A new year means new opportunities, and many will likely be looking towards new sources of income.
And for those with a budget of around £30k, this means a whole spectrum of various investment strategies to consider.
This article will break down some of the most popular and lucrative forms of investment – covering things like what is good yield for rental property and how to get started with the stock market – to help you understand which route is ideally suited for your needs.
Arguably one of the best methods of securing a solid stream of passive income, investing in property allows you to earn returns through two different methods at the same time.
Looking at buy-to-let investment, in particular, investors will see a consistent cash flow of passive income through the collection of rental income from tenants each month.
According to the latest from the Rental Index, the average rent in the UK is around £1,174 per month – with many significant cities having higher average rents than the national standard.
With property being a physical asset, it rises in value over time – so investors can also see benefits from capital appreciation as time passes.
Last year, house prices across the UK rose by 12.6% on average at the end of October, showing some serious potential for lucrative returns.
With a solid sense of security that not every investment can provide, the housing market is well known for its ability to withstand severe financial and economic crises.
Investing in real estate is an excellent method of securing high returns with relatively fewer concerns about the endurance of your investment.
Property can make for a great investment in the long-term as a result of this security and a consistently higher level of returns on offer.
If you’re looking to invest £30k, one of the best ways to do so is through off-plan properties.
These are properties currently in the development process or construction stages and are typically much cheaper than traditional property investment strategies.
Not only can you purchase these properties for below-market value prices, but you can also set up payment plans to spread out the costs of investment.
This means you can use your budget to invest in property by putting down a smaller amount to secure the investment.
With this in mind, this option combines affordability and high returns with a strong sense of security, making it one of the best ways to invest £30k in 2023.
Aside from property, one of the most well-known and popular forms of investment can be found in pursuing the stock market.
Investing in the stock market allows you to buy fractions of ownership in companies, so you can earn returns based on how well they perform financially.
The more you own, the more significant your stake of ownership is, as well as the profit you’ll make from your portfolio.
However, this route is not always entirely smooth sailing.
As your yield is utterly dependent on how your chosen companies perform, if their luck suddenly runs out: so will yours.
A good way to lessen the chances of this happening is to diversify your portfolio as much as possible.
Having a diversified portfolio means spreading your money across multiple forms of companies (and methods of investment).This means that if one of your investments fails, you will not lose as much money – something which is especially helpful for those with lower risk tolerances.
Some of the most popular companies for beginners to purchase stocks from are those with continued success, such as Amazon, Google, etc., because of their consistent performance rate. The downside of this, however, is that these stocks tend to be much more on the expensive side.
Alternatively, you can choose to invest in smaller companies in the hopes that one day the value of their stock will rise.
This way, you can buy more stocks for less money – of course, at a higher risk.
Once your stocks have risen in value, you can sell to make a profit, or the company you’ve invested in may choose to give you more stocks as dividends. This way, you should be able to expand your investment portfolio over time without having to spend any more money.
There are certainly some rewards to be had in this method, but the stock market does come with its level of risks.
The value of stocks can change quickly, so you will need to consistently keep one eye on the markets or hire the use of a financial manager to manage your portfolio.
If you’re not careful, you might see your investments losing value fast before you know it.
While there is potential to make a lot of money on the stock market quickly – you could also very well lose it just as fast.
A relatively recent form of investment, cryptocurrency has exploded in popularity in recent years.
Crypto is a form of online currency with no centralised structure or organisation and supposedly offers a higher level of freedom and deregulation – unlike any other form of investment.
This means investors see faster transfer fees, a better degree of anonymity and fewer restrictions than other investment options.
Most cryptocurrencies work through a form of technology known as the blockchain.
Essentially, forms of data like transactions are contained in ‘blocks’, which are then spread out across a ‘chain’ of a large number of computers so they cannot be altered or changed.
Because there is no centralised server or location, such as with regular money, it is much harder to regulate cryptocurrency.
While there is undoubtedly far more freedom than other investment options, this isn’t always a good thing.
There are countless horror stories of investors being scammed or having their crypto wallets hacked and losing everything in the process.
Unlike other investment options where there are strict regulating bodies – there is little to no chance you will ever be able to recover any of your investments if this happens to you.
Almost all of this makes cryptocurrency one of the riskiest investment options you can consider.
That being said, with high risk comes high reward, and there is the potential to make some serious returns by investing in cryptocurrency.
In 2016, Bitcoin, the oldest and most popular form of cryptocurrency, cost around £370 for a single unit.
Now at the time of writing, one Bitcoin costs around £16538.76.
While Bitcoin is the largest and most successful platform, there are many others achieving success.
Ethereum and Tether are two other popular cryptocurrencies which have grown exponentially since their launch, even if they are not at the heights of Bitcoin.
Alternatively, like with the stock market, you could invest in a smaller cryptocurrency in the hopes that it will strike it big.
Crypto has skyrocketed in popularity for a reason: under the right circumstances, it can make you a hefty profit in a short time.
However, the market is so unstable and subject to volatility and can completely change on a whim, so you can quickly find yourself in uncharted waters.
As with all investments, you must take care to comprehensively research, evaluate, and consider your options before taking the plunge – it can make the difference between lucrative returns and spectacular failure.