Starting a Stocks and Shares ISA in 2024: here’s what the experts say

Shaky UK share prices might scare people away from a Stocks and Shares ISA right now. But I say we need to think long term.

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I think 2024 could be one of the best years ever to start a Stocks and Shares ISA. But, before I say why, I’ve been taking a look at some of the tips from the experts out there.

The first thing they all stress is that there’s still plenty of time left for the current 2023-24 ISA. So, as long as we haven’t hit the full £20k limit, there’s no need to wait.

Most ISA providers point out that using as much of our allowance as we can each year gives us the best chance of long-term wealth. And that, in fact, has been a big priority for the UK’s 4,000+ ISA millionaires.

Cash ISA?

I see the subject of Cash ISAs coming up a lot. I’m not surprised, as they offer the best interest rates we’ve seen for some time. It’s easy to find 5% for instant-access accounts, and some fixed-term ones offer more.

But a number of financial firms remind us that rates like that are still too close to the inflation figure. Typically, Cash ISAs don’t beat inflation. And that means they lose money in real terms.

I don’t know about anyone else, but saving tax doesn’t excite me too much if it’s a losing investment in the first place.

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.

Short vs long term

As many experts say, a Cash ISA can be great for saving for something short term, or holding an emergency cash supply.

Individual approaches to risk are important too. At least Cash ISA returns are guaranteed, while Stocks and Shares ISA returns aren’t.

But many agree that shares offer the best chance for long-term growth.

Over the past 10 years, we’ve seen an average annual Stocks and Shares ISA return of 9.6%. Over the very long term, the UK stock market has average closer to 7%. And that’s something that could build up nicely over the decades.

Pooled investments

It can be hard to pick which shares to buy. But one approach comes up regularly — to put cash into pooled investments, like Investment Trusts.

In fact, UK ISA millionaires hold a lot more of their cash in investment trusts than most of us. It’s around 40%, compared to 25%.

Investment trusts give us a way to hold small stakes in a lot of stocks to get some diversification. I rate that as essential.

Top tip

The most common tip I’m seeing from the experts is a key one. It’s to invest as much as we can, as soon as we can, and keep doing so for decades.

I agree.

So why do I think 2024 could be a great year to start?

It’s just because I see so many top UK shares going cheap right now. It makes me think the FTSE 100 is having an early 2024 New Year sale. But it surely can’t go on for ever?

Yes, I see bags of short-term risk in a Stocks and Shares ISA right now. But it’s easily my top long-term way to invest.

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.

Views expressed 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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