Want to give up work and live off passive income? I do. That’s why I’m trying to build an investment pot large enough to buy lots of dividend shares that will help me retire early.

But life is expensive. No matter what age you are there are all sorts of living costs that need to be met. With this in mind, how much would you need in a Stocks and Shares ISA to try and replace your employment earnings with an identical income stream from dividends? Let’s see.

A crucial difference

According to government figures, the average (median) UK salary is £32,890. So that’s our passive income target.

But we are not comparing like with like here. Anyone with an ISA will be able to earn dividends tax-free. By contrast, salaries over £12,570 are usually taxed.

Ignoring this important distinction, a portfolio of dividend shares paying 5% a year would need to worth £657,800 to match the average salary. At 6%, this falls to £548,167. With an annual return of 7%, a £469,857 ISA would suffice.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Don’t panic!

These are significant sums.

But I reckon it’s possible to achieve something similar by investing little and often in growth shares. Generally speaking, these are likely to beat the returns of the wider market as their businesses are expanding more rapidly.

They could be, for example, in the tech sector or life sciences. Or they might be a successful investment company or a business that’s growing quickly through acquisition. Alternatively, they could simply be operating in the right sector at the right time.  

The table below identifies five FTSE 100 stocks that have experienced rapid share price growth since April 2021. Their five-year average annual return has been an impressive 15.3%.

Of course, there are no guarantees that history will be repeated. And I would have to do more research before deciding whether they are worth considering for the next five years. Indeed, this is a random list based on some of the examples I gave earlier. There are plenty of others I could have chosen.

But the purpose of the exercise is to illustrate the potential returns available from investing in the UK stock market.

For example, someone putting £150 a month into an ISA for 25 years, would see it grow to approximately £514,000, assuming an annual growth rate of 15.3%.

Something else to consider

The boss of Standard Life (LSE:SDLF), the pension and savings group, told the BBC this week (16 April) that only one in seven of us are saving enough for a decent retirement.

Ironically, with a yield of 7.4%, I think those wanting to improve their living standard in old age could consider the group’s shares. Applying this rate to our £514,000 ISA would produce dividends of £38,036, more than the country’s average salary.

However, dividends cannot be guaranteed. Threats to its payout include increased competition as well as global economic uncertainty. The group’s £309bn investment portfolio is likely to suffer heavy losses during periods of market instability.   

But 2025 was a good year. Adjusted operating profit increased 15% compared to 2024. And its Solvency II ratio (a measure of balance sheet strength) went up. This week’s announcement that it’s agreed to buy Aegon’s UK pension business should help underpin future increases in its earnings and dividend.

The post How much is needed in an ISA to target a £2,741 monthly passive income? appeared first on The Motley Fool UK.

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• 7.89% yield! Should I buy this FTSE 100 dividend stock?

James Beard has positions in Standard Life. The Motley Fool UK has recommended AstraZeneca Plc, Diploma Plc, and Halma Plc. 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.

What would you do with the equivalent of £1k a week of passive income flowing into a Stocks and Shares ISA? It’s an intriguing thought.

For most, however, it might appear little more than a daydream. After all, it equates to £52k a year. Most people don’t have that much to invest, let alone possess a portfolio big enough to generate it in passive income.

So, how realistic is it?

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

The long game

How big an ISA would have to be to throw off £52k a year would come down to the size of the dividend yield.

For example, a portfolio with a 6% yield would need to be worth approximately £867,000. Not only is that a hefty sum, it also far exceeds the annual £20,000 Stocks and Shares ISA contribution limit.

Therefore, even if one had £867k to invest upfront, only a fraction of that could be invested tax-free straight away. By necessity then, most investors are compelled to play the long game.

But the good news is that there are some benefits to doing this. The main one is that it becomes impossible to mistime the market. For example, if someone is investing £700 per month come rain or shine, they will be buying when the market is up, down and flat.

Crucially, they will be investing when stocks are down and dividend yields are higher. History shows the very best time to invest is after a stock market crash.

