Why wait until April? Here’s how I’d invest a £20K Stocks and Shares ISA now!

Our writer explains why and how he would aim to invest a £20K Stocks and Shares ISA now, rather than waiting several months to see what happens.

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Every April there is a rush as lots of investors scramble to put money into a Stocks and Shares ISA before the tax year ends.

But rather than wait, if I had spare cash today I would rather tuck it into an ISA now and start investing immediately if I found opportunities that seemed appealing enough.

Bias for action

The annual April deadline is for putting money into an ISA, not investing it.

Still, if I invest now rather than in April or beyond, I may earn dividends sooner.

That is because shares declare an ex-dividend date, after which new shareholders will not be eligible for a given dividend. So in some cases, buying a share now rather than in April may entitle me to a dividend I would miss if I bought down the line.

Not only that, but I think some shares look very attractively valued at the moment relative to the quality of the businesses concerned.

If I wait to buy them, perhaps I could get them at a cheaper price. Then again, I might not.

I could miss out on an opportunity that takes years to come back at an attractive valuation, if it ever does so.

Investing an ISA

Investing a £20K ISA would give me enough money to diversify. I would spread the money evenly over five to 10 different companies.

Ought I to go for growth or value?

Some FTSE 100 shares have juicy yields right now. I already own stakes in companies like M&G and Vodafone. At current share prices, they yield 8.9% and 11.7% respectively.

I would likely want to buy some income shares. But a Stocks and Shares ISA lends itself perfectly to my long-term investing mindset. So I would buy some growth shares too.

I would stick to blue-chip companies with proven business models, a track record of profitability, and a large ongoing market.

Growth and income

In some cases, a share may even allow me to target both growth and income.

As an example, consider one of the shares I would buy more of (I already own it) if I had a spare £20K to invest in my ISA today: JD Sports (LSE: JD).

Over time, the performance has been stellar. In the past decade, the JD Sports share price has grown over 600%.

Lately, though, things have been sluggish. The shares are down 30% so far this year after a profits warning hurt investor enthusiasm for the sportswear retailer.

But with plans to open hundreds of new stores annually, I see strong growth prospects.

The dividend yield is currently a meagre 0.9%. But the shareholder payout more than doubled last year. Over time, if the business performs strongly, I think the dividend may follow.

Bargain hunting

Then again, that may not happen.

JD Sports’ profit warning underlined the risk of weak consumer spending hurting earnings.

Still, the company expects to be solidly profitable this year. Over the long term, I think its proven business model could help it grow while boosting the dividend.

Yet its price-to-earnings ratio is in single digits.

I see that as a bargain.

If enough other investors do, JD Sports might not stay a bargain for very long.

That is why I would happily buy it for my Stocks and Shares ISA today along with similar bargains, instead of waiting until April.

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.

C Ruane has positions in JD Sports Fashion, M&g Plc, and Vodafone Group Public. The Motley Fool UK has recommended M&g Plc and Vodafone Group Public. 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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