How I’d invest £5k in a Stocks and Shares ISA now

Rupert Hargreaves explains how he would invest £5,000 in a selection of UK equities in a Stocks and Shares ISA today.

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.

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I am currently looking to invest a lump sum of £5,000 in my Stocks and Shares ISA. With the ISA allowance deadline rapidly approaching, I have been searching for the best stocks to buy to make the most of my contribution.

Investors can put £20,000 a year into a Stocks and Shares ISA, but this is a ‘use it or lose it’ allowance. It does not roll over to the next tax year.

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With that in mind, I have been searching for the best income and growth stocks to buy. There are a couple of companies that I want to add to my portfolio considering their potential.

Stocks and Shares ISA investments

I am looking for companies that have robust competitive advantages, corporations I can buy and forget for the next decade. But these businesses are relatively few and far between.

I would not trust many firms to look after my money for an extended period. That is not because I do not trust them, it is because I know the business environment is incredibly competitive.

Many businesses try their best to succeed. Most fail simply because they do not have the competitive advantages or economies of scale required to compete effectively.

One of my favourite income and growth investments I would buy for my Stocks and Shares ISA right now is the financial services group Close Brothers.

This company provides financing services and wealth management to a unique group of clients. It has a strong reputation in the financial services industry for its level of customer service and unique offering.

Some challenges the company could encounter include regulatory headwinds, which could increase costs and bureaucracy.

International growth

Along the same lines, I would also acquire wealth management group Schroders for my portfolio.

This company has an international presence and reputation for managing the wealth of the rich and famous. This reputation has helped the business increase its assets under management and expand its footprint.

I do not think this reputation will change any time soon, suggesting the competitive advantage will remain in place.

Unfortunately, the company is also exposed to the same headwinds as its smaller peer. Regulatory challenges and competition in the financial services sector could hit growth over the next few years.

Sticking with the financial services sector, I think NatWest group would also make a great addition to my Stocks and Shares ISA. The bank has made tremendous progress in recent years, reducing costs and increasing profitability.

Dividend champion

It has now become a dividend champion, and I think there is further room for growth as the UK economy rebuilds after the coronavirus pandemic.

That said, the company is exposed to the UK economy. If there is a sudden economic downturn, growth could take a hit in the bank may have to book losses on loans made to customers.

Even after taking this risk into account, I would acquire the lender for my portfolio today.

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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Schroders (Non-Voting). 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.

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 considered, so you should consider taking independent financial advice.

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