Opening a Stocks and Shares ISAs can be a great way to get started with investing, as anyone can take advantage of tax breaks on any income earned through their returns.
Up to £20,000 can be deposited into a Stocks and Shares ISA in any given tax year, which will not be subject to income or capital gains tax — a very efficient way of getting the most out of your investment.
The only real difference between a Stocks and Shares ISA and an average share-dealing account is those tax breaks, ISA holders can buy and sell stocks, shares, funds and other assets.
Traditionally, Stocks and Shares ISAs have been viewed as a riskier option in comparison to other types of ISAs, such as the Cash or Help to Buy variety. But with interest rates on a Cash ISA currently still very low, I see investing in some of the UK’s biggest companies as a much more attractive prospect.
The FTSE 100 is an index of some of the most reputable firms listed in the UK across a variety of sectors, and two of those I would add to my ISA are Legal & General Group (LSE:LGEN) and Diageo (LSE:DGE).
Legal & General
Savings and insurance group Legal & General may not be the most exciting company by any means, but the group has consistently provided good returns for investors both in terms of dividends and growth.
LGEN is a solid FTSE 100 company that has been in existence for more than 100 years, making most of its profits through pension management.
It has shown a willingness to increase its dividend payouts to shareholders in recent years, and while some argue that this may be unsustainable, the company clearly has shareholders in mind when making major decisions.
That dividend growth has been matched by escalating profits for the business at the same time, with Legal becoming the first investment manager in the UK to manage more than £1trn in assets.
If I was looking for a company to invest in for steady long-term growth and solid dividends, I’d look no further than this one.
Alcoholic drinks giant Diageo has seen its share price grow by more than 23% in the last 12 months as demand for premium brands such as Guinness, Baileys and Smirnoff continues to remain strong.
Some have suggested so-called sin stocks — companies based on sales of alcohol, tobacco and gambling products — could be set for declines in the years to come due to an increasing consumer focus on health and lifestyle matters. However, as far as Diageo is concerned, I don’t see that on the horizon yet.
Its strong consumer brand portfolio is driving impressive cash flow, while profits are continuing to rise, with pre-tax profits in the most recent quarter up to £4.2bn from £3.7bn in the same period last year.
With the company’s biggest market (the US) currently undergoing a bit of a revolution via the introduction of legalised cannabis products, there has even been talk of Diageo expanding into this area, which could open up a whole new product opportunity for it.
I don’t see many reasons why the company’s growth can’t continue, and as a result I’d make Diageo one of the staples of my Stocks and Shares ISA.
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Conor Coyle has no positions in any of the shares mentioned. The Motley Fool UK has recommended Diageo. 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.