The Stocks and Shares ISA deadline is almost here. How would I invest £20k?

The Stocks and Shares ISA deadline is just around the corner and allows me to invest up to £20k each year with the gains being totally tax-free. James Reynolds discusses his picks for this tax year.

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The end of the fiscal year is approaching quickly. As a result, I’m starting to consider how I’ll invest my Stocks and Shares ISA allotment for the coming year.

I normally try to use as much of my ISA allocation as feasible at the start of each tax year. Indeed, studies demonstrate that using as much of the allowed amount as feasible, as early as possible, can result in higher tax-free returns.

However, at the end of the day, what counts most is my financial status. It’s not the end of the world if I can’t come up with the whole limit at the start of the tax year. Since there are no restrictions on when I may invest in a Stocks and Shares ISA, I can continue to invest regularly throughout the year. The amount of money I can save during the tax year is the sole restriction and is capped at a maximum of £20,000.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Choosing Stocks and Shares ISA investments

I’d search for both income and growth options while shopping for assets for my ISA. These, I believe, will allow me to balance the portfolio with a range of different stocks and income methods that should add to its value in as many ways as possible.

I’d also seek a combination of mutual funds and individual equities. BlackRock Throgmorton (LSE: THRG) is now one of my favourite investing funds. This trust invests in small-cap growth stocks in the hopes of outperforming the market. It also pays a small 1.3% dividend yield at the time of writing.

I believe it offers the ideal combination of development and income to meet my ISA objectives.

This trust does, however, impose a performance fee in addition to a usual management fee. In the long term, these fees may eat into my profits. And if the fund doesn’t choose the correct assets, the results might be far worse. These are the major dangers and problems of investing in the stock market through an investment trust.

This is why, for my Stocks and Shares ISA, I would also select a few shares from specific companies I believe to be safer bets.

Single stocks to buy

BAE Systems and Vodafone are two stocks that I would consider purchasing. These firms are attractive income opportunities, with dividend yields of 4% and 6%, respectively. They’re also benefiting from growth tailwinds. Increased defence spending should improve BAE’s sales and earnings. Meanwhile, Vodafone may benefit from the increasing availability and necessity of mobile data.

As time goes on, these businesses may encounter challenges such as increased expenses and competition, which might eat into profit margins. However, given their long-term development and income potential, I believe these companies would be excellent additions to my tax-efficient portfolio.

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.

James Reynolds has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

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