Based in the UK and looking for the best long term investments? If so, there are thousands of financial instruments that potentially fit the bill. Whether that’s in the form of shares, bonds, ETFs, mutual funds, or trusts – you need to find investment options that meet your long term financial goals.
The good news for you is that we have compiled a comprehensive list of the best long term investments in the UK right now. This covers a variety of asset classes, markets, and risk levels. As such, you are sure to find an investment that will allow you to grow your capital over the course of time.
Note: Although ‘long term’ investments are defined as any investment being held for at least 12 months, we would suggest that you consider making a much longer commitment. In fact, the general rule of thumb is to hold on your long term investments for at least five years – as this will allow you to ride out market waves.
- 1 Top 10 Long Term Investments 2021
- 2 Best Long Term Investments in the UK
- 3 1. S&P 500 Index – Best Long Term Investments For Beginners
- 4 2. FTSE 100 Index – Best Long Term Investment for the UK Economy
- 5 3. Tesla Shares – Best Long Term Stock Investments
- 6 4. Gold – Best Long Term Store of Value to Invest in
- 7 5. Barratt Developments – Cheap UK Stock That Has Suberb Long Term Potential
- 8 6. Amazon – Keep Hold of This Long Term Stock Investment Forever
- 9 7. Vanguard Total Bond Market ETF – Best Long Term Bond Investments
- 10 8. Bitcoin – Best Alternative Long Term Investments
- 11 9. Stanley Black & Decker – Best Long Term Investments for Dividends
- 12 10. FTSE All-World UCITS ETF – Long Term Investments in Over 3,400 UK and International Stocks
- 13 Best Platforms to Invest in Long Term Investments
- 14 How to Choose the Best Long Term Investments for You
- 15 How to Buy Long Term Investments on eToro
- 16 Conclusion
- 17 FAQs
Top 10 Long Term Investments 2021
Don’t have time to read our guide in full? If so, here’s a break down of the top 10 long term investments right now!
- S&P 500 Index – Best Long Term Investments For Beginners – Invest with 0% Commission
- FTSE 100 Index – Best Long Term Investment for the UK Economy – Invest with 0% Commission
- Tesla Shares – Best Long Term Stock Investments – Invest with 0% Commission
- Gold – Best Long Term Store of Value to Invest in
- Barratt Developments – Cheap UK Stock with Long Term Potential
- Amazon – Keep Hold of This Long Term Stock Investment Forever
- Vanguard Total Bond Market ETF – Best Long Term Bond Investments
- Bitcoin – Best Alternative Long Term Investments
- Stanley Black & Decker – Best Long Term Investments for Dividends
- FTSE All-World UCITS ETF – Invest in Over 3,400 Stocks
Best Long Term Investments in the UK
Long term investments are great for newbies. After all, you will have no interest whatsoever in short-term market corrections and slumps. On the contrary, you will be investing over the course of many years. As such, by creating a highly diversified portfolio of long term investments, you can grow your wealth in a risk-averse manner.
We have spent countless hours researching the best UK long term investments available in the market right now. In the sections below, we explain each and these investments in great detail so that you have a firm grasp of the potential risks and rewards.
1. S&P 500 Index – Best Long Term Investments For Beginners
Make no mistake about – if you simply want to invest regular lump sums into the stock markets without needing to spend a single second researching or analyzing the financials – stick with the S&P 500. This long term investment tracks the value of the 500 stocks that form the S&P 500 Index.
These are large-cap companies listed on the New York Exchange and NASDAQ – so you are essentially investing in the long term success of the US economy. In fact, the S&P 500 Index consists of companies that make up 70-80% of the US stock exchange – meaning that you are diversifying into heaps of markets and sectors.
To give you an idea of some of the stocks that you will be backing, check out the list below:
- Alphabet (Google)
- Berkshire Hathaway
- Johnson & Johnson
- Procter & Gamble
There are many benefits of investing in the S&P 500 Index. First and foremost, by placing a single investment with your chosen UK stock broker, you are buying 500 different shares. This means that you can achieve instant diversification at the click of a button. Next, once you make an investment into the S&P 500 Index, there is nothing more for you to do.
