Where I’d invest £10k in UK shares today

Investing in UK shares can be a great way to build long-term wealth. Here’s a look at where Edward Sheldon would invest £10k in the stock market right now.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

If I was investing £10,000 in UK shares today, I’d have plenty of options. The UK stock market offers everything from rock-solid, large-cap multinational companies to exciting small-cap growth stocks.

Here’s a look at where I’d invest if I was putting £10,000 into UK shares right now.

Strong and stable UK shares for capital preservation

I’d start by allocating some of my capital to strong and stable dividend-paying FTSE 100 businesses.

The reason I’d start with these types of stocks is that economic uncertainty is very high right now. So, it’s sensible to think about risk, not just return. After all, one of the keys to being a successful investor is preserving capital. Just ask Warren Buffett. He says the number-one rule in investing is to not lose money.

Stocks I’d consider for this part of my £10k investment would include the likes of Unilever, Diageo, Reckitt Benckiser, and Sage. All of these UK stocks have excellent long-term growth track records and pay regular dividends. They’re also generally not too volatile because they tend to generate relatively consistent revenues.

I’d invest around 50-60% of my investment in these types of UK shares. This should protect my capital and generate regular dividends that I can reinvest.

Growth stocks for healthy gains

I’d also want some exposure to growth stocks to boost my returns. Mid-caps can be a good way to pick up growth, in my view. Companies in this area of the market are generally well established. However, many are still growing quickly. This means that, over the long run, they can potentially provide very attractive returns.

One sector I like for long-term growth is technology. Given the digital revolution we’re currently experiencing, many UK technology stocks are growing rapidly at present.

Names I like in this space include Softcat, GB Group, Keywords Studios, and Gamma Communications. All of these UK shares have done well this year. Yet I think there’s plenty of growth to come.

Softcat, for example, should benefit as businesses transform themselves digitally. GB Group, meanwhile, should grow as identity theft becomes more of a problem. Keywords Studios should benefit from the growth of video gaming. Gamma should continue to take advantage of the work-from-home trend.

From my £10k investment, I’d invest around 25-35% of my capital in these types of growth stocks.

Small companies for explosive growth

Finally, I’d allocate a little bit of capital to small-cap growth stocks. These are riskier. However, they can also provide more explosive returns. The key, in my view, is to focus on companies already profitable and to spread capital over a few different companies to limit stock-specific risk.

One company I like a lot in this area of the market is dotDigital. It’s a fast-growing marketing automation company that’s benefitting from the growth of e-commerce. Another I like here is Alpha FX. It helps businesses with foreign exchange hedging.

I’d allocate about 10-15% of my investment to these kinds of smaller, high-growth UK shares.

A solid mix of UK shares

Overall, this kind of strategy should provide me with a nice balance of UK shares. The large-caps should provide portfolio protection, while the growth stocks and small-caps should provide long-term growth.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon owns shares in Unilever, Diageo, Reckitt Benckiser, Sage, Keywords Studios, Gamma Communications, Softcat, GB Group, dotDigital, and Alpha FX. The Motley Fool UK has recommended Alpha FX, Diageo, dotDigital Group, Keywords Studios, Sage Group, Softcat, and Unilever. 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.

More on Investing Articles

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »

Investing Articles

3 ideas to help investors aim for a million-pound Stocks & Shares ISA

The UK has a growing number of Stocks and Shares ISA millionaires, and this plan may be one of the…

Read more »

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »