How I’d invest a Stocks and Shares ISA with a 10-year time frame

Our writer explains how he focusses his Stocks and Shares investment choices by using a long-term perspective.

Smiling senior white man talking through telephone while using laptop at desk.

Image source: Getty Images

As an investor with a long-term mindset, I think of a Stocks and Shares ISA in terms of years not months. That has some implications for how I go about choosing shares to buy in it.

Fade out fads

Some businesses do very well while their product or service matches a short-lived fashion. But that is not the basis I would want for a long-term investment case.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

How can I decide what might turn out to be a short-term fad, versus the start of a long-term trend? There is no easy way to tell, in my view, but a company with a single business line that seems very on-trend now strikes me as more likely to end up looking like a fad than a business that has a variety of revenue streams.

Think about the future world

The world 10 years from now will likely seem different in some ways, but reassuringly familiar in others. I think some business areas will remain in high demand, from network operators such as National Grid to retailers like Tesco.

I think some businesses may need to change themselves to stay relevant but have a strong base on which to build. For example, shifts in homeware trends could hurt Dunelm – but they could also provide an opportunity.

Meanwhile, other areas could see demand declines. That is one concern I have about tobacco shares like British American Tobacco.

I cannot future-proof my portfolio, as no one knows what will happen in coming years. Even if I am right about a broad business area, for example, maybe I will be wrong about a particular company within that area. But what I can do is try to increase my margin of safety. If I think one business area is very likely to see sustained demand in a decade, that makes it more attractive for me to explore than a sector I think may lack staying power.

Focus on value, not just share price

Short-term swings in share price may come out in the wash over a longer investing time frame. Whether I buy a share now or next month for a few pennies less, might make little difference to my long-term returns if the business performs strongly enough.

That is why I look for businesses I think can create substantial value over the course of years. However, although share price is only one part of that it is still a part. So I cannot simply ignore it. No matter how good a company’s long-term prospects, its attractiveness for my Stocks and Shares ISA will be reduced if the share price looks too expensive to me. For example, I like the business model and competitive advantage of Dechra Pharmaceuticals. But it has a price-to-earnings ratio of 52. I think I can find better value for my Stocks and Shares ISA elsewhere.

Investing a Stocks and Shares ISA for the long term

I look for the same thing each time I buy shares for my Stocks and Shares ISA – does the business in question have a competitive advantage that could enable it to be profitable over the long term? If so, is the current share price attractive enough to offer me value?

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you'll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

Christopher Ruane owns shares in British American Tobacco and Dunelm. The Motley Fool UK has recommended British American Tobacco and Tesco. 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.

More on Investing Articles

Social media and digital online concept, woman using smartphone
Investing Articles

Will Lloyds shares recover in 2022?

Lloyds shares have struggled this year and the looming recession won't help. But I'd still buy them today.

Read more »

Two hands holding champagne glasses toasting each other with Paris in the background
Investing Articles

Can the stock market make me rich even now?

Here are three ways I'm coping with the stock market's recent bout of weakness and aiming to build wealth in…

Read more »

Cogs turning against each other
Investing Articles

3 top investment trusts to buy right now

Investment trusts offer a wide range of options for investors. And in troubled times, they provide some safety through diversification…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

Why hasn’t the FTSE 100 crashed in 2022?

The catastrophic events of 2022 have left investors around the globe fearing the worst for stock markets. And some have…

Read more »

Trader on video call from his home office
Investing Articles

2 inflation-resistant FTSE 100 stocks to buy today

Soaring inflation could dent my returns if I don't take care. Here are two top inflation-resistant FTSE 100 stocks I'd…

Read more »

Tabletop model of a bear sat on desk in front of monitors showing stock charts
Investing Articles

Why a bear market is an investor’s best friend

A bear market can certainly be scary. But any investor tempted to sell might benefit by looking at Warren Buffett's…

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

The Rolls-Royce share price could be stuck below £1 for a while. Should I buy?

The Rolls-Royce share price has been trading at penny stock levels since April. Could the stock be a bargain at…

Read more »

Young brown woman delighted with what she sees on her screen
Investing Articles

I’m aiming to make £45,000 in passive income with UK shares and never work again!

Investing regularly in UK shares can generate a substantial passive income over the long run. Zaven Boyrazian demonstrates how.

Read more »