As things stand, 2025 looks like being another good year for markets. But as night follows day, we can be sure this purple patch will run out of steam at some point. That’s why I’ve been doing three things to position my Stocks and Shares ISA in advance.
A bit of (summer) spring cleaning
The first thing I’ve been doing is reviewing my portfolio and checking that I’m still content with the stocks I own.
Notice that I said ‘content’ rather than ‘happy’. As a general rule, we focus on the long term here at Fool UK. Put another way, we tend to err on the side of sticking with investments if the outlook isn’t too ghastly. This is because it’s value rather than emotions that ultimately drive returns.
Sure, this will always be a judgement call to some extent. No one truly knows where the price of any stock is going.
If there’s been a fundamental shift in a company’s investment case however, I might be inclined to sell. Things could go from bad to worse if general market sentiment tumbles.
Buying without fail
A second thing I’ve been doing is continuing to buy shares in an exchange-traded fund (ETF) that forms the core of my ISA. In complete contrast to the stock-picking part of my portfolio, this happens every month without fail.
There are two reasons for this. First, owning this fund means that my money is instantly spread around more companies than anyone could ever realistically own directly. This ‘safety in numbers’ strategy should mean I don’t need to worry (too much) when the market hits a sticky patch.
Second, despite all the corrections and crashes we’ve witnessed over the years, the market hasn’t yet failed to recover. History can never be a perfect guide to the future, of course. But anyone betting against the resilience of the human race and its capacity to innovate hasn’t done well so far.
I’d still take the other side of that bet.
My favourite fund
The specific fund I own in my ISA is the SPDR MSCI World ETF (LSE: SWRD). As it sounds, this invests in a huge number of stocks from around the planet. Around 71%’s invested in the US, where the tech titans dominate.
Why this fund over alternatives? Well, one key reason is that the annual charge is just 0.12%. That’s very low. And as any experienced Fool will tell you, costs really matter when it comes to growing wealth over decades (which is how long I’m investing for).
This isn’t to say that the value of my holding won’t dip when we next think we’re going to hell in a handcart, possibly due to the consequences of Donald Trump’s tariff tantrum.
This particular ETF only invests in developed countries too. So I’d need to find another investment if I wanted exposure to (riskier) emerging economies.
Looking for bargains
A final thing I’m doing is preparing a wishlist of stocks to buy. For me, these will always be companies boasting solid fundamentals, market-leading positions and sound finances.
Understandably, businesses like this rarely go on sale. But a market crash may provide such an opportunity, especially when other investors are panicking and chucking innumerable babies out with the bath water.