In other words, this is going to be a completely passive long investment. The reason for this is that the S&P 500 Index is rebalanced and re-weighted every three months. For example, if a company no longer justifies its listing on the Index, it will be removed.
This is exactly what happened to US department store chain Macy’s earlier this year. Additionally, the actual weighting of the S&P 500 Index constituents will be adjusted. For example, if Apple increases its market capitalization but Facebook goes the opposite way, the S&P 500 Index will take this into account.
In terms of making money – this comes in two key forms. Firstly, as the value of S&P 500 Index stocks increases over time, as will your investment portfolio. Secondly, you will also be entitled to dividends that are paid by the respective Index constituent. So how has the S&P 500 Index performed over time? Well, since the Index was launched in 1926, it was averaged annualized returns of just over 10%.
Of course, the Index goes through ups and downs, but over the course of time, it has performed extremely well. If you’re wondering how to invest in the S&P 500 Index from the UK – the process could not be easier. The best way to do this is via an ETF at eToro.
The ETF provider (Vanguard) will personally buy the 500 shares that constitute the S&P 500 Index at the correct weighting. By doing this through eToro, you can invest from just $50 per transaction – and all dividend payments are distributed on a quarterly basis.
Your capital is at risk.
2. FTSE 100 Index – Best Long Term Investment for the UK Economy
While the S&P 500 is by far the best performing and most reliable stock market index over the past century – some of you might be looking to focus on UK companies. If this is the case and you’re not a fan of researching individual stocks – it might be worth considering an index fund that tracks the FTSE 100.
For those unaware, the FTSE 100 is the UK’s primary stock market index. It tracks 100 large-scale companies that are listed on the London Stock Exchange. As such, this is the best way to gain exposure to the wider UK economy over the course of time. To give you an idea of other types of companies that you will be investing in, check out the list below.
- Royal Bank of Scotland
- Anglo American
- London Stock Exchange Group
- Compass Group
- National Grid
- Lloyds Banking Group
- RELX Group
- Reckitt Benckiser
- Rio Tinto
We don’t need to go too deep into the underlying operation of the FTSE 100, as this operates much the same as the previously discussed S&P 500. That is to say, by making a single investment, you will be buying 100 different shares. You will also be eligible to receive dividends, and the Index will be rebalanced and re-weighted every three months.
On the flip side, we should note that over the course of time, the S&P 500 Index has performed significantly better than the FTSE 100. This is especially the case in more recent times. For example, over the past five years, the S&P 500 Index has grown by 63%. In the case of the FTSE 100, the Index has declined by 10%.
These numbers are, of course, highly staggering. But, if you’re hell-bent on investing in the UK markets, then the FTSE 100 is going to be the most risk-averse way to do this in the long run. We should, however, also note that the FTSE 100 is potentially undervalued at the time of writing. For example, if and when the FTSE 100 is able to get back to pre-pandemic levels, this would see an increase of 32%.
Once again, the easiest and most cost-effective way of accessing this long term investment is to purchase an ETF. Due to the popularity of the FTSE 100 Index, there are heaps of ETF providers that track this particular market. If using the ETF broker eToro to benefit from a low minimum investment and commission-free fees, the best provider to go with is iShares.
Your capital is at risk.
If we were to select one stock that we would comfortably keep in our share portfolio for several decades – it would have to be Tesla. In fact, this is a stock that many investors will never sell. Before we get to the fundamentals, let us quickly outline who Tesla is and what is plans to achieve for those of you that might not be familiar.
In a nutshell, Tesla is an electric car manufacturer that was first launched in 2003. Just 17 years later, the California-based company is now the largest automaker in the world – taking over the reins from Toyota in July. Although the firm has been operational for almost two decades, it is still defined as a growth stock by most analysts.
