What is the best way to invest £100,000?

When earning good money it can feel like there’s more responsibility than ever to press ahead and make progress toward your goals. Yet for many people, rising income comes from working hard at a particular craft. In most cases that’s nothing to do with finances. So why should you also be an expert with money and automatically know how to make the most of it?

Truth be told, there is no single best way to invest £100,000. Suitable options will depend on your goals, your risk tolerance and time frame. However, many people reaching this income level find themselves facing the same questions:

• Should I invest £100,000 myself or get professional advice?
• Where should I invest £100,000 first: a pension, Stocks and Shares ISA or General Investment Account (GIA)?
• How do I guard against the 60% ‘tax trap’ once my income exceeds £100,000?

Let’s go through each one and help set you up for success.

How should I invest £100,000? By myself, or with professional advice?

The very first question is whether you have the time, interest and expertise to invest yourself, or whether you’d prefer to have an expert take care of it all on your behalf? 

If you’re too busy to do your own research on investments, that’s not the disadvantage you may fear. The advantage of life with Charles Stanley is that investment managers and financial planners work under the same roof. So, if you know you should invest but don’t know where to begin, your journey can start with a personal conversation with a financial planner, asking questions like “what does this money need to do for me?”, “when?” and “how?”. The next step, seamlessly, is meeting an investment manager who can build and manage a portfolio that reflects your exact circumstances, your exact objectives, and your exact attitude to risk. 

However, if you’d rather invest yourself, or don’t think a wealth manager is right for you at this stage, that’s perfectly fine too. Charles Stanley Direct is our investment platform for people who prefer to take the DIY approach. It offers access to thousands of investments, including shares, investment funds, exchange traded funds (ETFs), investment trusts and bonds.

To start learning, our market commentary pieces are a great place to start. You can gather intel on markets, learn new industries and get ideas. 

Don’t miss our Insights here: Commentary | Charles Stanley

Start your journey on Charles Stanley Direct: Online Investing | Low cost trading platform | Charles Stanley

Where should I invest first?

Before choosing investments, it helps to choose the right home for them.

1. Stocks and Shares ISA

A Stocks and Shares ISA is often one of the first places to look when investing for the long term.

The government would love to see more of the population put their money to work in Stocks and Shares ISAs. From April 2027, the Cash ISA limit will be reduced from £20,000 to £12,000, to incentive more people to take risk to build wealth over the long term. It could help bring growth, create long-term affluence and take strain off the state pension. In a Stocks and Shares ISA, you don’t pay income or capital gains tax on your investment returns. That tax shield has become more valuable as the tax-free allowances for capital gains and dividends have fallen to £3,000 and £500 a year respectively. 

Our Stocks and Shares ISA at Charles Stanley Direct is unlike many others in the market because it’s flexible, meaning that if you withdraw money and put it back within the same tax year, the replacement does not count towards your annual ISA allowance. This flexibility is attractive if you need temporary access to your money but don’t want to be disadvantaged by that long-term.

Check it out here: Flexible Stocks & Shares ISA | Investment ISA | Charles Stanley

2. General Investment Account 

A GIA can be useful once you’ve used up your ISA allowance but still have more to invest. Unlike an ISA or pension, investments within the GIA get no special tax treatment. A GIA does not have the same tax protection as an ISA or pension. You’ll need to think about dividend tax, capital gains tax and how your investments are managed over time. This doesn’t make a general investment account (GIA) a bad option. It’s a very common option used alongside both ISAs and pensions. But it requires more attention from a tax planning perspective, especially if your income is growing past £100,000.

3. Pension

For many higher earners, pensions take centre stage for retirement planning.

As well as any workplace pension contributions from your employer, personal contributions can receive tax relief. This helps reduce your net income, which becomes important once your income approaches or exceeds £100,000 if you want to retain certain means-tested benefits like tax-free childcare, 15-30 hours of free childcare and your personal allowance worth £12,570.

The trade-off with investing in your pension is access. Pension money is usually locked away until age 55 (rising to 57 from 2028 for most people) so it is not the right home for money if you expect to need it sooner. You also need to think about how pension withdrawals are taxed in retirement. A pension can be highly tax-efficient, but it is not the same as an ISA. The money inside grows in a tax-advantaged environment, but income you take from it in retirement faces income tax beyond a tax-free amount of 25% of the pot in most cases.

Guard against the 60% tax trap

In 2025-2026, 725,000 high earners were caught in the so-called 60% tax trap. 

Once taxable income passes £100,000, the £12,570 personal allowance starts tapering off. Every £2 in earnings reduces it by £1. Taking this into account, you’re paying an effective marginal tax rate of 60% between incomes of £100,000 and £125,140. The trap usually hits people hardest in their 30s and 40s, when careers start to peak, but they still have significant costs associated with buying a home and raising children.

What’s more, if you have any children, note that in the three years before a child reaches school age, benefits can be worth up to £30,000. And unfortunately, like the personal allowance, these also are lost for parents in the £100,000 to £130,000 income zone. In fact, it’s worse than the personal allowance because all tax-free childcare is lost in cliff-edge fashion after passing £100,000. Controversially, parents can find themselves at an overall net loss for earning more as a couple. 

However, we’re here with our expertise to show you legitimate ways to plan around this.

If you have any freedom over how your income is received, consider deferring bonuses or splitting income across tax years. Many wealthy individuals also opt for more pension contributions or salary sacrifice to lower taxable income below the £100,000 threshold.

If you’d like to speak to one of our financial coaches for free, you can book in a 15-minute session using the button below.