How to invest £10,000

£10,000 is a good amount of capital to invest and build a portfolio. This guide takes you through the options you have available and what to consider before building your investment portfolio
By: Prash Raval
Prash Raval
When not researching stocks or trading, Prash can be found either on the golf course, walking his dog or… read more.
Updated: Jan 25, 2022
Tip: our preferred broker is, eToro: visit & create account

Investing £10,000 into a well balanced portfolio is no easy feat. That’s why our financial experts have created this guide to help you put your money to work the best way possible. Keep reading to learn how to build your portfolio and suggestions on where to invest.

How to build a diversified portfolio

The below table shows potential asset allocations for risk profiles and should be considered as guidance only. Every investor must make their own decisions. 

StocksFundsCryptoBonds
Low risk20%10%0%70%
Medium risk30%30%10%30%
High risk70%10%10%10%

The below is a section on how to build a portfolio. We’ll cover the most relevant topics and give suggestions on the best way forward. 

Choose how much you want to invest

£10000 is a good amount to invest. Although, just because you have £10,000, does not mean you have to invest it all. Paying debt and a ‘rainy day’ fund are two important things to consider prior to investing. However, if you’re in a position with disposable income, then investing the whole £10,000 is a good idea. 

Decide what investment account to use

Most of the investment types we will discuss in this guide can all be made through an online broker, so choosing the right one is a key factor to consider. There are many options available, but the most suitable is a Stocks and Shares ISA. In the UK, an S&S ISA will allow you to invest up to £20,000 per year without incurring any tax on profits

This is the easiest way to invest your money, safe knowing you will not have to worry about taxes on your profits. But, you may still need to pay brokerage fees, commissions and stamp duty if applicable. If you would prefer to invest for the shorter term, then an online broker may be a better option. You can click here to learn about our preferred brokers. 

Pick your investments 

Once your investment account is opened, deciding on what to invest in is the next step. This will require research and will largely depend on your appetite to risk and investment goals. If you’re more risk averse, then you may want to consider investing heavily in bonds. If your appetite to risk is higher, then investing in stocks and cryptocurrencies may be a better option. 

Above all, it is important to diversify your investments. Spreading your money across a range of industries, countries, and sectors will lessen your risk and protect you from unnecessary volatility.

Allocate your investments 

This is the part where you finally build your portfolio by splitting your investments, it’s called asset allocation and is dependable on your risk tolerance. There are many ways in which you can diversify, from low, medium, and high risk allocation meaning everyone will have a different approach. 

Legendary investor Warren Buffet uses the 90/10 rule, in which he allocates 90% of his portfolio to stocks and 10% to bonds. While this has worked extremely well for him, it’s considered high risk due to such a large stock market weighting. A common rule of thumb is known as ‘the 100 minus age’ rule. The rule is simple, minus your age from 100 and whatever the number you are left with is how much to invest in stocks, the remainder in bonds. 

It’s a popular approach because bonds are considered to be lower risk than stocks, meaning a younger investor has more flexibility to withstand stock market swings. A 30-year-old investor would allocate 70% of their portfolio to stocks and 30% to bonds according to the rule. 

Asset allocation is a personal choice which mostly depends on the investors risk appetite. Investors who are willing to take on more risk may want to include speculative investments, such as cryptocurrencies and penny stocks into their portfolios.

Compare the best place to invest £10,000

To start investing you’ll first need to open an account with a broker. Below you’ll find a list of our expertly selected brokers. Click through to the links to get started straight away.

1
Min. Deposit
$10
Promotion
User Score
10
Trade/invest in stocks with just $10
Deposit with ACA, Wire, Pay with my bank
Invest for dividends and get payout on stocks on Ex-Dividend day
Start Trading
Description:
eToro is a multi-asset investment platform with more than 2000 assets, including FX, stocks, ETF’s, indices and commodities. eToro users can connect with, learn from, and copy or get copied by other users. Buying stocks on eToro is free and you can invest with as little as $50.
Payment Methods
Bank Transfer, Wire Transfer
Full regulations list:
CySEC, FCA
Investoo Ltd is compensated if you access certain of the products or services offered by eToro USA LLC and/or eToro USA Securities Inc., as applicable. This compensation incentivizes Investoo Ltd to describe those products and services in favorable terms. Any testimonials contained in this communication may not be representative of the experience of other eToro customers and such testimonials are not guarantees of future performance or success.
2
Min. Deposit
$0
Promotion
User Score
9.3
$0 commission and $0 Options contract fees
Upgraded research with advanced charts
Smart Menus for faster trades
Start Trading
Description:
Firstrade is a leading online brokerage firm offering a full line of investment products and tools designed to help investors like you take control of your financial future. Since its founding in 1985, Firstrade has been committed to providing high value and quality services to help you reach your financial goals.
Payment Methods
Full regulations list:

Where to invest £10,000

From the stock market to rare stamps, the investment world can be a daunting place and a minefield of information. That’s why our experts have highlighted some of the areas you could split your investments between. It’s up to you what to do, with the list below offering a few suggestions and explanations to get you started. 

