Every year, the ISA deadline comes around bizarrely quickly. This year, due to the Covid-19 pandemic, the deadline on 5 April probably has slipped your mind as well. This is not only a friendly reminder about the deadline from a fellow forgetful investor, but also some of my suggestions.
Firstly, I wanted to mention why it is important to utilize your ISA despite everything going on in the world at the moment. The deadline is this week, but the impact of meeting the deadline will benefit you for at least the next year.
This is because your investments that are sheltered within the allocation are tax-free. This is a longer term benefit. If you buy a stock this week for the ISA, and sell it in five year for a 25% profit, that profit is free of tax. So even if it does not seem a priority right this second, your future self will be very thankful!
A tried and tested stock is GlaxoSmithKline (LSE: GSK). It is one of the largest pharmaceutical companies in the world, and is also a regular in the top 10 largest capitalized firms in the FTSE 100 index.
Share price performance of the firm has been steady over the past decade, and this is why I would look to add it into an ISA. GSK is never going to be a share that massively deviates from a steadily increasing mean price. What I mean by this is that it does not have very large price swings in the short term. This is good for investors who want to be able to sleep easily at night.
The reason I would look to buy it for this ISA allocation is due to the market sell-off we have seen as a result of the Covid-19 pandemic. GSK has seen an uncharacteristically large sell-off, down around 23% from the 2020 peak. Given that I think the firm’s products are going to be more in demand, I would expect the share price to reverse higher. The dislocation in the current price versus my expectations makes it a long-term buy in my opinion.
One of the firms due for promotion into the FTSE 100 is Pennon Group (LSE: PNN). It is a utility firm that operates mostly under the brands South West Water and Viridor. The company has performed very well over the past year, with a share price jump of over 30%. South West Water provides water for Devon and Cornwall. Viridor operates in the waste management space, serving a similar set of customers.
The reason I would be adding this into my ISA allocation for this year is that it is a defensive stock. Utilities and waste management are services that are staples for consumers. So I feel this stock protects me even if the situation with Covid-19 continues for another year. The revenues and profits from Pennon should be largely unaffected by the virus. Given is also has momentum following a strong year in 2019, it appeals to me right now.
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Jonathan Smith does not own shares in any firm mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended Pennon Group. 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.