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The 5 best shares for a new £5k portfolio

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I’ve been thinking about how I might start a new portfolio today with £5,000. Which do I think are the best shares to buy right now?

Many investors start with a simple FTSE 100 tracker. And I’m a great supporter of trackers. You get a performance closely in line with the top London index, providing safety through diversification. But I want some active involvement so I don’t invest in them myself.

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I’d put some money in City of London Investment Trust instead (which I’ve actually done, and I rate it as one of my best shares). It puts a lot of its money into top FTSE 100 shares, so I’d get some safety through diversification.

The trust goes mainly for dividends and has raised its annual payout for 54 years in a row. Last year, it yielded 5.6%. So, annual cash coming in, plus the excitement of seeing if the dividend will grow for 55 years, 56 years, and more. What’s the downside? If the trust fails one year to keep its dividend growing, investors might jump ship.

Best shares, best sector?

My next pick would be FTSE 100 housebuilder Taylor Wimpey. Risky, with the housing market almost constantly in the news? The sector can be erratic and tends to alternate between periods of growth with spells of stagnation. But, over the long term, it’s a sector I want to be in, despite the shorter-term risk.

Because the country has suffered from a housing shortage for decades, demand is strong, and new supply is limited. Taylor Wimpey usually pays good dividends, though we can lose that during tough times, as we saw in the Covid-19 crisis.

I’ve always considered financial companies among the best shares for long-term investing. But we can all see how badly banks and insurance companies have performed in recent decades. Well before Covid-19 hit, we had the carnage of the financial crisis. Then Brexit gave the sector another kicking. But starting a portfolio today, I think they could be some of the best shares to buy. I’d go for Lloyds Banking Group again, the one that has rewarded me so badly of late.

Some growth and some recovery?

Can my potential list of best shares be complete without a growth share? I think I’m seeing tempting prospects in iomart Group, which I examined recently when I took a look at the attractions and the risks. But though I like it (and it’s on my shortlist), I think I’d once again go for the growth stock I already own, Boohoo group. It’s been very volatile of late, but I see long-term potential.

Finally, I’d have to include a pandemic casualty. I think this would be Rolls-Royce Group. I’ve liked the Rolls business model for a long time. With the bulk of profits coming from maintenance and repair contracts, we get long-term visibility of income. Well, except for crises like the current one, which was beyond the company’s control.

I see Rolls as sufficiently well refinanced now, providing the pandemic doesn’t get any worse. The risk? It does get worse, and Rolls needs even more cash to survive.

Everyone will have different candidates for the best shares to buy now, and these are just my thoughts. Don’t forget to do your own research.

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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended boohoo group, Iomart Group, and Lloyds Banking 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.

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