If you’re looking to invest £100k, or any other major sum, then lucky you. You can generate serious wealth with that kind of money. You’re doubly lucky because I reckon today is a good time to invest £100k, or any other sum. Why? Because I’d much rather invest after a stock market crash, than before one.
The crash in March was brutal, as Covid-19 plunged the world into social and economic lockdown. The FTSE 100 fell by around a third. It has since picked up, but UK shares still trade nearly 20% lower than at the start of the year.
This makes now a great time to pick up top stocks at bargain prices. I wish I was able to invest £100k now.
Stock market crash has benefits
We live in an uncertain time. The world is hurtling into depression, thanks to the pandemic. While some talk up a V-shaped recovery, others are wary. Stock markets are likely to remain volatile for some time. They could drift lower.
But none of this should put you off investing your windfall. In fact, it could work in your favour.
The first thing to do is take your time. £100k is a lot of money. There’s no need to rush. If your money is in the bank, ensure it’s protected under the Financial Services Compensation Scheme. This guarantees the first £85,000 with one bank. For full protection, you may need to shift some of the money to another bank. Read up on the rules.
I believe the best way to invest for the long-term is in stocks and shares. Ultimately, they should deliver a better return than rivals such as the Cash ISA, Bitcoin, or a buy-to-let property.
Stock markets offer the unbeatable combination of capital growth if share prices rise, and dividend income from shareholder payouts. In the long run, they beat almost every other asset class. In the short term, they are volatile. That’s why I wouldn’t invest £100k in one go.
Instead, I’d start feeding money into today’s stock market on a regular basis. That protects you from a sudden crash. If share prices fall after you’ve put some money in, don’t panic. Simply invest another chunk of your £100k at the lower price.
Here’s how I’d invest £100k
While everybody should keep some money on easy access to cover three-to-six-months of everyday spending for emergencies, your long-term wealth should go into shares. You could dip your toe in the waters by investing in a FTSE 100 tracker, such as the iShares Core FTSE 100 ETF.
As your confidence grows, you could build a portfolio of individual FTSE 100 stocks to generate higher income or faster growth. Invest little and often, with the aim of holding your money in the market to retirement and beyond. You should never invest money you may need in the next five years.
Looking to invest your £100k in shares? Try these…
Markets around the world are reeling from the coronavirus pandemic…
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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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