The Motley Fool

Forget Cash ISAs and buy-to-let! I’d make a million from £10,000 like this 

Image source: Getty Images.

The FTSE has had a rocky start to 2020. It started with tensions between the US and Iran that could easily have escalated. Coronavirus and its attendant risks slowed down global business shortly afterwards, and continue to do so. As a result, the post-general election gains have been all but wiped out. 

Cash ISAs carry hidden risk 

At times like these, it’s most tempting to consider other popular investing options like Cash ISAs and property. Neither is without its challenges though. Consider Cash ISAs. A few offer an interest rate of 1.5% at the most right now. The inflation rate, based on consumer prices, was at 1.4% in December. So if I put my money in a Cash ISA, I barely earn a return in real terms. This is because prices have risen almost as fast as the interest rate (and faster than the lower rate offered on some Cash ISAs). So, I am no better or worse off than I was at the start of the year. And what if the inflation rate were to rise even higher (like it did in January)? Then investing in a Cash ISA actually reduces my real income.  

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Buy-to-let may be a let-down 

Now consider buy-to-let property. According to news reports, landlord numbers have hit a seven-year low in the UK, as have the number of privately rented homes. Increased taxes and lower incentives have made property purchases less attractive. This adds to the potentially extensive time and effort required to buy a property in any case. With some signs of a pick-up in the property market, it might look like a good idea. But I would prefer to consider alternatives as well. 

The rising stars 

Let’s start with an amount of £10,000, which is a reasonable amount to consider as a downpayment for a property purchase in some areas. Can I make a million investing in the stock market instead? The answer is yes, but investing in high-performing stocks is key. Online retailer Ocado, whose share price has tripled over the past five years and JD Sports Fashion, which earned a place in FTSE 100 last year, are good examples. My capital can appreciate to £1m in 25 to 30 years if these stocks continue or even slow-down slightly from their past performances.

The catch however, is that it’s easy with hindsight. It may not be as easy to make timely stock purchases without the benefit of hindsight. But I would keep an eye out for high-performing FTSE 250 stocks, which may well be among FTSE 100 constituents in the future. It’s a good idea to to assess my portfolio for the best possible returns every few years. This gives me the opportunity to buy some of these stocks when they-re still on a steep rising curve, while selling any under-performers.  

Providing a cushion 

It’s also advisable to hold shares that provide steady growth and have shown stability over the years, in case some investments don’t yield the desired returns. FTSE 100 shares are a good place to look for these. Drinks giant Diageo is one example. Property developer Barratt Developments is another. A combination of high growth and stable stocks, should hold us in good stead.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo. 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.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.