  • Stocks and shares. Buying stocks and shares is a way to own part of a publicly traded company. While there are many risks associated with the stock market, a diverse portfolio of holdings can help mitigate volatility and risk. From blue chips to penny stocks, investors can play it safe or speculate. 
  • Investment funds. If you’re not comfortable with picking your own stocks, investment funds may be a good option. They are run by fund managers who invest large sums of money in the financial markets. Investing in funds is a great way to diversify and follow the advice of experts. 
  • Bonds. Bonds are often used as a way to balance out risk over the long term and are a useful addition while building a portfolio. In its most simple term, a bond is a loan to a government or company. For loaning this money, investors are repaid by way of a fixed rate of interest.
  • Commodities. Investing in commodities is a popular choice for many and should be considered while investing. Commodities are natural products that include things like gold, silver, and oil. Gold in particular is the most popular commodity investment type and is held by central banks around the world. 
  • Property. With £10,000, it will be difficult to invest in a property as prices are too high. However, turning to real estate is still an option even with a lesser amount of money. One way is through investing in a REIT (Real estate investment trust). Similar to investment funds, investing in a REIT is an easy way to get exposure to the property sector.
  • Cryptocurrency. In the past decade, the rise of cryptocurrencies has emerged. They are now some of the most invested in asset classes and are popular amongst speculative investors. The crypto market is complex and is probably not suited to a novice investor. However, with the monumental gains on offer, it could be a wise decision to allocate a small portion of your portfolio to the largest coins.
  • Others. The above six investment choices are generally the most popular way to build a well balanced portfolio. However, the options available for investment are much more expansive. It is possible to invest in things like rare wines, stamps, collectables, and private equity. Another popular choice for many is short term trading in things like currencies and crypto. Although these types of investments are best left alone until your money and experience grows.

What to consider before investing

Should you invest

Your decision to invest will largely depend on your own finances and if £10,000 could be put to use elsewhere. You may want to consider your personal circumstances, for example: are you moving house? Having a baby? Riddled with credit card debt? There are just a few things you could use £10,000 for instead of investing it.

Why are you investing

Everyone will have different reasons for investing, although making money is often the number one. But what you should think about is your end goal. Are you investing for a better retirement? Saving for a house deposit? For your children’s education? The list is endless but important. Your end goal will impact your investment timeframes and approach. 

Timeframe

Following on from the section above, your investment time frame is an important factor to consider. If you’re 30 years away from retirement for example, you have a lot more flexibility in building and growing your portfolio at a relaxed pace. If, on the other hand, you’re saving for your child to go to university in the next few years, you’ll likely need to take on more risk. 

Appetite to risk

Every investment carries an element of risk, although some are less risky than others. Your own tolerance to risk will impact your decisions and it’s vital to be honest with yourself. For a risk averse investor, it is a good idea to diversify your portfolio, while an investor with a higher risk tolerance may be more speculative in what they do. 

Your Expectations

While not impossible, it’s unlikely you’ll turn your £10,000 into millions in a short period and it’s key to manage your expectations. By being realistic in your goals, you’ll be less prone to making mistakes. A common phrase often associated with investing is, ‘time in the market is better than timing the market’. Patience while investing usually pays better than aiming for quick returns. 

Is £10,000 a good amount of money to invest?

Yes it is a good amount of money to invest. But you should be comfortable with leaving your investments for at least five to ten years. It is also wise to reinvest any profits in order to see sufficient growth and take advantage of compounding. Above all, it is critical to diversify and have another source of income. 

Recap

£10,000 is a great amount to get started with when investing, but it’s not quite as easy as buying stocks and collecting profits. Building a balanced portfolio is crucial to successful investing as is diversification. 

The biggest and fastest gains can come from highly speculative markets such as cryptocurrencies and penny stocks. However, investing all of your money into such assets would be inadvisable and you should only invest in them if you’re happy with the large risks involved. 

Taking your time and conducting your own research while deciding what to invest in is a good option. While we’ve covered a range of investment options and asset allocation strategies, a patient approach can often provide a successful outcome. 

Investing and trading courses

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Fact-checking & references

Our editors fact-check all content to ensure compliance with our strict editorial policy. The information in this article is supported by the following reliable sources.

Risk disclaimer

Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >

Prash Raval
Financial Writer
When not researching stocks or trading, Prash can be found either on the golf course, walking his dog or teaching his son how to kick a… read more.