If an investor put £500 a month in a Stocks and Shares ISA, here’s what they could have in 8 years

Jon Smith points out how to diversify risk in a Stocks and Shares ISA and talks through a specific mining trust he thinks could do well in the future.

| More on:
piggy bank, searching with binoculars

Image source: Getty Images

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.

Most investors like the concept of compounding profit over the long term. But it can be trickier to stick to a regular monthly investment plan. In reality, the two go hand in hand. Using a Stocks and Shares ISA and adopting a sensible strategy can enable someone to speed up the process. Here’s how.

Building a strong portfolio

The benefit of using an ISA is that an investment portfolio can grow faster. Any dividends received aren’t subject to dividend tax, meaning the full amount can be enjoyed or reinvested. Further, when selling a growth stock for a profit, there’s no capital gains tax.

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.

Of course, these advantages apply only if the portfolio is well-positioned. Therefore, the following key point is how to build a robust ISA. To do this, an investor needs to diversify their risk. This can be done in multiple ways.

Risk needs to be spread across sectors, so that means owning companies from consumer staples through to tech. It also relates to geography, owning companies with exposure not just to the UK but around the world. Finally, not just putting all the money in a handful of names, but rather a broader portfolio, can act to reduce the concentration risk associated with one or two stocks.

Show me the money

Now let’s talk about numbers. Putting away £500 a month isn’t going to work for everyone, but let’s assume this is the figure. I’m also going to assume an annual growth rate of 6% for the portfolio, which I believe is reasonable over the long term. By the end of year eight, the portfolio could be worth £62.2k.

This is just a projection based on my assumptions. A higher or lower growth rate might be achieved in practice, which could give the investor a larger or smaller pot size.

Looking for nuggets

One stock I believe fits the bill is Blackrock World Mining Trust (LSE:BRWM), up 73% over the past year. Over a broader five-year time horizon, the stock’s up 58%, exceeding the annual 6% target gain.

The investment trust buys mining and metals companies and is actively managed by BlackRock’s natural resources team. Among the current top 10 holdings are Glencore, Anglo American, and Rio Tinto.

Given the commodity rally in 2025, the trust did very well. I think the move in precious metals will continue for the coming years. Base metals like copper and nickel are becoming increasingly valuable for industrialisation globally, as well as for the transition to cleaner energy products (like EVs).

The exposure to gold is also significant. I think we’re in for another rocky year as far as geopolitics and macroeconomic uncertainty go. So owning stocks that directly benefit from rising gold prices (which people buy as a safe haven) should serve the trust well.

In terms of risks, commodity stocks are known to be volatile. The movement in the trust price in the past has also been volatile. Therefore, investors need to be aware that they could experience large swings before committing.

Yet despite this concern, I think it’s a good stock that could be considered for an ISA as part of a long-term growth strategy.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended BlackRock. 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 For Beginners

Black woman using smartphone at home, watching stock charts.
Investing Articles

How much do you need in an ISA for £1,618 of monthly passive income?

Dr James Fox explains how Britons could use the Stocks and Shares ISA to build a portfolio that can deliver…

Read more »

Stack of one pound coins falling over
Investing Articles

Here’s how to invest £50 a month in UK shares to aim for £10,000

Even with a small amount to invest each month, buying quality UK shares can still build substantial wealth in the…

Read more »

Two male friends are out in Tynemouth, North East UK. They are walking on a sidewalk and pushing their baby sons in strollers. They are wearing warm clothing.
Investing Articles

£2,000 in a SIPP at birth could be worth £849k in 65 years!

Dr James Fox explains how an investment into a SIPP at birth could compound into a nice retirement pot even…

Read more »

A rear view of a female in a bright yellow coat walking along the historic street known as The Shambles in York, UK which is a popular tourist destination in this Yorkshire city.
Investing Articles

How big does an ISA need to be to generate a £100k second income?

Ben McPoland highlights how it's possible for a Stocks and Shares ISA portfolio to one day throw off life-enhancing sums…

Read more »

A rear view of a female in a bright yellow coat walking along the historic street known as The Shambles in York, UK which is a popular tourist destination in this Yorkshire city.
Investing Articles

With £1 taken out, can Lloyds’ share price surge again in 2026?

Barclays analysts think the Lloyds share price could soar 20% over the next year. Royston Wild considers how realistic this…

Read more »

Landlady greets regular at real ale pub
Investing Articles

As Diageo’s share price dives, is this a once-in-a-decade opportunity?

As Diageo's share price struggles, Royston Wild looks at the FTSE 100 company's credentials as a recovery stock. Is it…

Read more »

Hydrogen testing at DLR Cologne
Investing Articles

Up 1,250% since 2023, can the Rolls-Royce share price climb higher?

The Rolls-Royce share price used to trade for less than 100p. But after three short years, it’s now closer to…

Read more »

Middle-aged Caucasian woman deep in thought while looking out of the window
Investing Articles

Martin Lewis reveals just how much money you could be making in the stock market

Martin Lewis shows how £1,000 invested in 2016 could have grown to £3,790 now. But Zaven Boyrazian shows how we…

Read more »