If I had £1,000 a month to invest in the stock market, I’d want to consider which UK shares to buy now. Here’s how I’d look to get an attractive return from my regular investment.
One good thing I see in putting £1,000 each month into shares is that I could build up a decent investment pot relatively fast. That would enable me to diversify my holdings. I value diversification because it offers exposure to different businesses. That helps reduce my risk should any one investment perform poorly.
I’d consider from the outset whether I wanted to target long-term growth, income, or both. If looking for UK shares to buy now with growth in mind, I might choose companies in strong expansion mode. Examples include S4 Capital and Clipper Logistics. For income I’d likely put more of my money into dividend payers such as Diageo and Imperial Brands.
Choosing growth shares
Some growth shares are very early stage companies. They might not have profits, or in some cases even revenue yet.
I don’t have the risk appetite for that. Instead, I’d focus on companies whose business model is already proven. I’d hunt for those I think have potential for substantial future growth.
Tech shares like THG are a common pick for this sort of investment.
But growth can come even in slower moving industries. For example, I like names in the self-storage sector such as Safestore and Big Yellow. I think smaller houses and an increasingly consumerist society are long-term trends set to drive demand for self-storage.
UK shares to buy now for future growth
I could read the news to see what the latest fad is when choosing UK shares to buy now. But I often try to focus on long-term shifts I expect to influence customer behaviour. Such trends can be fairly gradual. However, over time they may be very powerful.
With such an approach, I might pick more than one company. That’s because I think it can be easier to spot a rewarding trend than it is to choose individual winners years in advance.
The future is ultimately unknowable, so there’s a risk I’ll look for growth in the wrong areas. For example, a building boom or post-lockdown decluttering could reduce demand for self-storage units. That’s why I split my portfolio across different sectors.
I’d also put some of my £1,000 each month into income picks.
For example, £1,000 in Imperial Brands offers a prospective yield of £92 per year, while the same amount in BP is on course to return £52 in dividends annually. Dividends are never guaranteed – both companies reduced theirs last year. For my portfolio I see these as UK shares to buy now, but risks include a decline in end user demand.
But with a mix of different dividend picks, I’d hope to set up a regular passive income stream. Over time I could reinvest these payouts, so my monthly £1,000 to invest could grow without costing me anything more.
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christopherruane owns shares of Imperial Brands and S4 Capital plc. The Motley Fool UK has recommended Clipper Logistics, Diageo, and Imperial Brands. 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.