This is because Tesla is only just about in profit-making territory. While there are other electric car makers out there, none are anywhere near as innovative as Tesla. At the forefront of this is the firm’s drive for globalized sustainable energy. This includes its cutting-edge battery technology that Tesla says will eventually have a radius of over 1 million miles.
You then have its progress towards consumer-based solar panels. All of this is in addition to its ever-growing Tesla car model range. In terms of its stock price history, Tesla first went public in
2010. Taking into account its recent 5-for-1 stock split, the shares would have cost you in the region of $3.82 back then. Just one decade later in 2020 – the shares have since hit all-time highs of over $502. In simple terms, at a 10-year growth rate of 13,110% – had you bought £5,000 worth of Tesla stocks in 2010 – it would now worth in excess of £650,000.
Even more impressively is how Tesla stocks have navigated the covid pandemic. Not only did consumer demand for cars hit rock bottom lows during the lockdown period, but Tesla was forced to close its main US plant for several months. And how did the markets respond? Well, Tesla shares are up almost 400% in the first 10 months of trading. Crazy.
With all that said and done, at a current market valuation of over $395 billion – there is no reason to believe that Tesla won’t become a multi-trillion dollar company in the next 10-15 years. Now, if you’re a UK investor and you’re interested in buying this US-listed stock – fear not.
FCA-regulated broker eToro allows you to buy Tesla shares without you needing to pay a single penny in commission or ongoing fees. Even more attractively – and as noted earlier, you can invest from just $50. As such, there is no need to meet the full $424 (at time of writing) stock price that Tesla shares are currently commanding.
Your capital is at risk.
4. Gold – Best Long Term Store of Value to Invest in
Ask any seasoned long term investor in the UK and they likely tell you that they have a small allocation of trading capital reserved for gold. Why? Well, gold is the oldest ‘form of money’ that these days – is an excellent store of value to hedge against falling markets. In fact, it is often the first asset class that UK investors turn to when market conditions appear somewhat bearish.
Now, when we say invest in gold, we are not talking about buying chunks of gold bullion and storing it under your bed. Not only would this a logistical nightmare, but the minute that gold is exposed to oxygen it begins to lose value. The other option available to you is to use an online platform that allows you to invest in gold – which in turn, is stored by the respective company in a regulated vault.
However, if you’re looking for easy, cheap and safe investments in the long term value of gold is to purchase an ETF. For example, the SPDR Gold ETF is the largest exchange-traded fund globally to be backed by gold. The provider personally buys and stores gold bullion bars so you don’t have to.
As such, when the value of gold goes up or down, this is reflected in the price of the SPDR ETF. There are heaps of benefits of choosing an ETF to gain exposure to this store of value. First and foremost, your gold investment is 100% liquid. In Layman’s terms, this means that you can exit your position at any given time during standard market hours.
After all, the ETF is listed on the New York Stock Exchange in the form of shares. In other words, the minute you sell your SPDR Gold shares, the cash will be added to your brokerage account instantly. This isn’t something that you can do when you go through the traditional channels, as you would physically need to sell your gold holdings for cold hard cash.
We should make it clear that an investment in gold isn’t only a hedge against falling markets. On the contrary, there is every chance that the value of your investment will increase over the course of time. In fact, taking the SPDR option as a prime example, the ETF in question has increased by over 300% since it was launched in 2004.
Your capital is at risk.
5. Barratt Developments – Cheap UK Stock That Has Suberb Long Term Potential
The struggles of the FTSE 100 in 2020 have left investors will plenty of ‘cheap’ stocks to ponder over. By cheap, we mean that they are potentially undervalued – and by some distance. After all, the downfall of many UK stocks this year has been a direct result of the pandemic. With this in mind, we need to look at three key metrics:
- How was the company performing before the pandemic came to fruition?
- Does the company have the required balance sheet to it through current market conditions?
- What is the upside potential of the company in the long term?
