Let me introduce you to Mark.
Mark, 42, a senior consultant, is married with two children and lives in a lovely four-bedroom house in Surrey, carrying a sizeable mortgage. On paper, he’s made it. His salary is healthy, the holidays are nice, and the car’s leased. But if you sit down with him over a pint, he’ll admit something that many professionals feel but rarely say aloud:
“I feel like I work too hard for money that disappears too quickly.”
Sound familiar?
Mark’s also been reading about investments lately. He’s opened a Stocks & Shares ISA. He’s watched a YouTube video on property. His mate made a killing on crypto (allegedly). But despite all that, his money’s mostly sitting in a savings account—losing value to inflation every month.
The problem isn’t that Mark is lazy, stupid, or overly cautious. He’s just overwhelmed.
If that’s you, too, let’s fix it.
In our last blog, we discussed how to determine your risk tolerance. This blog offers a clear breakdown of the eight common investments, the risks and returns associated with each, and—most importantly—how to align them with your life, goals, and appetite for risk.
Let’s get started.
Step 1: Know the Real Problem (And It’s Not “Where Should I Invest?”)
Most people think the key question is: Where should I put my money?
It’s not.
The better question is: What do I want my money to do for me—and what am I willing to risk to get there?
That means:
- How long can I leave this money untouched?
- Do I want steady income or future growth?
- How would I feel if my investments were to drop by 20% next year?
Get clear on those, and you can stop following fads and start building a useful plan.
Step 2: The 8 Asset Classes You Can Choose From
Let’s walk through them one by one. Each comes with its pros, cons, and a distinct risk-return profile.
1. Cash
Cash is the one asset class everyone already has—usually by default.
What it is: Savings accounts, Premium Bonds, cash ISAs
Risk: Very low
Returns: 0.5–2% (often lower than inflation)
When to use it:
- Emergency fund (3–6 months of expenses)
- Short-term investments (e.g. a holiday in 6 months)
What to avoid:
- Hoarding cash for the long-term
- Letting your ISA allowance go unused because “it’s safe in the bank.”
Inflation is sneaky. If you’re earning 1% interest and inflation is 5%, your money is losing 4% in real terms each year. That £20k buffer you’ve had sitting there for three years? It’s shrinking quietly.
2. Bonds
What it is: Loans to governments or companies (gilts, corporate bonds)
Risk: Low to medium
Returns: 2–5%
When to use it:
- You want some income and low volatility
- You’re getting closer to retirement
- You want to balance out more aggressive investments
What to know:
Bonds don’t make you rich, but they can help you sleep at night. They’re the investment equivalent of a Volvo—dependable, not flashy.
3. Equities (Shares)
What it is: Ownership in companies (via individual shares or funds like FTSE All-Share, S&P 500)
Risk: Medium to high
Returns: 6–8% long-term average
When to use it:
- Long-term wealth building (10+ years)
- Pension investing (SIPP, workplace pension)
- Stocks & Shares ISAs
Key tip: Time in the market > timing the market.
Don’t try to buy low and sell high. Just keep adding. Consistency beats cleverness over the long run.
4. Property
What it is: Buy-to-let, holiday lets, REITs, property funds
Risk: Medium
Returns: 6–10% (capital + rental yield)
Why people like it:
- Tangible asset
- Leverage through mortgages
- Monthly rental income
Why it’s not always easy:
- Illiquid (can’t sell quickly)
- Higher barriers to entry (deposit, stamp duty, legal costs)
- Management headaches
My tip: Don’t rush into buying a property unless you understand the numbers and the risks. You don’t want a second job disguised as an “investment”.
5. Commodities
What it is: Gold, oil, silver, etc.
Risk: High
Returns: 0–5% historically
When to use it:
- Hedge against inflation or geopolitical turmoil
- Diversification
The key thing to know: Commodities don’t produce income. Gold doesn’t pay rent or dividends. It just sits there. It’s a store of value, not a growth engine.
Use sparingly—if at all.
6. Private Equity / Startups
What it is: Investing in early-stage businesses directly or through funds (EIS, VCT)
Risk: Very high
Returns: 10–20% for winners—but most fail
Who it’s for:
- High earners with spare cash
- Those with access and insight (e.g. angel investors)
Mark’s reality: You don’t build your wealth here—you risk it. This is dessert, not the main course.
7. Collectibles
What it is: Art, wine, watches, classic cars
Risk: Extremely high
Returns: 0–10% (if you know what you’re doing)
Let’s be honest: Unless you’re an expert or obsessed, steer clear. These markets are driven by sentiment, timing, and luck. You don’t want to be the guy who spent £50k on a “rare” wine only to find it’s worth £20k five years later.
8. Cryptoassets
What it is: Bitcoin, Ethereum, altcoins
Risk: Very high
Returns: Unpredictable—sometimes insane, often terrible
When to use it:
- You want exposure to a new asset class
- You’re willing to lose the money
- You cap your exposure (1–5% of portfolio)
Mark’s approach: A small holding in Bitcoin, nothing else. Keeps it interesting doesn’t bet the farm.
Important: Crypto is unregulated and not protected by the Financial Services Compensation Scheme (FSCS). If the exchange goes bust, you’re out of luck.
Step 3: Don’t Just Pick Assets—Build a Plan
Here’s what most people do:
- Save money randomly
- Buy what their mate recommends
- Panic when markets drop
- Sell at the worst time
Here’s what you should do:
- Set clear goals
- What’s your timeline?
- Do you need income or growth?
- Understand your risk profile
- If you stress over a 10% dip, you’re not a high-risk investor
- If you’re 30 years from retirement, you should be taking more risk
- Build a balanced portfolio
- 60% global equities
- 20% bonds
- 10% property (or REITs)
- 5% commodities
- 5% crypto (max)
- Use tax wrappers
- Max your Stocks & Shares ISA (£20k/year)
- Contribute to your pension (SIPP or workplace)
- Use LISA if you’re under 40 and saving for a first home or retirement
- Review once a year, not every week
Step 4: Putting It All Together (Mark’s Story, Rewritten)
Let’s come back to Mark.
Instead of freezing with £100k in cash, here’s what he did:
- Kept £15k as an emergency fund
- Opened a S&S ISA and put £60k into a global equity fund
- Added £5k to a REIT for property exposure
- Bought £10k worth of gilts for stability
- Allocated £2k into Bitcoin
- Invests £1,000/month into this same mix
He didn’t try to get rich quick.
He developed a plan that aligns with his goals, risk tolerance, and lifestyle.
That’s the difference.
The missing key is knowing how to put these all together to make sure you are diversified. That’s what we cover next week.
Final Thoughts: Take the First Step
You don’t need to be an expert.
You need a clear strategy that reflects your real life—not someone else’s on YouTube.
Start small.
Be consistent.
Let your money start doing some of the heavy lifting.
Because the goal isn’t just to be rich, it’s to buy back your time.
And that starts with making your money work as hard as you already do.
PS. Want to learn how to build a life of time and financial freedom around your current job?
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The content on our website, blog, social media, and newsletter is for educational purposes only. It does not constitute financial advice. For guidance specific to your personal circumstances, please consult a financial adviser authorised by the FCA.
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