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How to Invest £40k UK – Best Investments Revealed

With banks in the UK still paying rock-bottom interest rates – it’s worth considering other investment options.

If you’ve got £40k to invest, you might consider the likes of index funds, stocks, ETFs, ISAs, or even gold. You do, however, need to ensure that your chosen investments are right for you and your financial goals.

In this guide, we explore How to invest £40k UK in 2021. We also explain how to find a suitable asset class yourself and what you need to do to get started with an investment account today!

Top £40k Investments 2021

Here’s a rundown of the main asset classes you might consider when looking at how to invest £40k UK. By scrolling down, you can read our full analysis of the best investments we like the look of.

  1. Stocks – Top stock markets to focus on include the FTSE 100, NYSE, and NASDAQ – Invest Now
  2. ETFs – ETFs allow you to diversify and invest in index funds, bonds, and dividend stocks  – Invest Now
  3. Commodities – To hedge against the stock markets and rising inflation – consider gold and silver
  4. ISAs – By opening an ISA – you can invest in a tax-efficient manner

Best Ways to Invest £40k UK

Make no mistake about it – a £40k lump sum is a lot of money to invest. That isn’t to say you should leave it in a savings account to earn a mere 1% per year.

On the contrary, the trick to ‘smart investing’ is to create a highly diversified portfolio that covers a range of assets and markets. This will give you the best chance possible of growing your £40k in a risk-averse manner.

To help point you in the right direction, below we discuss the best ways to invest £40k UK.

Stocks

Many investors in the UK will focus exclusively on stocks and shares. The main idea here is that you will be looking to invest in companies that you believe will grow over the course of time.

In turn, you’ll want to see the value of your shares rise so that you can sell them for more in the future. Along the way, you might even be able to collect some dividend payments – should the respective company pay them.

There are tens of thousands of stocks at your disposal from a variety of exchanges, markets, and sectors – which we elaborate on in more detail below.

UK Shares

If you feel more comfortable investing in UK companies – there are two stock exchanges that dominate the market. First, you have the UK’s primary marketplace – the London Stock Exchange.

This is where you will find some of the biggest UK companies – such as:

You might have also come across the FTSE 100. This is the UK’s main stock market ‘index’, and it covers the 100 largest companies that are listed on the London Stock Exchange. As we cover this later on, you can invest in all FTSE 100 stocks via a single trade when buying an ETF.

The second UK stock exchange that you might consider is the Alternative Investment Market (AIM). This is an exchange for smaller companies that are not quite big enough to list on the London Stock Exchange.

Some examples include:

  • Burford Capital
  • Hutchinson China Meditech
  • Abcam
  • Boohoo.com
  • Fevertree Drinks
  • Blue Prism Group
  • Plus500
  • Jet2

As companies on the AIM are either up-and-coming or possess smaller market capitalizations – both the risks and upside potential are much higher. As such, if you do consider investing in some AIM stocks – you’ll want to keep your stakes very modest. Once again, this is all part of building a diversified portfolio for your £40k investment.

US Shares

Although there are many so-called cheap stocks on the London Stock Exchange and AIM at present – it might be worth having a much larger focus on US-listed shares.

Crucially, this is because the US stock markets have historically performed much better than the FTSE. This was fully evident when you consider the recovery of both the NYSE and NASDAQ after the coronavirus pandemic sell-off last year.

Some of the most popular US stocks that you might consider adding to your portfolio include:

As a UK investor, it’s now super easy to buy US stocks online. In fact, as we cover later on, brokers like eToro allow you to invest in US-listed shares without paying any commission.

Dividend Stocks

On top of the specific marketplace – you also need to consider the type of stocks you are investing in. One such example is dividend stocks.

Put simply, these are stocks that have a good track record of paying dividends – which are usually paid on a quarterly basis. This allows you to earn income in two forms. After all, not only will you receive a dividend payment every three months but you’ll make money when the value of shares increases.

If this sounds of interest, it might be worth focusing on Dividend Aristocrats. This is investment jargon for companies that have not only paid a dividend every quarter for 25 consecutive years – but have continuously increased the size of their payment.

There are dozens of such companies that are now part of the Dividend Aristocrat club. The longest-standing members can be found below – alongside the number of consecutive years they have increased the size of their dividends.

