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£10k to invest? Forget buy-to-let! I’d invest in a Stocks and Shares ISA

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If you want to invest £10k and make the most of the current economic climate, I’d choose a Stocks and Shares ISA over alternatives such as buy-to-let.

Investing in an ISA is a more achievable option for those with a smaller budget to invest. It also has several advantages. Once you have created your online account with a broker, you can buy and sell shares immediately. Any returns you generate are free of income tax and capital gains tax for life. Stocks and Shares ISA set-up costs are marginal, and you are not obliged to consult external specialists such as lawyers, solicitors and estate agents.

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Investing in the buy-to-let property game is never as easy as it sounds. The coronavirus pandemic has compounded this, and I think house prices will take a hit from the shrinking economy and increasing job losses. Retail landlords have been struggling with demands to cut rent for some time, while private landlords are now facing the real risk of tenants being unable to pay their rent.

Take control with a Stocks and Shares ISA!

Investing in a Stocks and Shares ISA puts you in control of your finances without having to consider other people’s feelings and society’s opinions. This may sound selfish, but if you want to be selfless, you can donate to charity. Investing in your future is not so much selfish as sensible. If nothing else, the COVID-19 pandemic has shown us how important it is to have a financial cushion to fall back on when unforeseen events arise.

£10k is a great amount to get started with and gives you plenty of room to add to your investment — the annual ISA allowance is £20k.

Long-term financial growth

Finding the best shares to buy now depends on your appetite for risk. When the financial markets are experiencing a downturn, it presents an opportunity for you to buy cheap shares, but some are riskier than others.

Within a Stocks and Shares ISA, you are free to take control of what you buy. You may choose to diversify your equity purchases through 10 sets of ‘cheap’ shares for £1k each or two sets at £5k each. Otherwise, you might like to buy index funds, bonds, investment trusts or exchange-traded funds.

Investing in this way should be approached with a long-term outlook, much like you would if you were venturing into buy-to-let. It’s not a launchpad to get rich quick, but many people have become extremely wealthy through the Stocks and Shares ISA route.

A good plan is to invest as much as you can realistically afford each year and leave it to accumulate and compound into a greater sum of wealth.

A Stocks and Shares ISA is a brilliant way for ordinary investors to take control of their financial future. I also think it is a much easier and safer alternative than buy-to-let.

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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.