Forget buy-to-let: I think these 2 FTSE 100 stocks can help you obtain a £1m ISA

Buy-to-let investing is a lot of work. These two FTSE 100 shares can be bought with minimal fuss in a Stocks and Shares ISA and you could make a fortune.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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.

Although it might be the right path for some, buy-to-let is a tough investment to make and manage. I am willing to bet that for the majority looking to build wealth, a Stocks and Shares ISA built around FTSE 100 stocks might be a better option. ISAs are easy to open. You can build up ISA wealth gradually, investing any amount regularly and spread the risk across multiple stocks.

Compare the ease of ISA investment with the work required for buy-to-let. First, you have to buy the property. That usually means getting a mortgage and making repayments. Next, you have to find reliable tenants because missed rent payments could make mortgage repayments difficult. Then there are the costs of maintaining the property.

In the long run, an ISA portfolio can swell to quite a size, and yes, there are ISA millionaires out there. That portfolio can provide income, via dividends, in retirement. If you want to cash the portfolio in, it’s as simple as clicking ‘sell’ on your ISA provider’s website – compare that to trying to sell a house.

So if the idea of a Stocks and Shares ISA sounds appealing, here are two FTSE 100 stocks that I would buy and hold inside one.

Informa your ISA

Right now, the Informa (LSE: INF) share price of 428p looks like a bargain. The coronavirus crisis shut down Informa’s events business, and events deliver about 65% of revenues, which explains why the shares are trading 49% lower than there were a year ago. 

However, subscription-linked businesses account for 35% of Informa’s revenues, and these have continued to trade well. A recent £1bn equity raise has strengthened the balance sheet, at the cost of diluting shareholders. Informa has not had to ask its debtholders for any favours as yet. 

A healthy balance sheet and ongoing subscription businesses are buying time for Informa’s events business to get back on track. Investors like to look for catalysts to get a share price moving and being allowed to host events will be such an event for the Informa share price.

The prospect of a return for some major events in China from this month onwards is a welcome sign. The long term prospects look good for Informa with 90% of analysts rate it as a buy. Since the share price is so low at present, they reckon investors could make 88%+ over the next 12 months by investing in this FTSE 100 share. 

A FTSE 100 stock with a difference

Shares in Scottish Mortgage Trust (LSE: SMT) have returned 64% over the last year, comfortably beating the FTSE 100’s return of -18%. The rather drab title of the company is at odds with its business of maintaining a rather exciting investment portfolio. Buying shares in Scottish Mortage gets you access to this portfolio, which is overseen by an experienced management team.

A Stocks and Shares ISA is probably going to be built around UK-listed companies, many of them in the FTSE 100 index. Buying Scottish Mortage trust shares gains an investor exposure to companies listed in the US, Europe, and China. There is also exposure to unlisted companies. Both of these attributes will help to diversify a portfolio of publically traded, UK-based shares.

Scottish Mortage’s investments could be volatile in the future. Investors will need to invest for at least five years and have the patience to allow any temporary share price slumps to correct themselves.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

James J. McCombie owns shares of Scottish Mortgage Inv Trust. The Motley Fool UK has no position in any of the shares mentioned. 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 Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »