3 reasons I’m still picking stocks for my ISA in 2024

Edward Sheldon could just invest his ISA savings in an index fund. Instead, he picks stocks for his portfolio. Here are three reasons why.

| More on:
Smiling young man sitting in cafe and checking messages, with his laptop in front of him.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

In today’s investing world, in which ‘passive’ investments such as index funds are hugely popular, picking stocks for an ISA might seem a little old school. Yet, here I am still actively selecting shares for my portfolio.

Why? Well, there are several reasons. Here’s a look at why I haven’t abandoned stock-picking just yet.

Fist-pump moments

Index funds can be a great way to get diversified exposure to the stock market. However, for me, this approach to investing is a little boring.

Personally, I enjoy spending time analysing companies, spotting trends, and unearthing hidden opportunities. This keeps me engaged and motivated.

Meanwhile, I love the euphoria that comes with landing a big winner. If I was to switch to passive investing, I would miss the ‘fist-pump’ moments that come with stock-picking.

The potential to beat the market

This leads me onto my second reason for sticking with individual shares. When picking stocks, investors can potentially generate market-beating returns.

Now, beating the market isn’t easy. In fact, a lot of professionals struggle to do it. But it’s certainly possible. All that’s really needed to outperform over the long term is a few big winners.

It only takes a handful of big winners to make a lifetime of investing worthwhile

Legendary fund manager Peter Lynch

Thankfully, I’ve had my fair share of winners in recent years.

Apple (NASDAQ: AAPL) is a good example. I started buying shares in the iPhone maker in late 2018 when they were trading for less than $40. Today, they’re trading at $180 – around 350% higher.

If I can keep picking winners like this, I may be able to achieve financial freedom faster.

So many opportunities today

Finally, picking stocks gives me the ability to customise my portfolio. My ISA isn’t just a collection of random stocks – it’s a reflection of my values, interests, and long-term vision.

I’ve invested in companies I believe in, all of which have innovative products/services and look set for strong growth in the long run.

And what excites me is that there are so many opportunities for long-term investors like myself today. With the world currently undergoing a major technology revolution, there are lucrative opportunities everywhere.

Going back to Apple, it’s likely to release artificial intelligence (AI)-enabled iPhones in the next few years. I think this could be a game-changer for the company.

It’s also likely to refine its new Vision Pro headset. In five years’ time, this headset could be far more powerful (and streamlined) than it is today.

Additionally, the company is continuing to make moves in the digital healthcare space. According to CEO Tim Cook, healthcare will be the company’s “greatest contribution to mankind”.

Given the innovation here, I plan to hold on to the stock. It’s a $2.8trn company today with a relatively high valuation, which is a risk. But I reckon it has the potential to continue delivering above-average returns in the long run, although there are no guarantees.

A rewarding experience

Of course, stock-picking isn’t for everyone. It requires time, effort, and a healthy dose of risk tolerance.

Yet for those who have the time for it, and believe in their ability to identify winning investments, it can be a very rewarding journey.

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.

Edward Sheldon has positions in Apple. The Motley Fool UK has recommended Apple. 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.

More on Investing Articles

Investing Articles

Up 75% in 5 years, I reckon this FTSE 250 still has lots to give!

Our writer explains why this FTSE 250 stock could still continue to provide growth and returns despite already being on…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

2 high-quality FTSE 250 stocks to consider buying

The FTSE 250 is home to some of the best investment opportunities out there. This Fool highlights two stocks for…

Read more »

Investing Articles

The Marks and Spencer share price dips! Is this my chance to buy?

Marks and Spencer was one of the hottest stocks on the market last year. With its share price falling in…

Read more »

Growth Shares

How low could the boohoo share price go?

Jon Smith explains why the enterprise value and the low risk of bankruptcy should help to prevent the boohoo share…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

Down 23% in a year! Can the Diageo share price regain £30 in 2024?

This Fool UK writer is checking the charts to see if the Diageo share price can recover from the recent…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Investing Articles

I wouldn’t touch this FTSE 100 stalwart with a bargepole

Despite looking like a bargain on paper, this Fool is avoiding FTSE 100 constituent Vodafone at all costs. Here he…

Read more »

Investing Articles

I’m waiting for the Rolls-Royce share price to pull back before I buy

The Rolls-Royce share price has been the Footsie's best performer in the last year. But this Fool has no intention…

Read more »

Front view photo of a woman using digital tablet in London
Dividend Shares

2 dividend stocks to take me from £0 to £9.5k in second income

Jon Smith talks through some ideas with second income potential, including one stock that has a dividend yield above 10%…

Read more »