Taking the aforementioned questions into account, it could be argued that Barratt Developments can now be bought at a major discount. Before we get to that, Barratt Developments is a UK-based housing developer. The company was founded way back in 1958 and it is now listed on the London Stock Exchange. In the last financial year alone, Barrett Developers was behind more than 17,500 new home builds throughout the UK.
It goes without saying that operations were severely impacted by the UK lockdown period. After all, not only could it not fully resume its house building endeavours for several months, but buyers and sellers were left in limbo will the lockdown measures remained in place.
As a result of this, Barratt Developments shares have taken a major hit in 2020. In fact, before the wider FTSE 100 crash that began in March, the shares were priced at highs of 889p. Fast forward just a few weeks and the shares hit lows of 349p. This translates into a complete capitulation in excess of over 60%.
Since then, Barratt Developments shares have recovered to 500 – as of November 2020. As such, this represents a recovery rate of 43%. With that said, this is far short of the true potential. Even with a short-to-medium term target back to the 889p region – you would be looking at further growth of 77%. But, we would argue that the long term potential of this investment is much, much greater.
For example, the UK homebuilder recently announced that in the three months following July, property completions increased by 24%. Impressively, this is in comparison to the previous year, not quarter. Secondly, with UK interest rates still at rock bottom levels – and likely to stay for many years to come, demand from new and existing homeowners is sharply on the rise.
In terms of financials, things are looking even better. The firm is in possession of a strong balance sheet which is driven by low levels of debt. This is further protected by the company’s decision to suspend dividend payments while it sees its way through the pandemic. But, the most attractive aspect of its current financial outlook is that Barratt Developments is still trading at a P/E ratio below the FTSE 100 average of 15.7. As such, at 13.35, the shares are still potentially in the undervalued category.
Your capital is at risk.
6. Amazon – Keep Hold of This Long Term Stock Investment Forever
Much like in the case of Tesla, Amazon is another US-listed stock that will likely remain in our investment portfolio forever. This might surprise you when you consider that the firm has not, and likely never will, pay a single penny in dividends. Instead, Jeff Bezos is wholly focused on long-term growth.
Now, it is important to note that Amazon is already worth in excess of £1.6 trillion on the NASDAQ. As such, you might be fooled into think that there is only so much further than this stock can go. However, we would argue that this couldn’t be further from the truth. Before we get to the long term potential of Amazon, we should point to the fact that in the first 10 months of trading in 2020 – the stocks have increased by over 80%.
Not bad for a company that at the start of the year already possessed a market valuation just shy of $1 billion. On the one hand, these growth levels so make sense when you consider that Amazon was one of many tech stocks to benefit from the pandemic. After all, consumers were forced to consider online alternatives to obtain their essential and non-essential goods during the lockdown.
However, we should stress that Amazon as an organization is about so much more than just its online retail division. In fact, the firm is behind heaps of additional products and services that are performing very well.
- Amazon Web Services (AWS): AWS is by far the largest supplier of cloud computing services. This is an industry that is growing at a rapid pace and almost certain to dominate how we facilitate online storage in the future. At the time of writing, AWS holds a market share in excess of 33%.
- Amazon Prime: Amazon Prime is a subscription-based add-on that gives members enhanced services for a monthly fee. This includes expedited delivery of its online retail offering, unlimited e-books, and access to its content streaming platform. As of mid-2020, Amazon Prime was home to over 112 million monthly subscribers.
- Amazon Prime Video: Not to be confused with its wider Amazon Prime service, this is the TV and movie streaming segment of the organization. While Netflix still dominates this space, Amazon Video Prime is slowly but surely closing the gap. As of Q2 2020, it is estimated that more than 150 million subscribers are paid members of the service.
There are many, many other services that fall under the Amazon brand. In addition to this, Amazon is also behind more than 40 subsidiary companies that it has either developed itself or now owns on the back of an acquisition. Some of the firm’s most prominent subsidiaries include Whole Foods Market, PillPack, Twitch Interactive, and Zappos.
Your capital is at risk.