In contrast, a person who invests a large sum may do so just before the stock market tanks. And if they’re new to investing, they may make beginner mistakes that a longer-term investor would learn to avoid.

How long?

Sticking with the example of investing £700 a month, it would take just over 25 years to reach £867,000. This assumes an average total return of 9.5%, with dividends reinvested.

This return isn’t guranteed, of course, and individual dividends are far from bullet-proof. But it is the annualised total return of the FTSE 100 index over the past decade, so it’s not an unrealistic ballpark figure to aim for.

Finally, it goes without saying that £52k will buy less in 25 years than it does today. Then again, rising inflation arguably makes a future income stream even more necessary.

FTSE 250 dividend stock

One example of a dividend stock to consider for an ISA is Hollywood Bowl (LSE:BOWL). As the largest ten-pin bowling operator in the UK and Canada, it has a strong brand and plenty of repeat business.

Last year, revenue increased 8.8% to £251m, while average spend per game rose to £12.04 from £11.05 the year before. The FTSE 250 firm opened 7 new locations, bringing the total to 92. It intends to have 130 centres by 2035, including strong expansion in Canada.

Naturally, inflation adds risk. If people’s energy, fuel and food bills go up, they may have less disposable income for a game of bowling.

That said, the experience is competitively priced. A family of four can sometimes bowl for under £26 during peak times, and Hollywood Bowl is expanding its electric go-karting and mini-golf offerings. 

After falling 26% in two years, the stock’s trading cheaply at 10.6 times forward earnings. And there’s a forward dividend yield of 5.5% on offer.

The post How much do you need in an ISA for £1,000 a week in passive income? appeared first on The Motley Fool UK.

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• 3 top FTSE 250 growth stocks to consider for an ISA today
• Up 12% in a month, Hollywood Bowl is a UK dividend stock on a roll

Ben McPoland has no position in any of the shares mentioned. The Motley Fool UK has recommended Hollywood Bowl Group Plc. 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.

Investing in a Stocks and Shares ISA is a great way to target passive income. Once you’ve chosen which dividend stocks to buy, you can hopefully sit back and watch the money roll in. What’s more, any income drawn will be completely free of tax for life.

Fancy making a substantial second income with a Stocks and Shares ISA? Here’s one strategy to consider.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Investing early on

With the new tax year under way, every adult in the UK has a fresh £20,000 ISA allowance to exploit. Not everyone has this much cash to hand and drip-feeding money into an ISA can yield brilliant returns. However, those who can start buying shares straight away can grow their wealth even faster.

Stock markets tend to rise over time, so getting money invested earlier increases exposure to long-term growth. Data from Vanguard backs this up — over a typical 12-month period, investing a large upfront sum has historically beaten drip-feeding cash about 68% of the time. Over three years, the odds improve to 74%.

Not only does lump sum investing win more often. It also tends to deliver higher returns over time, as gains start generating their own returns sooner. Over 12 months, this strategy typically earns around 2.3% more than spreading investments over the year. Over three years, this edge rises to 4.2%.

Let’s see how that looks in monetary terms.

A £297k boost

Say someone invests £20,000 at the start of each tax year over 20 years. While positive returns are never guaranteed, let’s also assume they secure an annual average return of 9%. At the end of this period, they’d have an ISA worth £1,350,000.

If they drip-fed that £20k over the course of each tax year, investing an equal amount each month, their eventual windfall would be £1,053,500. That’s a brilliant amount, but still almost £297,000 worse off.

What sort of investments could someone consider for a lump sum in to target a £1,350,000 ISA? Diversification is critical, and an exchange-traded fund (ETF) like the iShares FTSE 250 ETF (LSE:MIDD) can deliver this cheaply and easily.

It spreads investors’ cash over the whole of the FTSE 250 index. So it provides exposure to a wide range of industries and different parts of the globe. The advantage? It spreads risk and provides exposure to many growth and dividend opportunities.

