Opening a Stocks and Shares ISA is one of the best things UK investors can do. Not having to pay tax on investment returns is a huge advantage.
Returns can vary from one year to another. But over time, investing in the stock market has generated higher returns than keeping money in cash.
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.
Five-year returns
Different investors get different returns from their Stocks and Shares ISAs for one simple reason. They don’t all buy the same things.
One of the simplest investments is a fund that tracks an index like the FTSE 100. A good example is the Vanguard FTSE 100 UCITS Accumulating ETF.
In the last five years, that’s returned a total of 79.77%, which is an annual average of 12.44%. But individual years have been very different.
In 2022, returns were less than 6%. But 2025 was a banner year for the index, generating a return of more than 25% for investors.
A 12.44% annual return is enough to turn a £20,000 investment into £35,954 over five years. And I don’t see a way to do that with cash.
What to buy?
At today’s prices, investors who put £100 into a FTSE 100 fund end up with £6.71 in Shell and 27p in Bunzl. And they might not want that.
With my own investing, I prefer to focus on companies that:
- Have good long-term prospects.
- Are relatively easy to understand.
- Trade at reasonable valuations.
From this perspective, I don’t think Shell is 25 times more attractive than Bunzl. And this is why I’m not buying a FTSE 100 fund.
That’s one example – there are others. But anyone looking to invest in an index fund needs to be sure that’s what they want.
In my case, it isn’t. I’m happier with my portfolio focused on a few high-quality names, with other stocks from elsewhere.
A FTSE 100 standout
Games Workshop (LSE:GAW) is just 0.22% of the FTSE 100. But it’s a bigger part of my portfolio and that’s the way I like it.
The risk with the company is that it’s exclusively a Warhammer business. And that means there’s a risk of its products falling out of fashion.
The firm, though, does have all of the features I look for in a stock to buy. Its products are impossible to copy, which is key to its long-term strength.
The company’s growth plan is also pretty clear. It’s planning to expand in the US and an upcoming film is a key part of this.
A price-to-earnings (P/E) ratio of 27 sounds high. But the firm’s converts almost all its income to free cash, which makes the stock cheaper than it looks.
Quality stocks
Games Workshop has outperformed the FTSE 100 over the last five years. That’s without including dividends, which have been big.
A £20,000 investment in the stock from five years ago is now worth £36,168. Add in another £4,209 and it’s not even close.
I don’t think this is an accident. And I think the company’s key strengths that have generated this outperformance are still intact.
As a result, I’m looking to keep adding to my investment steadily. I don’t want every FTSE 100 stock in my ISA, but I do like this one.
