Every investor dreams of making a million. If you start early and stick with it, making good use of your stocks and shares ISA allowance, then it can be done. The following two investment trusts would have got you there in just 20 years.
If you had invested each year’s maximum ISA limit in the top performing investment trust Aberdeen New Thai (LSE: ANW) from 1999 to 2018, you would now have a cool million (and a bit). You would have invested £206,560 in total, and the trust would have turned into a staggering £1,070,583.
No investment trust has done it better over the period, although others have given it a go. Scottish Oriental Smaller Companies (LSE: SST) would have turned the same money into £956,981. Not quite a million, although I doubt investors will be complaining.
Past performance figures are slippery things. Everybody would be a multi-millionaire if they had the benefit of perfect hindsight, but none of us do. However, these figures still show how your wealth can grow, if invested wisely for the long term.
So should you buy Aberdeen New Thai today? As you can imagine with a country-specific fund like this, it comes down to how well you expect the Thai economy to perform. You won’t be surprised to hear that it has been volatile. Twenty years ago Thailand was still reeling from an economic boom that had ended in bust during the 1997 Asian crisis.
This left it with large account deficit, exhausted foreign currency reserves, a slumping currency and inflation of 10%. As so often happens, the perfect time to invest was immediately after a meltdown, when assets could be picked up cheaply.
Today, Thailand generates two thirds of its GDP from exports and this is a worry with the global economy on the brink of recession. If regional powerhouse China slumps, Aberdeen New Thai could follow. Thailand is still battling to escape the middle income trap, which won’t be easy with half the workforce employed in agriculture, while the country is also ageing. You might want to invest a small corner of your portfolio, but not enough to make you a million.
The Scottish play
Scottish Oriental Smaller Companies invests mainly in smaller quoted companies in Asia, which includes the Indian subcontinent but excludes Japan and Australasia. I should declare an interest here, I bought it around 15 years ago. Sadly, I was a newbie investor then and only invested £1,803, so although it has grown 214% since then, my £5,661 holding is well short of a million. Dream meets reality, again.
Sadly, while strong over 20 years, it hasn’t been such a good hold for the last five, during which time it grew just 35%, less than half the 80% growth of its Asia-Pacific benchmark. That makes the fund hard to recommend for new investors. In fact I’m wondering whether to sell.
Don’t despair, because there are plenty of promising investment trusts out there. Here are 2 income investment trusts to consider. While these two could form the basis of a good starter portfolio. There is more than one way to crack that million.