Dividend Stock Years
3M 57
Coca-Cola 57
Colgate-Palmolive 57
Dover 57
Emerson Electric 57
Genuine Parts 57
Johnson & Johnson 57
Procter & Gamble 57
Stanley Black & Decker 52
Hormel Foods 51
Becton, Dickinson & Co. 48

Interestingly, all of the dividend stocks above are listed on the NYSE. As we cover shortly, you can actually invest in all Dividend Aristrocat stocks via a single trade when opting for an ETF.

Growth Stocks

It’s also worth considering some growth stocks when looking at how to invest £40k UK. For those unaware, these are stocks that are still relatively young and thus – are growing at a much faster rate than established entities. This does, of course, allow you to target above-average market gains.

To give you an idea of some of the best-performing growth stocks of 2020 – check out the list below:

  • Tesla – 743%
  • Etsy – 302%
  • Square – 282%

You might be surprised to see such large financial gains in a year that was dominated by the pandemic. However, this shows that by selecting the right stocks from the right sector or industry – gains are possible even when the wider markets are down.

On the flip side, growth stocks do come with more risk – as you are potentially investing in an unproven business model. Additionally, many growth stocks are arguably overvalued – as the respective share price is based on potential future earnings.

IPOs

Initial Public Offerings – or IPOs, allow you to invest in a company at the very start of its stock exchange journey. In other words, this is the process that sees a company go from a ‘limited’ to ‘public’ status. In turn, once the IPO has concluded, the shares are available to buy, sell, and trade with ease.

Now, the main benefit of investing in an IPO is that oftentimes – you will be purchasing the shares at a favorable price. For example, many IPOs result in the respective stock finishing the first day of trading in double-digit gains.

One of the most successful IPOs of 2020 was Airbnb – which joined the NASDAQ in December. Listed at an initial price of $146, the stocks have since breached $219 in just a couple of months of trading. Looking forward, the most anticipated IPO of 2021 is Coinbase. This platform is the largest cryptocurrency broker globally with a customer base of more than 35 million investors.

If you thinking about investing some of your £40k into an IPO – you will need to find a suitable broker. Hargreaves Lansdown – although expensive, is probably the best platform for this purpose. Alternatively, commission-free broker eToro usually offers newly listed IPO stocks as soon as they hit the exchange.

Fractional Shares

If you’re wondering how to invest £40k UK into the stock market in the most risk-averse way possible – then fractional shares are well worth considering. Put simply, fractional shares allow you to buy a ‘fraction’ of a stock. This is particularly useful when buying shares listed in the US – which often cost hundreds of pounds each.

  • For example, when using FCA-broker eToro – you can invest any amount of your choosing as long as you meet a $50 minimum (about £35).
  • This means that instead of investing $700 into one Tesla stock, you can buy just a fraction.
  • For instance, if you met the $50 minimum and the stocks were worth $700 – you would own just over 7% of a single share.
  • Your profits and losses would remain the same – but at a proportionate amount.
  • For example, if Tesla stocks increased by 20% – your $50 investment would then be worth $60.

Ultimately, although you shouldn’t invest all of your £40k into the stock market – if you did, this would allow you to purchase more than 1,000 individual shares.

ETFs

Exchange-Traded Funds – or ETFs, allow you to invest in dozens, hundreds, or even thousands of financial instruments through a single trade. The main purpose of an ETF – which is backed by financial institutions like iShares, BlackRock, Vanguard, and SPDR –  is to track a specific marketplace like-for-like.

  • This might include a stock market index, dividend stocks, or a commodity like gold. This means that there is an ETF to suit investors of all shapes, sizes, and risk levels.
  • As the ETF fund manager will personally buy the underlying assets, this allows you to invest in a passive manner.
  • Best of all, ETFs are listed on public stock exchanges like traditional shares. This means that you can enter and exit the market at any time. The value of your ETF investment will depend on how well the respective assets are performing. For example, if the ETF tracks dividend stocks and the companies are performing well – the value of the ETF will naturally increase.
  • Plus, if the underlying assets within the portfolio pay dividends or coupon payments – you will be entitled to your share.

Now, there are thousands of ETFs that you might consider investing some of your £40k into – so you’ll need to do a bit of research before taking the plunge. Nevertheless, to give you an idea of what options you have, below we list some of the best ETFs in the market right now.

Note: All of the ETFs listed below can be investing in at eToro from just $50 – commission-free. 