On the downside, a focus on UK shares leaves the fund vulnerable if the broader London market underperforms. But this hasn’t stopped it delivering excellent returns over the last decade. Since early 2016, this iShares product has delivered an average yearly return of 8.7%.

A £1,350,000 ISA portfolio could deliver a £94,500 annual income if invested in 7%-yielding dividend shares. This works out at £7,875 per month.

And do remember that while lump sum investing can deliver outsized returns, even drip-feeding money into an ISA can help investors secure a comfortable retirement.

The post Here’s how a £20k ISA could generate £7,875 in monthly passive income appeared first on The Motley Fool UK.

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Royston Wild has no position in any of the shares mentioned. 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.

After years of high-octane gains, Nvidia (NASDAQ: NVDA) stock seems to have run out of gas. Had an investor put £5,000 into the chip stock six months ago, that capital would now be worth about £4,800 (factoring in exchange rates).

Is it game-over for this legendary growth stock? Or is it just pausing for breath before its next leg higher?

Taking a breather

My view here is that it’s simply taking a breather. Between the start of 2023 and October 2025, the stock jumped from $20 to $200. At some stage, it was likely to experience a lengthy period of ‘consolidation’. I think that’s what we’re seeing now.

Get ready for the next move higher

I fully expect it to continue its ascent at some stage in the near future. Because the underlying fundamentals look very strong.

At last month’s GTC conference, for example, CEO Jensen Huang unveiled a bunch of powerful new products including the Vera Rubin AI platform (which is far more powerful than its current Blackwell platform), the Groq 3 inference chip, and a software platform for OpenClaw. He also announced the launch of a few partnerships for self-driving cars (which will use Nvidia’s self-driving tech).

Meanwhile, Huang said he now expects a whopping $1trn in revenue from Blackwell and Rubin chips through 2027. Late last year, the company was only expecting $500bn.

So it’s not like the growth story here has come to an end. If anything, growth appears to be accelerating.

Undervalued today

Note that after the recent dip in the share price, the stock’s starting to look very cheap. With analysts expecting earnings per share of $8.26 this financial year (versus $4.92 last financial year), the forward-looking price-to-earnings (P/E) ratio’s only 21 (near a seven-year low).

At that earnings multiple, the stock’s undervalued, in my view. It seems Wall Street analysts share my view here – currently the average price target is about 50% higher at $264.

Worth a closer look

Ill point out that in the current market environment (where investor sentiment’s weak due to economic and geopolitical uncertainty), the growth stock isn’t suddenly going to surge to $264. For the Nvidia share price to resume its long-term upward trend, we’ll need to see market conditions improve.

And of course, there’s no guarantee it will actually get to that price target. If spending on AI infrastructure from hyperscalers such as Microsoft and Amazon drops, or competitors (including the hyperscalers) launch powerful new AI chips, the growth story here could potentially be derailed.

Taking a long-term view however, I’m bullish on Nvidia as I expect the AI buildout to continue. I think it’s worth a closer look today while it’s around 15% below its highs.

The post £5,000 invested in Nvidia stock 6 months ago is now worth… appeared first on The Motley Fool UK.

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Edward Sheldon has positions in Nvidia, Amazon, and Microsoft. The Motley Fool UK has recommended Nvidia, Amazon, and Microsoft. 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.

For those with a full record of National Insurance contributions, the current State Pension is £230.25 a week, equivalent to £11,973 a year.

But according to industry experts, a single person’s likely to need £13,400 a year to provide for a basic retirement. To help make up this shortfall (and more), I reckon a Stocks and Shares ISA’s worth considering. Here’s why.

Crunching the numbers

According to the Office for National Statistics, more than half of all 23-year-old men are in full-time employment. For women, the majority are employed at the age of 24. And those who are currently in their mid-20s will have to work until they are 68 before they can access the state pension.

This means most people will have around 45 years to plan for their retirement. This is a long time and by starting early, I think it’s possible to build a sizeable investment pot for later in life.

