How to Achieve a 17% Return on Your Money

The three main ways you can invest your hard earned funds are stocks & shares, real estate and peer-to-peer lending, with each modality having their own set of advantages and disadvantages.

Why invest your money?

Well you can either spend your money, invest it or do nothing. Regular readers of UKdoctoronFIRE will know that I’m all for spending money when it comes to buying your time back, but not when it comes to mindlessly accumulating material possessions. Investing your money is a great option and doing nothing is probably the worst option because just as compound interest can work for you, it can also be your worst enemy in the form of inflation.

How do I achieve a 17% return on my money?

Stocks and shares generally return 7% of your money annually so if you invest £1,000 you can expect an average of £1,070 back at the end of the year. I should stress that this is over the long term and it shouldn’t surprise you that stocks and shares don’t increase in value in a linear fashion.

Real estate is similar in terms of yield but can vary widely depending on landlord experience and luck. If you purchase a £100,000 property you could expect something like £500 in monthly rent, give or take, which is an annual yield of 6%. However this yield is complicated by a multitude of factors: disadvantages such as mortgage interest, repairs and all the headaches associated with having tenants and estate agents, with the main advantage being able to leverage your money.

Peer-to-peer lending is the third main investment vehicle and has the advantage of having a low entry point, meaning that anyone can do this. If you have £100 sitting around you could open an account with a peer to peer lending company, that acts as the middle man, and lend money to borrowers. Interest rates vary between 3% and up to 12% meaning you could feasibly earn £120 every year from a £1,000 investment. In the ideal situation it would only take you 6 years to double your money.



The screenshot from my MacBook shows that I’ve made approximately £190 (interest + bonus) over the past 7 months on a £4,000 investment which works out to an average of 8.5% (note that November’s interest not paid yet). This is all tax free up to £500 or £1,000 (depending on your circumstances) annually due to the personal savings allowance.

Believe it or not but I deliberately chose a lower interest rate to stay well within the personal savings allowance as I feel the extra earnings aren’t worth spending weekends filling out tax returns or self assessments. However if you’re not making any interest at the moment, you can choose up to 12% annually but with higher interest rates come higher risks of loan defaults and so forth. As always, do your own research before making any decisions.

If you use the following link and invest as little as £1,000 you receive £50 cash back on top of the potential 12% interest, resulting in a possible £1,170 at the end of the year. Note that this is real estate peer-to-peer lending, meaning you’re lending to commercial landlords.

If you prefer to lend to small businesses and entrepreneurs you can achieve up to 12% annual interest using this link.

Remember that the riskiest thing that can happen is doing nothing. With current UK inflation rates of 3% your £1,000 will only have a purchasing power of £740 in ten years, and only £540 in twenty years. Think about your future before it’s too late but remember to do your own research before making any investment decisions.

P.S. I learned everything I know about finance from this book, this book and finally this oneamongst some others. If you prefer learning through listening use this link for a free Audiobook of your choice by signing up to their 30-day free trial. Simply cancel with the click of a button if you decide later on that the service isn’t for you and still keep your book.