Vanguard S&P 500 ETF

This ETF is ideal if you want to gain exposure to the US stock market. Put simply, the ETF is tasked with tracking the hugely popular S&P 500 index. For those unaware, the index is home to 500 of the biggest companies in the US. This includes everything from Amazon, Apple, and Facebook, to Visa, Johnson & Johnson, and Tesla.

The best thing about this ETF is that through a single investment – you are essentially buying all 500 stocks on the index. Your investment into each S&P 500 stock will mirror its respective ‘weighting’.

For example – as you can see from the image above, Apple has a 6.70% weighting, while Microsoft stands at 5.60%. So, if you invested, £40k into this ETF – you would essentially own £2,680 worth of Apple stocks (6.7% of £40k) and £2,239 of Microsoft stocks (5.6% of £40k).

These weighting percentages are usually readjusted every three months to ensure they reflect the wider US stock markets. You don’t need to do anything personally – as this is taken care of by the ETF provider – Vanguard. Additionally, many stocks in this ETF pay dividends – so you stand the chance of earning income in two forms.

In terms of financial returns, the S&P 500 has averaged annualized gains of approximately 10% since it was launched in 1926. You would, however, need to hold on to this ETF for at least five years to ensure that you do not exit the market at the wrong time. After all, the S&P 500 will go up and down in value in direct correlation to the health of the economy.

iShares FTSE 100 ETF

If you are more interested in UK stocks, then you might want to consider an ETF that tracks the FTSE 100. There are many providers in the market to choose from – albeit, iShares is probably the best option on the table.

By investing in this ETF, you will be buying all 100 shares that are listed on the FTSE 100 index. Just like we discussed in the section above – the ETF will be weighted.

FTSE 100 ETF

As you can see from the image above, Uniliver carries the largest weight at 5.46%, while HSBC and AstraZeneca stand at 5.13% and 5.08%, respectively. As such, if you invested the full £40k into this ETF – you would own just above £2,000 in each of the three companies. Much like the S&P 500, many companies on the FTSE 100 pay dividends.

Vanguard FTSE Emerging Markets ETF 

While many investors in the UK focus on markets in strong economies like the UK and US – there are other global opportunities that you might consider.

At the forefront of this is the emerging markets in regions such as South East Asia and South America. Accessing these marketplaces as a retail client can be difficult – which is why an ETF is the best route. After all, the ETF provider will have a billion-pound war chest – meaning that it can access markets that the Average Joe would otherwise find challenging.

Perhaps the best option in this respect is the Vanguard FTSE Emerging Markets ETF. Put simply, by making a single investment into this ETF – you will be buying over 1,800 stocks – all of which are located in the fast-growing emerging economies.

FTSE Emerging Markets UCITS ETF (VFEM)

As you can see from the image above, more than 45% of the portfolio is invested in China. This includes huge large-cap stocks like Tencent Holdings, Alibaba, and JD.com. Other marketplaces that you will be gaining exposure to, Taiwan, India, Brazil, South Africa, Suadi Arabia, and Russia.

When it comes to performance, this ETF made gains of over 31% in the 2020/21 financial year. In the two years prior, the portfolio made a loss of 0.25% and 9.7%.

However, in the two years before that, gains of 27% and 30% were made, respectively. Ultimately, if you are planning to invest some of your £40k  into fast-growing economies – an allocation into this ETF is well worth considering.

Dividend Growth CopyPortfolio 

The Dividend Growth CopyPortfolio offered by eToro isn’t an ETF per se. However, it operates in virtually the same way. This is because eToro CopyPortfolios allow you to invest in a full basket of assets through a single trade. The key difference here is that the portfolio is actively managed by the team at eToro – as opposed to tracking a specific market.

This is the with the view of outperforming the wider markets as opposed to just tracking them like-fo-like. The Dividend Growth CopyPortfolio is of particular value if you are looking to create a portfolio of the best-performing dividend payers.

dividend growth copyportfolio

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In fact, at the time of writing, your portfolio will consist of 40 dividend stocks from a wide variety of sectors. This includes everything from Unilever, Johnson & Johnson, PepsiCo, Procter & Gamble, Coca-Cola, Diageo, and Franklin Resources.

