Best Long-Term Investments for UK Investors

This guide breaks down some of the best long-term investments available to UK investors. Whether you have £1k or are contemplating the best ways to invest £100k. We’ll cover the pros and cons of each option, highlight what makes them suitable for long-term growth, and help you understand how to build a resilient portfolio that aligns with your goals.

Long-term investing is a strategy focused on holding assets, such as stocks, property, or precious metals, for an extended period, typically several years or even decades. This approach allows for financial planning, whereby certain goals can be achieved by growing money over a longer timeframe. These goals could be retirement, saving for a home, sending children through private education, or even buying a yacht!

Unlike short-term trading, which aims to profit from quick price changes, long-term investing is about allowing your money to grow steadily over time, often through compound returns and reinvested earnings.

It’s a patient approach that rewards consistency, discipline, and resilience through market ups and downs. Investments should be based on your belief in their fundamentals which will reap profit in the long term, rather than the technical knowledge required to exploit shirt term trading opportunities.

One of the main advantages of long-term investing is the power of compound growth – essentially earning returns on your returns. The longer your money stays invested, the more time it has to grow, especially if you reinvest dividends or interest.

Other key benefits include:

• Lower costs: Fewer transactions mean lower trading fees and reduced tax exposure (such as capital gains tax).
• Reduced emotional decision-making: You’re less likely to panic-sell during market downturns if you’re focused on long-term goals.
• Better performance potential: Historically, long-term investors tend to outperform those trying to time the market.

By staying invested through market cycles, you give your portfolio the opportunity to recover from volatility and benefit from long-term economic growth.

What counts as “long term” can vary depending on your goals:

• 5–10 years: Suitable for major life events such as buying a home or funding a child’s education.
• 10–20+ years: Ideal for retirement savings and wealth accumulation.
• Lifelong: Some investors maintain certain holdings, like gold or property, as generational assets.

The key is matching your investment choices with your time horizon and comfort with risk. Long-term investing isn’t about getting rich quickly, it’s about building wealth steadily and securely over time.

Making thoughtful decisions at the start can help you avoid common mistakes and build a portfolio that works for you over time. Selecting the most suitable investments for your personal situation and possible evolution will help mitigate any changes outside of your control.

Risk tolerance refers to how much investment risk you’re willing, and able, to take. This depends on several factors, including:

• Your financial goals: Are you saving for retirement in 30 years or a house deposit in 5? If your objective is to afford an essential goal, then your risk may be lower than saving for a new Ferrari!
• Your time horizon: Generally, the longer your timeline, the more risk you can afford to take as there’s enough time for market downturns to recover.
• Your comfort with market ups and downs: If volatility keeps you up at night, you might prefer more stable assets.

Understanding your risk tolerance helps you choose investments that you’ll stick with, even during market downturns. The basic rule of thumb is the higher the investment risk, the higher the possible return (and loss).

Diversification means spreading your money across a mix of asset types (like stocks, bonds, property, and gold) so that no single investment has too much impact on your overall portfolio. It’s a key principle of risk management.

Asset allocation refers to how you divide your investments among these asset classes, based on your goals and risk tolerance. Many investors will find it difficult to label themselves as high, medium, or low risk. A good approach can be to break down your investment capital into various assets representing a mix of risk appetite. For example, £10k of capital, could be allocated into £2k high risk, £5k medium risk, and £3k low risk.

A well-balanced portfolio might include:

• Equities for growth
• Bonds for stability and income
• Property for long-term capital appreciation
• Physical gold as a hedge against inflation and currency risk

Over time, you may need to rebalance your portfolio to maintain your desired mix or reflect your developing risk appetite.

Making investment returns, income, and profit is only one part of the winning formula. Choosing tax-savvy options will help you keep more of those profits to spend or re-invest. While some investment products are specifically designed with tax efficiency in mind, many mainstream assets will be available as standard or tax-efficient versions. It’s always worth researching whether your desired investment can be executed within a tax-efficient wrapper or in a tax-free way.

It’s important to select tax efficient options specifically relevant to UK investors, as tax regimes treat investments differently around the world. The tax implications for UK gold and silver investors are very different to those in the US for example.

The UK offers several tax-advantaged accounts that can help you maximise your investment returns:

• Stocks and Shares ISA: Tax-free growth and income on investments up to your annual ISA allowance (£20,000 in 2025/26).
• Lifetime ISA (LISA): Ideal for first-time homebuyers or retirement savings, with a 25% government bonus.
• Self-Invested Personal Pension (SIPP): Contributions receive tax relief, and investments grow tax-free within the pension wrapper.

Using these accounts can significantly reduce your tax burden and improve your long-term returns.