For example, someone putting £75 a month into a Stocks and Shares ISA — at an annual growth rate of 6% — would build a portfolio of £207,733 after 45 years. At this point, a collection of dividend shares paying 6% would produce an annual income of £12,463. This is approximately £500 more than the current State Pension. Combined, the two income streams would generate £24,436 a year.

But is it really possible to earn 6% from dividends? Well, with the right shares, I think it is.

For example, the FTSE 100 is currently (2 April) home to eight stocks yielding more than this.

One of these is Aviva (LSE:AV.), the insurance, wealth, and retirement group. For 2025, it declared a dividend of 39.3p. In cash terms, this is 78% higher than in 2021. And it means the stock’s yielding 6.5% at the moment. This is a better return than the 6% used in the example above.

Buyer beware?

However, savvy investors know that above-average yields could be a warning that the City’s expecting a cut.

Indeed, this could be the case if problems in the Middle East continue and the group’s enormous investment portfolio fails to generate the anticipated returns. Like all of us with exposure to the stock market, I suspect its equities have taken a bit of a hit lately.

Also, its car insurance business (notably, it owns Direct Line) could be affected if AI-powered tools make it easier for customers to shop around looking for cheaper deals.

Right place, right time

However, for now at least, the group appears to be going in the right direction. And I think it’s well positioned to capitalise on some interesting industry trends that seem to be emerging.

Younger people appear to be buying more private health insurance than their parents as dissatisfaction with the NHS grows. And they are taking more of an interest in their retirement planning.

In 2025, the group reported a 25% improvement in operating profit and a 14% increase in earnings per share compared to a year earlier. With a 12-month target that’s 16% higher than today’s share price, analysts believe investors have yet to fully factor in the group’s potential.

For these reasons, I think Aviva’s one of many UK shares that could be considered by those looking to build a diversified portfolio of income stocks.

The post How much would someone need in an ISA to double the state pension and target a £24,436 annual income? appeared first on The Motley Fool UK.

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• Here’s how Aviva shares could soon rise a further 20%… or fall 15%!
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James Beard has no position in any of the shares mentioned. 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.

The Iran war might feel a world away from the UK high street, but holders of Greggs (LSE:GRG) shares have felt its impact.

Over the past 10 days, the FTSE 250 stock has fallen a further 7.1%, which would have wiped roughly £350 off a five-grand investment.

Of course, the word on everyone’s lips right now is ‘inflation’. If energy costs remain elevated, which is possible if the Iran conflict drags on into the summer, then Greggs will take a hit due to the baking, refrigeration, and transport costs associated with its operations.

Not only that, but there could be the knock-on effect on sales if inflation-exhausted customers tighten their belts. This week, the average price of a litre of petrol rose above 150p for the first time in nearly two years. Anticipating higher interest rates, mortgage rates are on the rise.

Greggs has added a few pence to the price of its sausage rolls and pasties in recent years to offset higher costs, but it has a value proposition to protect. Raising prices yet again risks driving customers elsewhere (or workers could turn to packed lunches).

The company described 2025 as a “tough market“. This year could get even tougher.

So, given this quite frankly terrifying backdrop, is Greggs now a stock to avoid at all costs?

Thinking long term

The answer to that depends on the timescale of an investor. Looking a few months ahead, the outlook doesn’t look that great for Greggs.

But that’s no different to many consumer-facing businesses, including JD Sports Fashion, Domino’s Pizza, and J D Wetherspoon. All are suffering from weak consumer spending and higher operating costs.

Taking a contrarian view, however, now might be a great time to consider investing in Greggs for the long term. Because while the near term looks flaky, it’s a lot more certain than for many rivals that are shutting down and scaling back.

For example, embattled bakery chain Cooplands has been downsizing in recent years, while Exeter-based baker The Crusty Cob closed all nine shops last year. And 68 Pizza Hut restaurants disappeared in late 2025 (Greggs sells pizza).

As things sadly get worse, I expect more competition to shut up shop. But while rivals are going to the wall, the number of Greggs locations is expected to rise to above 3,000 over the next few years.