Unlike traditional ETFs, there are no fees to invest in eToro CopyPortfolios. This is because the platform is commission-free and it does not charge any ongoing platform fees. As and when one of the stocks in your portfolio pays a dividend, this will be reflected in your eToro cash balance. You then have the option of reinvesting your dividends into other asset classes.

Commodities

If you’re wondering how to invest £40k UK without over-exposing yourself to the stock markets – it could be worth looking at commodities.

At the forefront of this is a store of value like gold. History has shown us that gold is often the go-to asset class for institutional investors during times of economic uncertainties. After all, this finite precious metal has held its own for over 6,000 years. There are other commodities that you might also consider – like silver and oil.

To help point you in the right direction, below we explore the most popular commodity trading investments in the UK.

SPDR Gold ETF

If you are looking to hedge against the stock market by investing in gold – you don’t need to buy physical coins or bars and store them at home. Instead, you can invest in gold via an ETF at the click of a button. In doing so, your investment will rise and fall in direct coloration to the global price of gold.

The best gold ETF in this respect is offered by SPDR. In fact, this is the largest physically-backed gold ETF globally. Like all ETFs, this is listed on a public stock exchange (NYSE Acra), so you can exit the market at any given time.

SPDR GOLD ETF at eToro

This is crucial, as when you invest in physical gold yourself, you would need to sell it in-person. In doing so, not only would you need to sell the full amount – but you would get a lower rate than the current spot price.

This ETF is available at eToro on a commission-free basis – and the minimum investment is just $50. In terms of performance, it is important to note that this gold ETF is not just a hedging instrument. On the contrary, this ETF is worth 34% more today than five years prior.

SPDR Oil & Gas Exploration & Production ETF

Another commodity trading marketplace that you might consider is the SPDR Oil & Gas Exploration & Production ETF. As the name suggests, this will get you exposure to the global oil and natural gas sectors. This is because the ETF contains 41 different oil and gas companies that are publically listed.

This includes the likes of Exxon Mobile, APA, Diamondback Energy, EOG Resources, Devon Energy, and Marathon Oil Corporation. Naturally, the value of your investment will be correlated to the global price of oil and gas. After all, the higher the price, the more money oil and gas companies can make.

iShares Silver Trust ETF

Another commodity that is popular with those looking to hedge against the stock markets is silver. Although much less valuable and in demand as its gold counterpart, silver shouldn’t be discounted. After all, from an investment perspective, silver has performed really well over the course of time.

iShares Silver Trust ETF

In fact, silver has increased in value by over 475% over the past two decades. If you are bullish on silver yourself, there is no need to purchase physical coins or bars. Instead, you can once again opt for a suitable ETF. We found that the iShares Silver Trust ETF is the best option on the table – as this is physically backed by silver.

ISAs

Individual Savings Account – or ISAs, are not financial investments per se. Instead – and as the name suggests, they are accounts that you can place your investment into. The main concept here is that you can shield some of your investments from capital gains and dividends tax.

In the 2020/21 tax year, you can put up to £20,000 into an ISA. This will also be the case in 2021/22. There are several ISAs that you can choose from in the UK, including:

  • Cash ISA: This allows savers to earn interest on cash holdings without paying tax – up to the first £20,000. However, you can earn up to £1,000 in interest tax-free in the UK anyway. Plus, when you consider that bank account and building society interest rates are rock-bottom, it’s unlikely you would ever earn enough to make a Cash ISA worthwhile.
  • Lifetime ISA: This ISA is specifically targeted at those that wish to save for their first home purchase, or to build a long-term retirement pot. This is a good option, as the UK government will boost your savings by 25%. As such, for every £400 you put into the ISA the government puts in £100.  However, this is only up to a maximum of £4,000 per year – meaning you’ll have a significant amount leftover should you wish to invest £40k. Plus, if you’re not looking to buy a home the ISA might not be worth it – as there are much better retirement investment strategies available.
  • Innovative Finance ISA: This ISA allows you to lend money to approved businesses in the UK. The amount of interest on offer will vary depending on the risk associated with the loan. Crucially, the interest that you make from an Innovative Finance ISA is tax-free.
  • Junior ISA: As the name implies, this ISA allows you to create a savings plan for your children. The amount you can put into this ISA currently stands at a tax relief of £9,000 per year. Although you can transfer this ISA from one provider to another, your child won’t be able to access the money until they turn 18.

