How I’d invest £10,000 in my Stocks & Shares ISA right now

Jon Smith explains how he’d chop up £10,000 right now and invest in his favourite sectors for his Stocks and Shares ISA.

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The volatility in the stock market at the moment isn’t easy to navigate in the short term. However, I’m of the opinion that within a few years, the market will be higher than where it is now. So when I’m considering how to invest £10,000 in my Stocks and Shares ISA right now, I think there are several opportunities to take advantage of.

Avoiding timing the market

The first thing I’d do is split my £10,000 into three or four chunks. Given the market volatility, the stock market could fall in coming weeks. Therefore, I’m going to invest each chunk over the space of the next couple of months. This helps to even out my buying prices, and possibly allows me to buy some stocks at even cheaper levels than currently seen.

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I have a limit for the next year of £20,000 in my Stocks and Shares ISA. This means that there’s no rush to make use of the £10,000. Why is the ISA route important? Ultimately, the benefit of my investing this money via my ISA is that I don’t have to pay any tax on profits or dividends in the future.

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.

Selecting my favourite sectors

After splitting up my money, I want to divide each lot into even smaller amounts of £200-£400. This allows me to buy around 10 stocks at any time. I want to spread these stocks out to ensure I have a broad exposure to my favourite sectors. This likely means owning two or three stocks from the hottest sectors that I believe in.

Personally, I’d pick healthcare, energy and financial services as my go-to areas right now for my Stocks and Shares ISA. I think that there will be a steady demand for healthcare in the future, with the ageing world population. Energy, particularly renewable energy, is going to be the focus of high investment. Finally, financial services should offer me good performance thanks to higher interest rates in developed countries.

Using my Stocks and Shares ISA for income

I’d focus on UK-listed stocks from those sectors for my ISA. This isn’t to say that I can’t own US-listed stocks, and I might want to take advantage of that option for the future.

At the moment, I’d include Legal & General, SSE and GlaxoSmithKline in my £10,000 investment pot. As well as being in my target growth sectors, each company also shares the same characteristic. Each currently has a dividend yield above the FTSE 100 average of 3.78%.

This income element is also important for me in my ISA. I benefit from not paying any dividend tax on receipt of the income. Further, if we do see a market crash, then even if I’m down on my initial investment, I can offset some of this by the income that I receive during this period. This helps to tie in with my long-term approach to investing.

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Jon Smith has no position in any share mentioned. The Motley Fool UK has recommended 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.

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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