7. Vanguard Total Bond Market ETF – Best Long Term Bond Investments
With gold being the exception – all of the best UK investments that we have discussed thus far have centred on the stock markets. However, a lot of seasoned investors in the UK will also allocate some of their capital to bonds and bond funds. This allows you to earn a steady, predictable cash flow of income.
Now, buying bonds in the UK as an everyday retail investor is no easy feat. This is because most brokerage houses require you to meet a huge minimum investment. In most cases, this is out of reach for the average Joe. As such, if you want to gain exposure to the global bond markets, then we would suggest considering an ETF.
At the forefront of this is the Total Bond Market ETF offered by Vanguard. Put simply, by making a single long term investment into this ETF, you will be gaining exposure to almost 10,000 individual bonds. At the time of writing, Vanguard’s portfolio contains bonds with an average coupon rate of 3%.
Across nearly $300 billion worth of bonds, this covers instruments from both the corporate and government sectors. 425 of this figure is in the form of safe and secure US Treasuries, while 20.8% is backed by government mortgages. There is also an allocation to foreign-issued bonds. All in all, this is a great way to build a highly diversified portfolio of bonds at the click of a button.
Best of all, as you are investing in an ETF as opposed to the bond agreement itself, you don’t need to wait until maturity to cash out. Instead, you can exit your position at any time during standard market hours. In terms of receiving your share of bond coupon payments, Vanguard makes a distribution every three months.
Your capital is at risk.
8. Bitcoin – Best Alternative Long Term Investments
Let’s be clear – this particular long term investment won’t be for everyone. In fact, even if you do plan to add Bitcoin to your portfolio, you should keep stakes to an absolute minimum. After all, the cutting-edge digital currency operates in a highly volatile marketplace.
But, the most important thing to note is that over the past 10 years – Bitcoin is by far the best performing asset class globally. Starting life at less than $0.01 per Bitcoin, the cryptocurrency is worth almost $14,000 at the time of writing. In simple terms, this represents 10-year growth of over 134 million percent.
In other words, had you invested just £1 back in 2009, you would now be a multimillionaire. However, there are simply too many variables standing in the way of Bitcoin to know with any certainty whether or not the digital currency is here to stay in the long run. This is why investments should be kept to a minimum – say, no more than 5% of your portfolio.
We should also note that many UK investors that are interested in buying Bitcoin fail to do so because they simply do not understand the technology. This is further amplified when you start adding cryptocurrency exchanges and digital wallets into the mix. As such, if you do want to gain exposure to this alternative asset class, the easiest and most convenient way of doing this is through eToro.
Not only can you invest from just $25 into Bitcoin at the platform, but you don’t need to worry about storage. Additionally, you won’t pay any fees or commissions to make the investment. And, perhaps most importantly, eToro is licensed by the FCA – so you don’t need to worry about dealing with unscrupulous cryptocurrency exchanges.
Your capital is at risk.
9. Stanley Black & Decker – Best Long Term Investments for Dividends
If you’re looking for a long term investment that combines the potential of capital growth and regular income – you might want to consider a dividend stock. In this respect, it really doesn’t get much better than Stanley Black & Decker. This NYSE-listed stock has paid a dividend for over 143 years.
Not only this, but it increased the size of its dividend payment every year for the past 52 years. This is nothing short of remarkable especially when you consider the many market slumps and recisions that we have gone through over the past century. For those unaware, Stanley Black & Decker is a major US-based producer and supplier of industrial tools.
It is also involved in security products and household hardware goods. As of late 2020, the firm has a market capitalization of over $26 billion. Not only is this one to consider for long and consistent dividend payments, but Stanley Black & Decker is a good defensive stock to consider during times of economic uncertainties.
Your capital is at risk.
10. FTSE All-World UCITS ETF – Long Term Investments in Over 3,400 UK and International Stocks
If you’re the type of investor to knows that they want to invest purely in the best stocks – but you don’t quite know which markets to target, this ETF is likely to be of interest. In a nutshell, the FTSE All-World UCITS ETF will give you access to over 3,4000 stocks via a single investment.
