How should I invest £30,000?

Q: "I have around £30,000 I want to invest. I am really stuck on the best approach. I want to invest into the S&P 500, but is it wise to put £20k into a Stocks and Shares ISA so that I am not taxed on this money? I assume S&P 500 I will have tax that I have to pay? Any guidance around this would be very appreciated."

Certainly investing the maximum you can into an ISA is a smart way to make sure your savings and investments are as tax-efficient as possible. You can save up to £20,000 in the current tax year in a stocks and shares ISA and you won’t pay any income or capital gains tax on any gains made on investments within it.

It’s important to remember that an ISA is effectively a wrapper. You choose what goes into that wrapper. The S&P 500 is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices, but depending on what else you have saved or invested, you might want to consider investing some of the £30,000 in another index tracker or a completely different asset class altogether.

Diversification is a really important and valuable tool to an investor. By investing in different assets, or even just in different asset classes, in different parts of the world, etc, such as large and small companies, or UK and US companies, you spread the risk of investing in any single one. A bit like the old adage about not keeping all your eggs in one basket, by diversifying your investments you make sure that one slip doesn’t mean you lose the whole lot, for instance.

If you’re relatively new to investing or simply want to take a low-cost approach and invest in index trackers, you can still diversify and spread that risk by putting some of your £30,000 into one or two more index trackers. Our Investment Finder has a full range of over 3,000 funds and we also have a smaller selection in our Select 50, which is a range of 50 or so of our favourite funds, selected by experts, which are all available on our website.

If you've got question of your own, you can ask the experts here. 

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. Tax treatment depends on individual circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.