By mid-2027, it will have two new state-of-the-art facilitates open to support expansion, with more automation to drive efficiency. Cash flow is expected to improve significantly by then, supporting dividends and possibly share buybacks.

Similar to Wetherspoons, investors are focusing on the near-term challenges. But there’s a distinct possibility that these businesses carry on taking market share and emerge much stronger — and more profitable — in a few years’ time.

Passive income

After its latest pullback, the stock is sporting a forward dividend yield of 4.5%. So there’s decent income on offer, assuming Greggs pays out, which it has a great track record of doing.

Meanwhile, the forward price-to-earnings ratio is just under 12, versus a 10-year average of 21. Given that Greggs benefits from a fantastic brand and strong market position, with further shop openings to come, I see this valuation as attractive.

All things considered, I think Greggs is worth looking into below £15 per share.

The post £5,000 invested in Greggs shares 10 days ago is now worth… appeared first on The Motley Fool UK.

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Ben McPoland has no position in any of the shares mentioned. The Motley Fool UK has recommended Domino’s Pizza Group Plc and Greggs Plc. 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.

Aviva (LSE:AV.) shares are among the most popular stocks to buy right now. And with a dividend yield of 6.5% alongside a double-digit share price rise over the last 12 months, it isn’t hard to see why.

Even when zooming out to the last five years, the insurance group seems to be on a roll. Fun fact: anyone who put money to work in March 2021 has since enjoyed a 115.4% total return – enough to turn £5,000 into £10,770.

Of course, as all experienced investors know, past performance doesn’t guarantee future returns. So can Aviva shares continue to deliver in 2026 and beyond?

Catalysts for growth

There are quite a few tailwinds filling Aviva’s sails right now. And one of the largest is its 2025 turnaround acquisition of Direct Line. The deal marked a key strategic shift for the business, with the goal of further diversifying its operations towards more capital-light operations. And so far, this move seems to be working flawlessly.

Direct Line contributed £174m of operating profits across the second half of 2025, ahead of the £150m expected. And subsequently, Aviva ended up delivering £2.2bn of operating earnings in 2025, beating its £2bn target a year earlier than expected.

But this could be just the tip of the iceberg. With a further £225m in annual cost synergies expected to materialise between now and 2028, Direct Line’s profit contributions are seemingly on track to get even bigger as time goes on.

At the same time, long NHS waiting lists continue to serve as a powerful incentive for private health insurance products. That’s another tailwind management’s successfully capitalising on with premiums growing by 12% to £1.1bn in 2025.

Overall, the business seems to be firing on all cylinders right now. And with leadership now aiming to deliver an average annualised earnings growth rate of 11% alongside a 20%+ return on equity between now and 2028, Aviva shares look nicely positioned to continue flourishing.

What could go wrong?

While the medium-term outlook’s promising, there are a few risk factors for investors to carefully consider. With Aviva’s recent performance noticed by both retail and institutional investors, the valuation today suggests that much of the expected future growth could already be baked into the current share price.

As such, if the business falls short of expectations, Aviva shares could turn volatile. And right now, there are some looming headwinds that could slow the business’s pace.

Insurance pricing in the automotive sector has weakened while inflation in repair and labour costs has continued to rise. At the same time, persistent weakness within the UK macroeconomic landscape could also apply some pressure to the group’s investment portfolios backing its insurance liabilities.

Volatile gilt yields, lacklustre GDP growth, and stubborn inflation could all trigger portfolio underperformance for the group. And combining higher insurance claims costs with falling investment returns could apply significant short-term pressure on the group’s financials.

So where does that leave investors?

The bottom line

Aviva undeniably has several financial hurdles to overcome. Yet management’s demonstrated an impressive knack for solid execution even during tough economic conditions. So with an attractive yield on offer, income investors may want to consider taking a deeper dive. But it’s not the only opportunity on my radar right now.

The post £5,000 invested in Aviva shares 5 years ago is now worth… appeared first on The Motley Fool UK.

