When it comes to investing your money, it can be difficult to decide where to place it, especially when it’s a large sum. Choosing the right place to invest your money can completely overhaul your financial future, so it’s an important decision to make.
With £20K of savings to hand, it’s understandable you want to put your money to work and ensure you maximise your returns. But what’s the best route?
As you might have guessed, there’s no one way to save your cash and the right way to save depends largely on your situation and unique needs.
In this article, we’ll give you advice on how to invest £20K, the different options you have, why a cash management platform might be the right decision for you and how to get started.
Read on to read the full article or skip to a section below:
- Why making the right decision is so important
- Assessing your goals and risk tolerance
- How a cash management platform could benefit you
- Tips for investment beginners
- Making your money work for you
Why making the right decision is so important
It might seem self-explanatory, but making the right decision with your money is essential for your financial future and could be the difference between long-term money struggles and an early retirement.
Just a few of the right decisions can make all the difference.
Selecting the right investment for your £20K can lead to steady growth, provide income and even allow you to achieve financial milestones sooner. On the flip side, poorly chosen investments might lead to lost opportunities and financial setbacks.
Also see: Is a cash management platform worth it?
Assessing your goals and risk tolerance
Choosing the best investment stream for you isn’t just about finding the route with the highest returns, it’s also about finding out what you’re comfortable with.
Maximising your financial growth is a great way to reduce your financial stress and make life that little bit easier. However, there’s no point in letting the method you’ve chosen cause you stress and worry.
That’s why, before you make any decisions, you need to assess your future goals and risk tolerance to find an option that not only gets you closer to your goals but allows you to do it in a way you feel safe and secure.
For example, if your goal is stability and minimal risk you might consider high-interest savings accounts. These can provide steady, predictable growth without significant risk to your capital.
Or, for those seeking substantial growth and willing to tolerate market fluctuations, investments in individual stocks can offer high-reward potential. These options have higher volatility but could provide significant returns if you’re prepared for the ups and downs.
How a cash management platform could benefit you
There are many benefits of using a cash management platform, particularly if you’re looking for flexibility and some guidance on the best accounts to use.
Typically, cash management platforms offer users access to a variety of financial products and savings accounts with different features and benefits. These platforms also allow users to move their money without filling out new, lengthy sign-up forms (your initial sign-up to the platform gives you access to all the available accounts.)
Therefore, savers can not only choose the account that suits them best but also easily move their money to a new account if their situation changes. And, by using a variety of accounts, you’ll be able to diversify your portfolio and spread your risk.
You’ll also be notified of new rates daily so that you can stay on top of the best rates and move your finances if you find a better deal. Most cash management platforms even offer personalised reports, which is another key benefit as it allows businesses and individuals to tailor financial reports and analytics to their specific needs, providing clearer insights and better decision-making.
And finally, cash management platforms provide centralised control, which enables businesses and individuals to manage their cash flow and accounts all in one place, improving efficiency and reducing the risk of errors or oversight.
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Tips for investment beginners
Even with all the help in the world, the idea of investing for the first time can feel daunting. And, while no one can take away that feeling of apprehension, there are a few ways you can make yourself feel more confident going forward.
Firstly, focus on diversification by spreading your investments across a range of financial products. Not only does this technique reduce risk since your money is spread across a range of accounts, but you’ll also be covered by FSCS protection for up to £85,0000 per individual account (providing they’re owned by different financial institutions). That way, if you’ve got more than £85,000 saved, you’re still covered.
At the start, you should also make sure you’re investing consistently. It can be tempting to go slowly at the beginning, but taking a consistent approach to your investments can ensure you’re always getting the best deals and never missing out.
Staying informed and doing your research to learn basic investment concepts, such as compound interest, market trends, and asset allocation, can also improve your confidence in your financial decisions.
And, lastly but most importantly, avoid emotional decisions. Emotions can be a strong force, but they’re not always pulling you in the right direction. Stick to a plan and don’t make any impulsive changes to it.
Making your money work for you
At the end of the day, there isn’t a one-size-fits-all answer to managing your cash savings. However, for many people (whether you’re new to investing or not) cash management is the most advantageous decision and the simplest way to make your money work for you.
Cash management platforms can offer great returns and opportunities as well as a greater level of flexibility and control over your finances.
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