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Where to invest £100k today?
Comments
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Well in your case as high tax payer id suggest either TG31 (4.5% return tax free in 5 years) or TG35 (5% return in 9 years):
I think HL charges for keeping investments there so I'd consider buying it elsewhere - Barclays.
The price of them will be going up and down over time - but what matters is the maturity date - thats when government will pay you £100 for each of these gilts, and 1 TG35 costs now about £68.
And it's a guaranteed £145k from £100k invested (after 9 years).
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For money you can keep invested for 10 years, then it seems like you could do better than your previous experiences with bank investments by opting for a multi-asset fund. These are broadly diversified investments designed to be held in isolation, so there isn't a requirement to split your money between multiple options. You can find some information and suggestions at
You may wish to hedge your bets and put some of your money into a gilt or two as suggested by @Newbie_John
There are also index linked gilts to consider if you want something that grows a defined amount above inflation, which can be handy. Over 10 years you can get close to 2% above inflation, which is a good deal if inflation is above 3% over that period. Like all gilts, you only lock in a specific return if you hold to maturity - if you sell earlier, then you could do better or worse.
The long term average return from a medium-high risk multi-asset fund is more like 3% above inflation, but is not guaranteed and could end up being higher or lower for you, so it is worth weighing up whether that risk is worth it and for how much of your lump sum.
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Pls correct me if am wrong, the 100k becomes £145k meaning 45% in 9 years, ie: 5% per year; makes it similar to the banks 4.9% fixed rate bonds?
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You say you're a higher rate taxpayer so because with low coupon gilts most of the return will be tax feee it'd be far better: 4.9% - 40% tax = 2.94%. You need to think about the net return.
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check the gross column here:
and follow logic that high coupon for ISA (taxed as interetsts ) low coupon outside - the gain is tax free
the price changes a lot over years, if you invest £100k now it may be worth £150k (if interest rates drop to 1%) or worth £50k if interest rates go up to 10%.. what's guaranteed is that at maturity for every gilt bought you will get £100. So if it costs £80 now that £80 will be £100 tax free. Then there are also coupons of 0.25% paid twice a year.. they're taxable.
You can sell earlier if you wish, no need to keep to maturity - but as said - the price in a year time can be very different.
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Yes, that's what makes low coupon gilts attractive, and the changing yields is irrelevant provided you intend to hold til maturity. However you do not benefit from the compounding on that £100k that you might expect in a 4.9% ISA I guess. where in the final year over a 10 year investment you could earn 4.9% on approx £161k, not just £100k.
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The annualised yield to maturity is equivalent to interest which is then compounded, the only variation is due to price changes at point of coupon reinvestment.
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Personally, I think it can be sensible to divide your funds into three parts.
One portion could be allocated to higher-risk, higher-return investments for long-term growth. Another could be placed in lower-risk investments or savings products that provide more stable returns. The remaining portion could be kept as an emergency fund in a bank account, ensuring you have readily available cash for unexpected expenses.
In my view, this type of diversification offers a more balanced approach. It provides opportunities for growth while helping to reduce overall risk and improve financial resilience.
I've also been following Elon Musk's upcoming X Money platform with great interest. Based on the information released during the current testing phase, it is expected to offer features such as around 6% APY on eligible balances and up to 3% cashback on qualifying card purchases. As the product is still in beta, the final terms, eligibility requirements, and availability have not yet been officially confirmed.
If the final product launches with terms similar to those currently being tested, I believe it could become an attractive option for managing cash. Personally, I'm looking forward to its official launch.
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Sorry I am not familiar with gilts. which of the return is tax free? The investment will be held outside ISA wrapper, I understand the incomes from coupons and % yield are taxable.
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Capital gains on gilts and "qualifying" corporate bonds are tax free. The flip side is is that capital losses on these cannot be used to offset taxable gains made elsewhere.
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