More reading

• Aviva’s share price has left rivals in the dust. Here’s why it’s still good value
• What a ‘forgotten’ £30,000 ISA could turn into by 2046 in passive income
• No savings at 30? How investing £5 a day in an ISA could target a stunning second income of £40,208 a year
• Here’s how Aviva shares could soon rise a further 20%… or fall 15%!
• These 5 FTSE 100 shares all offer dividend yields well above average!

Zaven Boyrazian has no position in any of the shares mentioned. 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.

Earning dividends from the shares of proven blue-chip businesses is a common way to try and earn some extra money. Done the right way, it can potentially provide a substantial second income over time.

How big an ISA would someone need to target a four-figure monthly income this way?

The income economics here are quite simple

The amount needed will depend on the average dividend yield of the ISA. Yield is basically what an investment earns annually in dividends, expressed as a percentage of the price paid for it.

As investors pay different prices even for the same share over the course of time, different investors often do not earn the same yield even from the same share.

£1k a month adds up to £12k per year. To keep things simple for illustration purposes, imagine the yield is 10%. That would mean the ISA needs to be worth £120k to generate the target second income.

In practice, blue-chip shares rarely offer such a yield. At the moment, the flagship FTSE 100 index of leading shares is yielding 3%.

That is only an average, though. I think a higher yield is realistic in today’s market even when sticking to a diversified selection of quality businesses.

I reckon 6% is achievable; that would mean the ISA needs £200k in it to hit the second income target.

Building the ISA up over time

That is 10 times most people’s annual ISA contribution allowance.

Does it require a decade of saving then? Not necessarily, even for someone starting from scratch.

By investing £20k per year and compounding (reinvesting) the dividends, the ISA should be worth £200k after nine years.

Constructing an ISA portfolio the right way

I already mentioned diversification: that is a simple but important form of risk management that basically means not putting all your eggs in one basket.

An investor can make other smart moves when it comes to managing their Stocks and Shares ISA, from comparing providers — to choose one that seems best for their personal needs — to carefully assessing a company’s likely future dividends, not just looking at its track record. Dividends are never guaranteed to last.

Here’s an income share to consider

One dividend share I think is worth investors considering right now is FTSE 250 firm MONY (LSE: MONY), the owner of businesses including Money Supermarket.

The fear that AI could eat into the price comparison website’s customer usage explains why its share price has tumbled 23% over the past year.

I think that AI risk is real. But I also think MONY could well be able to navigate around it, emphasising its deep experience, focus on specific financial products, and ability to offer complex products in a way that for now at least AI tools would struggle to do.

The business is proven and highly cash generative. That helps support a generous dividend. Indeed, the dividend yield currently stands at 8.1%.

The next few years promise to be challenging ones for the firm as AI starts to play a more prominent role in financial service cost comparison.

But I reckon MONY could play to its strengths, keep throwing off spare cash, and hopefully pumping out chunky dividends.

The post How much would someone need in an ISA to target a £1,000 monthly second income? appeared first on The Motley Fool UK.

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C Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended Mony Group Plc. 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.

Would James Bond buy Aston Martin (LSE:AML) shares? A strange question perhaps, given that 007 is a fictional character and currently off our screens.

But the Aston Martin-driving spy is a notorious risk-taker, with a love of high-stakes poker games. With the FTSE 250 stock down 99% since IPO in 2018, I think you would have to be into high-risk, high-reward investments to consider Aston Martin.

Yet fellow British icon Rolls-Royce was in a similar situation during Covid, with its balance sheet weighed down by heavy debt and its survival in doubt. And Rolls-Royce stock has delivered a mind-blowing 3,000% return since its low in October 2000.

What are the chances that Aston Martin could do something similar?

A wealth-shredder

The last time I wrote about the stock five weeks ago, I marvelled at how it just keeps heading lower, even when the bottom seems to be near. Back then, it was trading for 60p, down from 108p a year earlier. Now it’s fallen to 40p.

A 20p drop might not sound much, but it’s enough to have turned a £7,500 investment made five weeks ago into roughly £5,000.