With that said, if you are looking to invest money into the financial markets – the best option for you might be a Stocks and Shares ISA.

Stocks and Shares ISA

This ISA allows you to invest up to £20,000 into the financial markets each year without paying a single penny in capital gains or dividend tax.

As such, if you’re wondering how to invest £40k UK – you might consider splitting your capital across two separate years. In other words, you could invest £20,000 in year one and the other £20,000 in year two. In doing so, all of your £40k investment would be exempt from tax.

However, it is crucial to note that a Stocks and Shares ISA is merely an account offered by UK brokers. That is to say, you will be 100% responsible for choosing which investments to make. In terms of eligibility, virtually every asset imaginable is compatible with an ISA – including UK stocks, international stocks, ETFs, mutual funds, investment trusts, corporate bonds, and more.

ISAs vs Commission-Free Brokers

Now, there are many commentators in the UK investment space that will argue that Stocks and Shares ISAs might not just be worth it. This is for several reasons, albeit, this largely centers on the fact that there are more cost-effective options.

For example:

  • When you make investments through your Stocks and Shares ISA, you will still need to pay dealing fees. If using popular share dealing platform Hargreaves Lansdown for this purpose, this would cost you £11.95 every time you add an investment to your portfolio and another £11.95 when you cash out.
  • Furthermore, you almost always need to pay an annual fee when you have a Stocks and Shares ISA. Sticking with Hargreaves Lansdown as our prime example – this would cost you 0.45% per year. Assuming after year two you had £40k invested – that’s £180 annually.
  • And then you also need to consider stamp duty – which is payable on all London Stock Exchange investments. This amounts to 0.5%.

Crucially, although Stocks and Shares ISAs can shield your investments from tax – the share dealing platform costs can very quickly add up. Moreover – and perhaps most importantly, all UK investors get a capital gains and dividends tax allowance of £12,300 and £2,000 per year respectively anyway.

This is why, in doing the calculations, it’s likely that you would actually be better off opting for a standard account with a low-cost broker like eToro.

This is because:

  • You won’t pay any commissions to buy or sell investments – so that saves you £11.95 per trade compared to Hargreaves Lansdown
  • You won’t pay any ongoing platform fees – while Hargreaves charges 0.45% per year on ISAs
  • You won’t pay stamp duty on London Stock Exchange purchases, as this is waived by eToro

Sure, your investments at commission-free broker eToro won’t be shielded from tax like an ISA – but when you factor in the avoidance of commission, platform fees, and stamp duty – as well as your annual capital gains and dividend allowance – this could be much more favorable for you.

How to Choose Smart 40,000 Pounds Investments

So now that we have discussed the assets that you might consider – we now need to explain how to choose your own £40k investments. This is because it’s important to create your own long-term investment plan as opposed to relying on a third-party financial advisor.

Here’s what you need to consider when looking at how to invest £40k UK on a DIY basis:

Assets

The first thing that you need to look at is the specific asset classes that align with your financial goals. We would suggest creating a portfolio that contains many different asset types – which will ensure that you are well diversified. In its most basic form, this might include a broad selection of stocks, gold, ETFs, and bonds.

etoro markets

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But, it isn’t enough to just choose different asset classes. On the contrary, you’ll want to diversify within each investment type. For example, in the case of stocks – why not consider a combination of shares listed in the UK, US, and the emerging markets. This might consist of dividend stocks, growth stocks, and blue-chip stocks.

Then, when it comes to ETFs, you can easily diversify into heaps of different markets and strategies. For example, you might consider an ETF that tracks the FTSE 100, Dow Jones, Dividend Astricats, oil and gas, and even government bonds. All in all, by following a simple diversification plan, you will ensure that you are investing your £40k in a risk-averse manner.

Potential Returns

On the one hand, it is impossible to predict with any certainty how much money you can make from an investment. Well, not unless you are investing in a fixed-rate instrument like bonds.

However, in looking at the historical price performance of the asset in question – we can get an idea of what sort of returns might be possible. The type of financial returns that can be made will ultimately depend on the asset class. For example, if you were investing in UK gilts (government bonds) or high-grade stocks – then the returns are going to be modest.

But, if you were to invest in growth stocks or even gold – the upside potential is going to be much higher. Of course, the amount you can make will also depend on how much risk is associated with the investment – which we cover below.

