There might be a common misinterpretation that being involved or starting investments would require for you to have a large capital to start with, but that is not always the case. Most may not be aware of it but you could actually start investing your money even if you have just managed to earn a bit of cash for a year or two. Now there will be a lot of channels in which you could open up an investment, but what is actually the best way to invest 10k for 5 years? You may think that you would only get a small return because your initial is not that much, but if you find the best channel to get maximum returns with just a minimal risk, then the value of your money will be really financially beneficial in the next years to come. You just have to be really smart about your investing decisions and you will be on your way to a financial win!
ROI Higher Than Annual Inflation Rates
The inflation rate for 2019 is 1.8%. Inflation refers to the amount goods, services, or the cost of living has risen compared to the average prices in the previous year. Meaning to say, if you have a tally of your expenses last year and it amounted to £10,000 – your current cost of living for this year would rise up to £10,180. When you look it at it, you can see that you pay £180 more for the exact same goods and services. When you invest your money, it would be tied up for a couple of months the least or a couple of years most of the time for it to incur income. So if your investment has a tie up of at least two years, you better choose the investment channel that would give you an earning interest rate of at least 3.6% to at least cover the inflation rate for the next two years to come.
You might think that banks are a great channel for you to earn income on your £10,000 cash on hand because of how steady and safe your money might be without any added risk – you have never been more wrong. The lowest earning interest rate you could get from banks is only around 0.75% and the highest would be around 2%. If you leave it there for a year, you would barely earn enough to cover the inflation rate if you are lucky but if the interest rate you would get is under 1.8%, then the value of your money would just drop within a year, and that is if you do not touch the whole amount. Meaning, it is just like money under your mattress, you would not have any use of it while it is earning peanuts.
Get a High Return Investment with Minimal Risks
If you have available £10,000 cash with you and you want high returns with minimal risks and no work done, then investing it in buy to let cars could be your best bet. Even if a unit to lease out costs £14,000, you could still invest your £10,000 but of course you would earn a bit less for the whole investment compared to if you would if you invested in a unit already. With buy to let cars, you would be able to incur an average interest rate of 7% per year! Imagine earning roughly 5.2% more than the annual inflation rate. Not only will your money greatly increase in value per year, but you would be able to have extra money at the end of each year even with the inflation rate already accounted for.
If you invest your £10,000 in banks or in fixed investment schemes such as bonds or stocks, you would have to tie your money in as a whole for years. You are lucky if the lock-in period for your investment would only be two years or even a year. But more often than not, it requires three or more years before you get your money back in full with the interest earned. With buy to let cars, you would be able to have financial flexibility because of how the repayment of your investment is designed. A monthly repayment will be done for 36 months until you get most of your investment back, and a gross final payment will be given so that you not only fully recover your money, but as well as get the interest earned over the three years of investment. Without doing anything, you would be able to earn passive interest income at the end of three years and at the same time, you have the option to spend your monthly receivables any way you like. A smart move would actually to invest it again and keep the earnings rolling, right?