• Individual shares: Picking your own UK or global stocks via trading platforms like Freetrade, Hargreaves Lansdown, or Trading 212.
• Investment funds: Actively managed funds run by professional fund managers. Ensure you compare fees as they can have a significant impact on returns.
• Index trackers: Low-cost funds or ETFs that mirror the performance of a market index (e.g., FTSE All-Share, S&P 500).

💡 Tip: For most long-term investors, a diversified portfolio of shares (ideally via a fund or ETF) reduces individual company risk while still offering strong long-term growth potential.

Read our article comparing Stocks and Gold Investment

• Vanguard FTSE All-World UCITS ETF (VWRL) – global exposure across developed and emerging markets.
• iShares Core FTSE 100 ETF (ISF) – tracks the 100 largest UK companies.
• HSBC FTSE 250 Index Fund – offers access to mid-sized UK companies with growth potential.

Most of these funds can be held inside an ISA or SIPP for tax efficiency and are available on popular UK platforms like Vanguard, AJ Bell, or Interactive Investor.

💡 Tip: Consider using a monthly direct debit to “drip feed” into your chosen fund, which can smooth out market ups and downs over time (a strategy known as pound-cost averaging).

Read our article comparing physical gold vs gold ETFs

• Buy-to-let: Purchasing a rental property can generate long-term income and capital gains, but it involves management, maintenance, and potential tax considerations (like stamp duty and capital gains tax). These tax burdens have worsened considerably over recent years for UK investors.
• Real Estate Investment Trusts (REITs): These are companies that own or finance income-producing properties. UK REITs offer exposure to commercial and residential real estate, often with attractive dividend yields.
• Property funds: Actively managed funds that invest in a diversified portfolio of property assets, ideal for hands-off investors.

💡 Tip: For investors who want property exposure without the hassle of being a landlord, REITs and property funds can be a more flexible and cost-effective alternative.

We discuss in more depth the comparison between property and gold investment.

Use our automated portfolio builder to get suggestions based on various investment objectives.

• Workplace pensions: Auto-enrolment pensions are a good starting point and benefit from employer contributions, which can rise as your work tenure lengthens.
• Personal pensions: Suitable for the self-employed or those wanting more control over their retirement savings.
• SIPPs (Self-Invested Personal Pensions): Ideal for hands-on investors who want a broader choice of investments and control over their portfolio.

💡 Tip: While pensions can’t be accessed until age 55 (rising to 57 in 2028), their tax benefits make them one of the most effective long-term investment vehicles available to UK investors. However, be aware that pensions leave you vulnerable to legislative changes, which could leave you out of pocket or unable to access your funds until a later age.

We look at how gold bullion can be added into a SIPP in detail.

• Gold bars and coins: These can be purchased from reputable UK dealers such as The Royal Mint and Physical Gold. Popular options include Britannia coins and gold sovereigns, which are both CGT-exempt for UK residents.
• Secure storage: Gold should be stored safely—either in a home safe, a safety deposit box, or through a dealer’s insured storage service.
• SIPP, Monthly, or Lump Sum: Build a gold nest egg gradually by purchasing monthly, allocate capital on a buying dip, or add gold to your pension.

If you prefer not to hold gold physically, you can also consider:

• Gold ETFs: Such as iShares Physical Gold ETC or WisdomTree Physical Gold – these track the price of gold and are backed by physical holdings.
• Gold mining stocks: Higher risk, but potential for leverage on gold price movements.

💡 Tip: Focus on ‘best value’ gold coins which are pre-owned and come at a discount to brand new versions. You’ll receive exactly the same for them when it’s time to sell.

• UK Gilts: Bonds issued by the UK government. Considered very low risk and ideal for capital preservation. With mounting national debt, yields on Government debt have increased significantly.
• Corporate Bonds: Issued by companies, these offer higher yields than gilts but come with more risk.
• Index-linked Gilts: Designed to keep pace with inflation, these can be attractive for long-term savers worried about rising prices eroding the value of their wealth.

• Bond funds and ETFs: A simple way to access a wide range of bonds without having to buy individual securities. Examples include:
  • iShares Core UK Gilts ETF
  • Vanguard Global Bond Index Fund
• Direct purchase via broker: You can buy individual gilts or corporate bonds through most UK investment platforms.

💡 Tip: While bonds typically offer lower long-term returns than stocks, they’re valuable for balancing risk and protecting capital, especially as you near your investment goals.

• ESG funds and ETFs: These vehicles provide diversified exposure to companies that meet strict ethical and sustainability criteria. Examples include:
  • iShares MSCI World SRI ETF
  • HSBC Global Sustainable Equity Fund
• Direct investment in sustainable companies: If you have the expertise, you might consider investing directly in companies leading in renewable energy, waste management, or sustainable technology.
• Green bonds: Special bonds issued to finance environmentally beneficial projects, offering regular income along with a positive environmental impact.

