth may need to look elsewhere.
Investing introduces risk, as markets can rise and fall. But it also offers the potential for higher long-term returns by putting money into assets such as shares and bonds. This is why many people choose to invest once they have enough cash set aside for short-term needs.
Is £50,000 a good amount to invest?
Yes. £50,000 is a strong starting point for investing in the UK. With this amount, investors can:
Build a diversified portfolio. £50,000 is more than enough to have a wide spread of investments across asset types, geographies, even investment types (you could split between an ISA and a SIPP, for example.)
Make use of tax-efficient accounts. Both ISAs and SIPPs are extremely tax efficient for investors. You could max out your ISA allowance for the next two years and have £10,000 to spare, or you could put £20,000 into an ISA and the rest into your pension.
Take a long-term approach. £50,000 should be enough to give you a rainy day fund. That means you can leave the money you end up investing for a long time, which gives it all the time it needs to potentially grow.
The rainy day fund is important here – it’s common to keep a separate emergency fund in cash. This can help avoid having to sell your investments at a bad time if unexpected costs arise.
How to invest £50,000: key steps to consider
1. Decide what you’re investing for
Your goals should shape how you invest £50,000.
We all know we probably should be investing, but it’s not enough to just put money in a basic portfolio and assume it’ll be suitable for your goals.
Long-term goals, such as retirement, can usually tolerate more market volatility than short-term goals. Your personal comfort with risk also matters. Some investors are happy to accept larger ups and downs in pursuit of growth, while others prefer a steadier journey.
So, if you’re putting away money for retirement in 20 or 30 years’ time, your approach will look very different to someone building up a pot for a house deposit in five years’ time. Both can benefit from investing, but the level of risk they can comfortably take on will be vastly different.
Before you invest anything, it’s a good idea to figure out exactly what it is you’re investing for – your plan will be a lot more coherent as a result.
2. Diversify your investments
Diversification is one of the most important principles when investing £50,000.
Rather than relying on a single investment, diversification means spreading your money across:
- Different asset classes, like shares and bonds
- Different countries and regions
- Different industries and sectors
This approach aims to reduce the impact of poor performance in any one area and support more stable long-term outcomes.
3. Keep investment fees low
Fees have a direct impact on long-term returns.
Platform fees, fund charges, and management costs all reduce the value of your investments over time. Even small percentage differences can add up when investing £50,000 over many years.
InvestEngine offers commission-free DIY investing for both its ISA and its SIPP. This means you only pay the underlying ETF costs, which are low. So, with InvestEngine, you keep more of what you invest.
4. Use tax-efficient accounts in the UK
Tax planning becomes especially relevant when investing £50,000.
Stocks and Shares ISAs allow up to £20,000 per tax year to be invested with no tax on growth or income.
SIPPs (Self-Invested Personal Pensions) allow contributions of up to £60,000 per year, or 100% of earnings if lower, with tax relief applied.
Because £50,000 is above the annual ISA allowance, many investors spread contributions over multiple tax years or use a combination of ISAs, pensions, and General Investment Accounts. Tax treatment depends on personal circumstances and may change.
5. Consider how and when to invest
There is more than one way to invest £50,000.
Some people invest a lump sum straight away, while others prefer to spread investments over time. Automation can help remove emotion and reduce the temptation to time the market.
With InvestEngine’s Savings Plans, you can invest regularly from as little as £20 a week. These are then made automatically depending on the portfolio you’ve outlined. It’s a real set-and-forget system, for effortless long-term investing.
Investing £50,000 with InvestEngine
InvestEngine offers a low-cost, transparent way to invest in the UK, with account options including:
- ISAs for tax-free investing of up to £20,000 each tax year
- SIPPs for long-term retirement planning
- GIAs for anything else
Explore how InvestEngine can help you invest £50,000 with confidence.
Important information
Capital at risk. The value of your portfolio with InvestEngine can go down as well as up and you may get back less than you invest. ETF costs also apply.
This communication is provided for general information only and should not be construed as advice. If in doubt, you may wish to consult a professional adviser.
Tax treatment depends on personal circumstances and is subject to change. Past performance is not a reliable indicator of future returns.