This covers companies listed in nearly 50 different countries – subsequently giving you exposure to a global portfolio of shares. Just over 50% of this consists of US-listed powerhouses such as Apple, Microsoft, and Amazon. After that, you’ll be getting 7.5% in Japanese stocks, 5.2% in China, and 3.8% in the UK.
Other counties that you will be gaining exposure to include France, Korea, India, Switzerland, Canada, Australia, and many more. Your diversified portfolio also ensures that you are backing a variety of industries. This includes tech, consumer staples, real estate, finance, and health care.
Your capital is at risk.
Best Platforms to Invest in Long Term Investments
So now that we have discussed the best long term investments in the UK right now, you now need to start thinking about which brokerage site you plan to use. There are hundreds of such platforms to choose from, albeit, not all will offer the 10 investments that will have explored on this page (eToro does). In addition to this, you also need to look at what fees your chosen broker charges and what payment methods are supported.
To help clear the mist, below we list three of the best UK share dealing accounts that allow you to make long term investments online.
1. eToro – Overall Best ETF Broker in the UK
eToro should be the first name on your list in your search for a platform that allows you to make long term investments. Why? Well, this is for several reasons. First and foremost, eToro offers a wide range of investment products, and all of the investments listed on this page can be accessed at eToro with ease. Not only this, but the platform allows you to buy shares and ETFs without paying any fees or commissions.
You will also avoid the need to pay any ongoing maintenance fees. Other than a 0.5% FX fee that is incurred on all deposits, the only other fee is a $5 withdrawal charge. In fact, you will also avoid the standard 0.5% stamp duty fee that you need to pay when buying UK stocks, so this counters the deposit charge. In addition to being a low-fee UK broker, eToro is also great for making small investments.
This is because you can invest from just $50 into shares and ETFs – irrespective of how much the asset is priced at. This would be particularly useful when buying US-listed stocks like Apple, Tesla, and Facebook – which run into the hundreds of dollars each. eToro also offers managed portfolios. For example, you can copy an expert trader that you like the look of like-for-like. Through its CopyPortfolio tool, you can also invest in pre-build portfolios – which is great for diversifying in a risk-averse manner.
In terms of account minimums, eToro requires a minimum deposit of $200 (about £160). The platform supports a variety of popular UK payment methods – such as a debit/credit card, e-wallet, and bank transfer. We also like eToro because it has a very strong regulatory standing. On top of licenses with the FCA, CySEC (Cyprus), and ASIC (Australia), your money is protected by the FSCS. You can use eToro on your laptop device or via the mobile investment app.
- Super user-friendly online trading platform
- Buy stocks without paying any commission or share dealing charges
- Trade CFDs in the form of stocks, indices, commodities, forex, and more
- 1,700+ 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
- Not suitable for advanced traders that like to perform technical analysis
67% of retail investors lose money trading CFDs at this site
2. Plus500 – Commission-Free Trading Platform
Plus500 is an online CFD trading site that offers thousands of markets. You’ll have access to instruments in the form of stocks, indices, bonds, interest rates, commodities, cryptocurrencies, and more. As a CFD platform, you will have the option of going long or short at Plus500 – and even be able to apply leverage.
Plus500 is a 100% commission-free broker and does not charge anything for deposits/withdrawals. You can deposit funds with this FCA broker via debit/credit cards, Paypal, or a bank transfer. The platform has a great reputation in the CFD trading space and its parent company is even listed on the London Stock Exchange.
- Commission-free CFD platform – only pay the spread
- Thousands of financial instruments across heaps of markets
- Retail clients can trade stock market CFDs with leverage of up to 1:5
- You can short-sell a stock CFD if you think its value will go down
- It takes just minutes to open an account and deposit funds
- More suitable for experienced traders
72% of retail investors lose money trading CFDs at this site
3. IG – Trusted UK Broker With ISA Accounts
Are you looking to make long term investments via a Stocks and Shares ISA? If so, IG is likely to be your best bet. This trusted FCA broker offers over 12,000 traditional assets – most of which can be added to your ISA. This includes heaps of stocks and shares, ETFs, investment trusts, and even mutual funds. You will pay an entry-level dealing fee of £8. This can be reduced to £3 when you trade regularly.