💡 Tip: As with any investment, it’s important to conduct thorough research, ensure that the green or ethical label is backed by transparent and verifiable criteria to avoid “greenwashing.” ESG investing can help avoid possible sharp portfolio losses caused by the bad press associated with unethical practises.

Fluidity is key to successful long-term investing. While it may appeal to select your mix of assets and sit on them for decades, inevitably what may work for the first few years, may not continue to bring success in latter years. This is down to two factors.

Firstly, the macro framework constantly evolves. Legislation changes, political unrest, and simple trend changes can significantly impact how investments perform.

Secondly, your needs as an investor develop both with your life-stage and unexpected changes to your personal circumstances. Portfolios should be updated to reflect these evolving needs.

Your ideal asset mix will depend on your age, goals, and risk tolerance:

• Young investors (20s–30s): Can typically afford to take more risk. Higher exposure to equities and global growth funds. Plenty of time to recover from impact of market downturns.
• Mid-life investors (40s–50s): May begin shifting toward a more balanced mix, including bonds and alternative assets like property or gold. Responsibilities are at their peak, so desire for predictability increases.
• Approaching retirement (60+): Often focus on capital preservation and income, leaning more heavily on bonds and low-volatility investments. A more defensive approach is most suitable.

💡 Tip: Revisit and rebalance your portfolio regularly, at least once a year, to ensure it still reflects your long-term goals and current circumstances. January works well to act as a catalyst to revisit and re-assess your investments.

Even with the best intentions, long-term investors can fall into traps that derail their financial goals. Being aware of these common mistakes can help you stay on course and make smarter decisions with your money. Awareness that greed and fear can impact the clarity of any portfolio strategy is important.

Attempting to buy at the lowest point and sell at the highest sounds ideal, but in reality, it’s incredibly difficult, even for professionals. Constantly jumping in and out of investments often leads to missed opportunities and lower returns. The greatest stock market gains have been in the weeks following the largest market crashes.

✅ Instead: Focus on time in the market, not timing the market. Consistent investing over the long term tends to produce better results.

High fees can eat away at your investment returns over time. This is particularly true for actively managed funds, trading platforms with high costs, or frequent trading habits.

There will be a spread between the buying and selling price of any asset. Knowing the size of this spread before buying the asset is crucial to minimize costly margins.

✅ Instead: Look for low-cost index funds and ETFs and compare platform charges carefully before committing. Ensure you focus on low premium gold coins and bars rather than be misled by unscrupulous brokers into buying graded, numismatic, or tiny fractional gold coins.

Putting all your money into one type of asse, like shares in a single company or only UK property, can expose you to unnecessary risk if that asset performs poorly.

The investment landscape is possibly at its most unpredictable and unstable point in decades. Global instability has led to unexpected market volatility in many sectors which would have been impossible to predict and act upon. Diversifying wealth spreads that risk.

✅ Instead: Build a diversified portfolio across different asset classes, sectors, and geographies.

Markets naturally rise and fall. Selling in a panic during a downturn can lock in losses and prevent your investments from recovering. The staying is to be ahead of the curve, rather than behind it. Reacting to fear or greed inevitably means you’re behind the curve.

✅ Instead: Stay calm and stick to your long-term plan. Volatility is normal, and historically, markets recover over time, usually most steeply in the months immediately after the fall.

Failing to make use of ISAs, pensions, or other tax wrappers can result in avoidable tax bills that reduce your net returns.

Many investors new to the world of gold want to buy gold bars as they seem glamorous and familiar from films. But gold bars attract Capital Gains Tax, whereas certain gold coins are exempt. Research which options are tax efficient before buying.

✅ Instead: Prioritise tax-efficient accounts like Stocks & Shares ISAs and SIPPs wherever possible.

What is the safest long-term investment in the UK?

UK government bonds (gilts) are among the safest options, as they’re backed by the government. While returns are lower than stocks, they provide stability and can help protect your capital over time.

How much should I invest for the long term?

There’s no set amount. It depends on your financial goals and budget. A good rule of thumb is to invest at least 10-20% of your income regularly. Even small monthly contributions can grow significantly thanks to compound interest. You can also work backwards from the amount you wish to raise and calculate how much will need to be invested to achieve that return.

Are Stocks & Shares ISAs a good option for long-term investing?

Yes. Stocks & Shares ISAs allow your investments to grow free from income tax and capital gains tax, making them ideal for long-term wealth building. You can invest up to £20,000 per year (as of 2025/26).

Should I invest in physical gold or gold ETFs?

Physical gold is great for long-term wealth preservation and inflation protection, but it needs secure storage. Gold ETFs are easier to manage and can be held in ISAs or SIPPs. It depends on whether you want direct ownership or convenience.

Can I invest ethically and still get good returns?

Yes. Many green and ethical funds perform competitively over the long term. Just make sure to choose funds with transparent ESG criteria and solid performance history.