10 min Read
11 Jun 2015

Written by Damien

Damien is one of the most widely quoted money and investment experts in the national press and has made numerous radio & TV appearances. He created MoneytotheMasses.com while working in the City when he became disillusioned with the way the public were left to fend for themselves because they could not afford financial advice.

More about Damien

What to do with £100,000 cash

What to do with £100,000 cash

isa allowance 2014/15One of the most popular questions I'm asked is 'What should I do with £100k cash?'. For some people it may be they've suddenly inherited the £100,000. For others they may have taken £100k from their pension pot. Or quite simply it could be the culmination of years of savings. For all of these groups they are looking for the best return on their £100k cash.

So in this article I detail what your options are and how to get the best return on your £100,000. The £100,000 figure is somewhat arbitrary and the advice below is the same if you have £50,000, £100,000, £200,0000 or even £1 million. I explain the various options available to you and highlight the best places to go for further information.

The best bit of advice if you have £100,000 cash

When people have a large sum of money they automatically want to do 'something' with it. By that they automatically mean something other than leaving it in cash. A piece of advice from someone who has built financial plans for people in your situation.... take a breather.

If you happen to come into a large sum of money, perhaps from inheritance, then take a while to get used to the idea. Take your time and think about how the money can be of most help to you and your family. There is no rush to do anything and be wary of people trying to push you into doing something with the money. In the meantime it makes sense to get the best rate of interest on your £100,000 cash until you decide if you want to do anything else with it.

Getting the best return on £100,000 cash

Of course for some it may be that they want to leave the £100,000 in cash by depositing it in a bank or building society account. This is a risk free option, provided you are mindful of the Financial Services Compensation Scheme which I will come on to. Of course, current low interest rates mean that returns are on the low side. If you really want the best interest rate on £100,000 cash you are unlikely to achieve that by using just one savings account

I have written a detailed step by step guide - Best savings account for £100,000 which points you to the best rates for your savings together with details of the Financial Services Compensation Scheme (FSCS) and a brilliant service, which I've personally vetted, that takes the strain out of getting the best interest rate.

Investing the £100,000

If you are happy with taking more risk with the money, that is you are comfortable with the fact you could get less than you initially invest, then investing the £100,000 is viable option. By investing the money you have a great potential to get a better return as well as the chance of losing money.

Your attitude to risk will determine the sort of assets (i.e. property or shares for example) that suit you. Download this FREE investment guide to investment risk and reward. It's one of the best I've come across on the subject. Once you've downloaded it (it's FREE) flick to page 12 where it explains the risks involved in investing your money.

Then go to page 14 of that guide and answer the 7 questions to help assess your risk profile. Once you've done this you will have a better idea of what you will be comfortable investing in.

Assuming that you are comfortable taking some form of investment risk you need to decide if you want to use the money to generate an income or you simply want it to grow as big as possible (investing for growth) or a combination of the two. I deal with each of these in turn below:

Investing £100,000 cash to generate an income

If you are looking to generate an income from your £100,000 the there are a number of options available for you with varying degrees of risk and potential return. These options are detailed in our article - Where should I invest £100,000 to generate an income?

Investing £100,000 cash for growth

Investing in growth will mean that you favour assets that do not necessarily generate income. That means that your money can benefit from the effect of compounding, whereby as your money grows you get a snowball effect and your pot grows quicker and quicker in monetary terms.

Have a read of my article Where should I invest £50,000 for the best return? As mentioned earlier the principle still holds for sums of money over and above £100,000 as well. In that article I even explain how I personally invest my own money.

Investing in funds

Whether you choose to invest for income, growth or both the most sensible approach would be to invest via funds, rather than buying the asset directly (i.e shares). Investment funds allow you to invest in a range of assets which otherwise would be inaccessible to ordinary investors because of the economies of scale. An armchair investor can invest their money in a range of funds within their pension or even a Stocks and Shares ISA. As such one such fund might invest in commercial property (office blocks) while another of their chosen funds might invest in shares of UK companies. Funds help reduce the risk to you, allow to invest in a range of asset types and are easy to manage.

I suggest that you download this FREE guide to investing in funds which tells you everything you need to know. Once you've downloaded it skip to page 4 for a fuller explanation of what a fund is. Then look at page 9 for the types of assets you can invest in via funds and page 11 for an idea of historic returns.

I also recommend that you read the following articles which are packed full of information:

Investing £100,000 cash in buy-to-let

Many people consider buy-to-let property as a home for their money but they need to be aware of the potential pitfalls.  I would encourage you to read our article - Is buy-to-let the right investment for you? This article is written in the form of questions and answers which will help you decide if buy-to-let is the right investment for you. If you are keen to invest in a buy-to-let I would encourage you to have a browse around our buy-to-let section of the website where you will find numerous articles on the subject.

Also read the following articles:

Starting a business with £100,000 cash

You may be interested in starting a new business with the cash you have available. Maybe you have a hobby or a great idea you can develop into a profitable business. However, this is not for the faint-hearted. But if you have the drive and determination then why not live the dream.

Start by reading our articles on the subject:

Looking for a financial adviser near you?

Do you need financial advice? An independent financial adviser can show you how to make the most of your money.

Simply find your nearest qualified and regulated adviser using the UK’s largest adviser search.