Risk

Having a firm grasp of the ‘risk vs reward’ concept will stand you in good stead when considering how to invest £40k UK. After all, the higher the returns you wish to make from your investment – the more risk you need to take.

Going back to the example we discussed above, investing in UK gilts might only attract an annual interest rate of 1% – but the risk of you losing money is virtually zero. After all, the only way you would lose out is if the UK government ceased to exist!

However, if you were to invest in a growth stock – sure, the upside potential could be huge. However, as growth stocks are typically behind unproven business models and thus – trade on ‘expected’ future earnings, there no guarantee that the company will be successful.

nicola stock price

Look at zero-emission vehicle company Nikola as a prime example. The growth stock was valued at over $93 in mid-2020. As of early 2021 – the same stocks have since hit lows of $10. In real terms, this represents a loss of almost 90% in a super-short amount of time. Once again, this is why diversifying is so important.

After all, there is every chance that one of your individual investments will mirror the adverse performance of Nicola. But, as you’ll have hundreds or even thousands of other assets to fall back on, you won’t feel the impact of this anywhere near as much.

Timing 

The most seasoned of investors will select assets based on the current sentiment of the wider markets. For example, since March 2020 – the US stock markets have been booming. The NASDAQ 100, for example – which hosts the likes of Apple, Amazon, Tesla, and Facebook – is up over 50% in the 12 months prior to writing this article.

  • In times such as this, experienced investors will place a much larger percentage of their portfolios into stock markets that continue to thrive.
  • However, stock markets move in cycles – so it’s only a matter of time before we see a prolonged downward spiral – like we did in 2008/09.
  • When this does eventually come to fruition, smart investors will look to reduce their exposure to the stock markets and instead move into safe-haven assets like government bonds and gold.

Ultimately, if you’re wondering how to invest £40k UK in the smartest way possible – market timing should be something that you take seriously.

Best Brokers to Invest £40k UK

If you have read this guide on how to invest £40k UK – you should now have a much clearer idea of which financial markets and assets are suitable for your goals. If so, it’s now time to consider a suited online stock broker that can facilitate your investments in the most convenient and cost-effective way possible.

To save you countless hours of research, below we discuss the best UK trading platforms currently in the market.

1. eToro – Best FCA Broker with 0% Commission and No Stamp Duty

We have personally reviewed dozens of UK stock brokers and trading platforms and can comfortably conclude that eToro is the best option on the table. First and foremost, the online broker is regulated by the Financial Conduct Authority (FCA) and is covered by the FSCS (up to the first £85,000).

As such, you can invest £40k with this broker without needing to worry about the safety of your funds. When it comes to supported asset classes, most of the investments that we have discussed today are available at eToro. This includes more than 2,400 shares ($50 minimum) from 17 marketplaces – so you’ll have access to dividend stocks, growth stocks, blue-chip stocks, FTSE 100 stocks, and more.

etoro spreads

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eToro also offers more than 250+ ETFs ($50 minimum). This covers dozens of index funds like the Dow Jones, S&P 500, and NASDAQ 100, as well as stocks and bonds in the emerging markets. If you’re also looking to gain exposure to commodities like gold and silver, eToro offers this via top-rated ETFs. You can also access 18 cryptocurrencies ($25 minimum) – should you want to gain exposure to the likes of Bitcoin and Ethereum.

copy trading at eToro

67% of retail investors lose money trading CFDs at this site

Most importantly, eToro is the best UK stock broker to consider investing your £40k because it charges no dealing commissions or ongoing platform fees. As we briefly covered earlier, the broker also waivers the 0.5% stamp duty tax on London Stock Exchange investments. On top of offering super-low investment fees, eToro is really simple to use and it supports plenty of convenient payment methods. This includes UK debit/credit cards, bank transfers, and e-wallets like Paypal and Skrill.

etoro commission-free

You can use eToro via your web browser or through the mobile app. This is compatible with both iOS and Android devices. We should also note that eToro offers passive investment tools, too. This includes the previously discussed Dividend Growth CopyPortfolio. This is an actively managed portfolio that contains dozens of high-yielding dividend stocks. There is also a Copy Trading tool – which allows you to copy a seasoned eToro investor like-for-like.

