For many of us, there are two times each year when we think mostly about investing in a Stocks and Shares ISA.
When we get close to the start of April and the end of the ISA year, there can be a last-minute panic to use as much of our ISA allowance as we can.
But it’s too late to invest any of the money we’ve spent over the year. And that’s money that we might have invested instead had we focused on it a bit earlier.
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New Year resolutions
And then when the deadline rush is over, we relax a bit. But then we soon start thinking about how we’ll manage better this year. Well, I do, don’t you?
And that’s the second time, when we get into May and June full of good intentions. It’s like the New Year resolutions of the ISA world. But summer’s coming, and… well, there’s ages to go until next April.
No rush, the weather’s improving, and we might fancy a quick holiday.
Tough year
The past few years brought the extra pains of inflation and interest rates.
But as we hit September, it looks increasingly like we could be at a pivot point. Inflation is down, and we’ve already had one interest rate cut.
And money is starting to flow back into the stock market. The FTSE 100 has climbed 12% in the past 12 months, and it seems to be holding well above the 8,000 point level.
We’ve missed some of the best stock bargains. But then, I think we face a bit less risk now. That’s the way it balances.
Cheap shares
The stock market headlines are full of high-flying stocks, like AI darling Nvidia. But for my Stocks and Shares ISA I’ve always looked for buy-and-forget shares, like Lloyds Banking Group (LSE: LLOY).
We can see the rough decade that bank stocks have had. And that’s a hint to future risk too. In tough times, financial stocks can be among the worst to suffer.
The share price has done quite well so far in 2024. But we still see Lloyds shares valued at a low price-to-earnings (P/E) ratio of about 9.5, and dropping on future forecasts.
The forward dividend yield is at 5% now, which is decent. It can’t be guaranteed, but analysts expect it to rise.
The economic risk of the past decade is far from over. But as a stock to stash away in an ISA for 20 years or so and forget, I think Lloyds is a good one to consider.
Buy the market?
I generally think going for a nice spread across the whole stock market can make sense.
I’d be tempted to add pharmaceuticals firm GSK. The sector goes through cyclical tough spells, but long-term demand has to be positive.
And then a housebuilder, maybe Taylor Wimpey. I already bought some Persimmon shares, and they show the short-term risks with this sector. But again, it’s a business with long-term demand.
That’s just a start, and I see plenty of buy-and-hold possibilities across a diversified set of sectors to build my Stocks and Shares ISA.
And I do think the prospects for UK shares look brighter than usual at the moment.
