Why I’m still buying UK shares in my Stocks and Shares ISA today!

I have no intention to stop buying UK shares despite the uncertain economic outlook. I think I can still make big returns from my ISA in 2021.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

It’s not a surprise that UK share markets have reversed course in recent days. The FTSE 100 and FTSE 250 have basically lost all the gains they enjoyed during a sprightly start to 2021.

There’s a glut of reasons why UK share investors have got a lot gloomier over the eagerly-anticipated economic rebound. These include:

  • The emergence of Covid-19 variants that have caused infection rates to spike and lockdowns to return. Concerns that these new strains could be resistant to vaccines from the likes of Pfizer and AstraZeneca have fanned speculation over a long and widescale pandemic, too. Vaccine rollout problems in Europe have also tested investor nerves in recent weeks.
  • Signs that trade tensions are ratcheting up between major nations. It had been suggested that a new White House administration would soothe the frosty rhetoric between the US and other trade partners, especially China. Joe Biden’s decision to reimpose new aluminium import duties on metal shipped from the UAE has dampened these hopes.
  • Disruptions to UK-EU trade following the end of the Brexit transition period. Trade flows across the English Channel have taken a significant hit due to paperwork issues and higher costs. Many of these problems look set to stay as per December’s trade agreement, too, not just for much of 2021 but possibly indefinitely.

Why I’m continuing to buy UK shares!

As I say, it’s hardly a shock that investor confidence has taken a smack. But I have no plans to stop building my own UK share portfolio because of the issues I’ve described above.

Image of person checking their shares portfolio on mobile phone and computer

I clearly need to be extremely careful as the stress on corporate profits and balance sheets persists. The stream of dividend cuts and cancellations in 2020 sum up the huge pressure UK shares are feeling during the pandemic. Many investors could suffer the problem of poor returns for some time yet. Perhaps even another stock market crash could be around the corner.

But as someone who takes the time to properly research UK shares before piling in, I don’t feel that I should be afraid to splash the cash in 2021. There are plenty of defensive stocks out there, after all, for me to choose from. Companies like medicine maker GlaxoSmithKline and water supplier Severn Trent, for instance. Food producer Premier Foods and alcohol manufacturer Diageo as well. These sorts of stocks remain reliable profits generators during economic upturns and downturns.

However, I don’t feel that I have to only go defensive. My decision to buy UK shares in my Stocks and Shares ISA with e-commerce exposure, like packaging maker DS Smith and distribution specialist Clipper Logistics, is already paying off and should continue doing so. Other stocks like those involved in cloud computing, green energy and video games are great buys in my opinion too. They offer the chance for me to make huge returns whether or not the broader global economy remains depressed for a long time.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild owns shares of Clipper Logistics, Diageo, and DS Smith. The Motley Fool UK has recommended Clipper Logistics, Diageo, DS Smith, and GlaxoSmithKline. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Newspaper and direction sign with investment options
Investing Articles

When cheap markets meet favourable conditions, sentiment flips very quickly

London’s stock market is cheap — some sectors, even cheaper. Given a change in sentiment, the uprating could be substantial.

Read more »

Investing Articles

Empty Stocks and Shares ISA? I’d snap up these 3 stocks to start with!

Sumayya Mansoor explains how she would start to build wealth from scratch with an empty Stocks and Shares ISA and…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

7.7% yield and going cheap! Why is this unknown FTSE 250 stock flying?

It's no household name, but there's one FTSE 250 stock with a high dividend yield and booming profits that looks…

Read more »

Photo of a man going through financial problems
Investing Articles

I’d stop staring at the Nvidia share price and buy this FTSE 100 stock instead

This writer reckons there is a smarter way to invest in Nvidia today without taking on stock-specific risk. Here is…

Read more »

Young lady working from home office during coronavirus pandemic.
Top Stocks

5 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Young Asian man drinking coffee at home and looking at his phone
Dividend Shares

These 3 FTSE 250 stocks offer me the highest dividend yields, but should I buy?

Jon Smith considers FTSE 250 shares with a very high yield, but questions whether the income is going to be…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Is FTSE 100 takeover target DS Smith a great buy?

A mega-merger between FTSE 100 giants DS Smith and Mondi has the City abuzz. But is there any value in…

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

The WPP share price dips as profits fall. Here’s why it could be a top dividend buy

I'm starting to think the WPP share price undervalues the stock, especially if the long-term dividend outlook comes good.

Read more »