Pros:

  • Super user-friendly online trading platform
  • Buy shares without paying any commission or share dealing charges
  • Trade CFDs in the form of stocks, indices, commodities, forex, and more
  • 2,400+ stocks listed on the UK and international markets
  • 150+ ETFs
  • Deposit funds with a debit/credit card, e-wallet, or UK bank account
  • Ability to copy the trades of other users
  • FCA and FSCS protections

Cons:

  • Not suitable for advanced traders that like to perform technical analysis
  • No ISAs or SIPPs

67% of retail investors lose money trading CFDs at this site

2. Capital.com – Best CFD Broker for Day/Swing Trading Strategies 

new capital.com logo

Capital.com is an FCA-regulated trading platform that specializes in CFDs (contracts-for-differences). This means that you can trade an asset without actually owning it. Instead, you will need to determine whether you think the asset will rise or fall in value.

For example, if you were to trade a gold CFD at Capital.com, you would be given the option of going long or short. This gives you much more flexibility, as you can make money during falling markets via a sell order. Additionally, CFD trading platforms like Capital.com give you access to leverage. This means that you can trade with up to 30 times the amount you have available in your account.

capital.com review uk

71.2% of retail investors lose money trading CFDs at this site.

A leverage ratio of 1:30 is reserved for major forex pairs only – meaning you will get less on other assets. For example, this stands at 1:5 on stocks, 1:10 on indices, and 1:20 on gold. Capital.com is also a good option if you are looking to day or swing trade at competitive fees. After all, the broker is a 100% commission-free platform that offers super-tight spreads. In terms of supported CFD markets, this covers thousands of instruments.

This includes stocks from 18 different countries – such as Germany, Australia, Hong Kong, Canada, and the US. You can, of course, also trade FTSE and AIM stocks via CFDs. Capital.com also supports commodities like gold, silver, oil, and natural gas – as well as ETFs and indices. Dozens of forex pairs are also supported, should you wish to trade currencies.

capital.com review uk

If you are somewhat apprehensive about trading CFD markets on a short-term basis – Capital.com has you covered. This is because the broker requires a minimum deposit of just £20 – so the platform is perfect for trading with an inconsequential amount. Additionally, Capital.com also offers a live demo account. This allows you to trade CFDs in live market conditions without risking any money. Supported payment methods at this broker include debit/credit cards, e-wallets, and bank transfers.

Pros:

  • Educational app for new traders
  • Commission-free trading
  • Tight spreads
  • Leverage offered
  • AI assistant identifies your weak points
  • Excellent charting and analysis interface
  • £20 minimum deposit

Cons:

  • Cannot build custom trading strategies
  • CFDs only

71.2% of retail investors lose money trading CFDs at this site.

Conclusion

In summary, this guide has discussed everything there is know about how to invest £40k UK in the smartest way possible. Crucially, rather than leaving your £40k in a UK bank account that pays sub-1% interest – there are thousands of better options on the table. Whether that’s stocks, ETFs, index funds, or commodities – there is an asset to suit all risk/reward profiles.

You do, however, also need to spend some time finding a suitable UK brokerage site. Not only does the broker need to support your chosen investments – but it must also offer competitive fees and commissions. If you’re strapped for time and want to get started with the best investment platform in the UK – it could be worth considering eToro.

This FCA-regulated and FSCS-protected broker is now home to over 20 million clients-  many of which are UK-based. You can choose from thousands of investments – none of which attract any dealing fees or commissions. Plus, the minimum investment on stocks and ETFs is just $50 – so you can create a diversified portfolio with your £40k investment with ease.

eToro – Best FCA Broker with 0% Commission and No Stamp Duty

67% of retail investor accounts lose money when trading CFDs with this provider.

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About Kane Pepi PRO INVESTOR

Kane Pepi is a British researcher and writer that specializes in finance, financial crime, and blockchain technology. Now based in Malta, Kane writes for a number of platforms in the online domain. In particular, Kane is skilled at explaining complex financial subjects in a user-friendly manner. Academically, Kane holds a Bachelor’s Degree in Finance, a Master’s Degree in Financial Crime, and he is currently engaged in a Doctorate Degree researching the money laundering threats of the blockchain economy. Kane is also behind peer-reviewed publications - which includes an in-depth study into the relationship between money laundering and UK bookmakers. You will also find Kane’s material at websites such as MoneyCheck, the Motley Fool, InsideBitcoins, Blockonomi, Learnbonds, and the Malta Association of Compliance Officers.

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