IG is also worth considering if you are looking for a platform that offers in-depth research materials. You’ll also find educational pieces and market insights. IG requires a minimum deposit of £250. You can add funds to your account with a debit/credit card or bank transfer. Your money is safe with this broker, as you’ll benefit from the protections of the FSCS.
- Trusted UK broker with a long-standing reputation
- More than 12,000 traditional assets
- Good value share dealing services
- Leverage and short-selling also available
- Spread betting and CFD products
- Various account types
- Great research department
- A minimum deposit of £250
- US stocks have a $15 minimum commission
Your capital is at risk
What are Long Term Investments?
A long term investment is any investment held for a minimum of 12 months. But, in the case of investing in the financial markets – this is usually for at least 5 years. In opting for a long term investment strategy, you do not need to worry about short-term volatility. You can also pay less attention to market slumps, as you are only interested in the long term prospect of your chosen asset.
A lot of long term investments provide income on two fronts – especially in the case of stocks and ETFs. This is because the value of your investment can grow – meaning that you will make capital gains. Additionally, you also stand the chance of earning regular income via dividend payments.
Below you will find a list of assets that fall under the scope of a long term investment.
- Investment Trusts
- Index Funds
- Mutual Funds
- Real Estate
Long term investments differ from short term investments not only in the length of time you invest for, but also the types of assets, as short term investments are more restricted to things like bonds and money market funds.
How to Choose the Best Long Term Investments for You
Some online brokers in the UK give you access to thousands of assets from a variety of investment classes. While having lots of choice of always a good thing, this can make it challenging to make an investment that is right for your financial goals.
To help you find a suitable long term investment for your needs, below we list some of the main metrics that you need to consider when making your investment decisions.
You first need to evaluate what your long term investment can realistically generate in returns. Although not an exact science, the way way to gauge this is to look at past performance. It’s best to go back at least 10 years if possible – the longer the better.
For example, we noted that the S&P 500 Index has returned an average of 10% per year since its inception in 1926. We also noted that Bitcoin has returned more than 134 million percent. At the other end of the spectrum, low-risk assets like government bonds issued by the UK will rarely yield more than 1-2% annually.
Leading on from the above section, you need to also consider the potential risk of your chosen long term investment. After all, the more you require in annual returns, the higher risk you will need to take.
For example, it’s all good and well that Bitcoin is the best performing asset class over the past 10 years – but it is also the asset class fraught with the more risk. As such, you need to spend some time assessing your risk tolerance in the long run.
In an ideal world, you will be buying your chosen long term investment at a favourable price. That is to say, if you can invest in an asset when it is undervalued, you’re already moving in the right direction.
At the time of writing in late 2020, there are many assets that could be viewed as undervalued – not least because of the wider impact of the pandemic. This is especially the case in industries such as construction, retail, and travel.
Some long term investments can be difficult to access as a UK trader (non-professional investor). This is especially the case when it comes to corporate bonds and emerging shares.
As such, you need to check whether or not you are going to be able to buy your preferred asset. For example, if you want to invest in gold – your best bet is to opt for an ETF. Similarly, if you want to invest in non-UK corporate bonds, an ETF is also going to be the best option.
Income, Growth, or Both?
You also need to consider the type of returns that you seek. For example., some people in the UK prefer to stick with a regular form of income that is somewhat predictable. This includes the likes of high-grade bonds and dividend stocks. At the other end of the spectrum, some investors prefer to chase growth in the form of capital gains.
This is where the value of a stock or ETF increases over time. You also have the option of combining the two. For example, a solid index fund like the S&P 500 has not only averaged 10% per year since its inception but yields quarterly dividends.
How to Buy Long Term Investments on eToro
To conclude this guide on the best long term investments in the UK, we are now going to show you how to get started with an online broker today.
This includes the steps required to open an account, deposit funds, and make an investment. The steps below are based on eToro, as the platform offers all 10 of the long term investments that we have discussed – each and which can be purchased on a commission-free basis from just $50.
Step 1: Open an Account and Upload ID
Visit the eToro website and begin the account opening process. This should take you no more than a few minutes.
67% of retail investor accounts lose money when trading CFDs with this provider.
All you need to do is supply some personal information, contact details, and your national insurance number. eToro will ask you to verify your identity by uploading some documents, but you don’t need to do this right now. In fact, this doesn’t need to be done until you deposit more than $2,250 or you submit a withdrawal request.
Step 2: Deposit Funds
You can deposit funds into eToro with a debit/credit card, e-wallet (Paypal, Skrill, Neteller) or a bank transfer. The minimum deposit is $200 and you will incur a small 0.5% currency conversion fee.
Step 3: Search for a Long Term Investment
If you are planning to buy one of the long term investments we have discussed today, all you need to do is search for the asset. As per the example below, we are looking to invest in the Vanguard S&P 500 – so we enter this into the search box and click on the trade button.
67% of retail investor accounts lose money when trading CFDs with this provider.
Step 4: Make a Long Term Investment
You will then be shown an order box. To complete your long term investment at eToro all you need to do is enter your stake. In our example, we are looking to invest $500 – so we enter this into the ‘Amount’ box.
Finally, click on the ‘Open Trade’ button to complete your 100% commission-free long term investment!
If you want to grow your money over the course of time, long term investments offer a much better way to do this than simply keeping your cash in a bank account. After all, you’ll be lucky to attract more than 1-2% these days – even in a ‘high interest’ savings account. This is why we have presented 10 long term investments for you to consider today – each of which comes with varying risks and rewards.
If you’re ready to rake to plunge right now, the long term investment process at eToro can be completed in less than 10 minutes. This includes opening a share dealing account, making a deposit, and investing in your chosen asset. Best of all, you can easily fund your account with a debit/credit card and you won’t be charged any commissions to investment.
eToro – Best UK Long Term Investment Platform
67% of retail investor accounts lose money when trading CFDs with this provider.
What is the best long term investment?
There is no easy answer to this question as it all depends on how much risk you feel comfortable taking and what sort of returns you expect. With that said, the S&P 500 has provided an average annualized return of over 10% since it was launched in 1926 - so this is definitely a long term investment to consider.
What are examples of long term investments?
Long term investments come in a range of shapes and sizes. This includes stocks, bonds, ETFs, mutual funds, investment trusts, and gold.
Do you pay tax on long term investments in the UK?
Irrespective of whether you are investing in the short or long-run - tax on your gains might be due. This covers both income tax via capital gains and dividends. The good news is that all UK residents get an annual capital gains allowance - which in 2020/21 amounts to £12,300. You also get £2,000 in dividend tax allowance.
What is the safest long term investment?
While no long term investment is 100% risk-free, the closest you will get to this is an FSCS-backed savings account. However, these rarely yield more than 2% per year and only the first £85,000 is covered by the FSCS - were the bank or building society to go bust.
What long term investment offers the highest returns?
Over the course of the past 10 years, the best-performing asset class in terms of annualized returns is Bitcoin. However, this is a high-risk investment vehicle. If you're looking for something a bit less volatile, you might want to consider growth stocks.
Where can I find advice on the best long term investments?
There are several ways of obtaining financial advice and investment advice. One option is to check out things like investment podcasts, books and newsletters Although, you should also make sure you do your own research as well.
Can I invest in long term investments passively?
Yes, there are several ways to do this. There are many robo advisor investment apps, like Nutmeg, which invest your money for you. An alternative to these investment advisor apps is eToro, which you can invest in passively via its copy trading features. ISAs are another option for passive investing.