So, while Aston Martin makes beautiful speed machines, its stock has been nothing but a wealth-shredding machine.

The catalyst

A stock rarely loses a third of its value in five weeks for no reason, and the culprit here was the luxury carmaker’s preliminary financial results for 2025. The report opened with the words: “Navigated a highly challenging trading environment“.

The challenges included US tariffs, weak demand in China (Asia Pacific sales were down 21%), and fewer deliveries of the £1m Valhalla supercar than expected. Thankfully, the problems with Valhalla were down to production delays rather than demand issues.

Revenue slumped 21% to £1.26bn, with deliveries falling 10% to 5,448. The pre-tax loss increased from £289m to £364m. For context, back in 2020, Aston Martin set a 2024/25 revenue target of about £2bn, on 10,000 vehicles, with an adjusted EBITDA of £500m.

As bad as this sounds, the scariest part for investors was that net debt rose 19% to almost £1.4bn. The leverage ratio, which is net debt relative to adjusted EBITDA, exploded to 12.8 from 4.1.

This tips the carmaker’s balance sheet into distressed territory, which explains why the stock trades for pennies after crashing 66% in just 13 months.

Is a turnaround still possible?

Nevertheless, there were some bright spots, which could form the basis of a turnaround. Aston Martin now has a fresh line-up of new models, and 500 Valhalla deliveries planned for this year are expected to noticeably improve margins.

Meanwhile, a 20% cut in the workforce and lower five-year capital expenditures will help preserve cash. If 500 Valhalla deliveries are achieved, alongside a pick-up in the global luxury market, then a powerful share price recovery is possible.

However, as things stand, the odds of that look slim to me. Indeed, the outcome seems binary — either it will roar back if trading conditions suddenly improve, or carry on heading lower as investors worry about the company’s liquidity.

This might be the type of dicey gamble patriotic Bond would take after a few Martinis, but it’s not one I’m going to make as I aim to build wealth in my Stocks and Shares ISA.

The post £7,500 invested in Aston Martin shares 5 weeks ago is now worth… appeared first on The Motley Fool UK.

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Ben McPoland has positions in Rolls-Royce Plc. The Motley Fool UK has recommended Rolls-Royce Plc. 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.

We’re in the home stretch for this year’s Stocks and Shares ISA allowance, with the 5 April deadline fast approaching. Thankfully, the annual limit is £20,000 for the forthcoming 2026/27 year too.

Here, I want to see how well a typical ISA might have performed so far in 2025/26. In other words, how much would someone have now from a £20k investment made on 7 April 2025? 

Stock-picker’s market

Now, I should start by saying that I would have chosen 6 April, but that was a Sunday so markets weren’t open. Therefore, I’m assuming someone may have deposited their entire £20k on the Sunday but didn’t invest it until the next day.

Moreover, there will naturally be a great deal of variety in stock-picking, making a ‘typical’ ISA hard to define. Some focus only on blue-chip dividends shares, others on US growth stocks. Many ISAs are mixed, while more investors are buying passive index trackers.

But had some savvy stock-picker bought shares of Fresnillo, Airtel Africa and Rolls-Royce, they’d be patting themselves on the back because in the past year these are up 324%, 141% and 70%, respectively.

Indeed, four separate FTSE 100 shares have generated triple-digit returns in the past year, and a further 19 have delivered gains between 40% and 95%. Note, none of these numbers take dividends into account.

I should also mention that 7 April 2025 was a fantastic time to buy shares. Days before, President Trump had rocked global markets with his tariffs policy, sending most stocks down 15%-25% almost instantly.

But as Warren Buffett’s advice goes: “Be fearful when others are greedy and greedy when others are fearful“.

UK investors greedily gobbling up high-quality shares back then will likely have made solid returns since (even if a handful of popular stocks like Diageo and Taylor Wimpey haven’t done well).

A cracking result

What about an investor who put their £20k into a FTSE 100 tracker on 7 April? Well, they would have done very well too, with the index up roughly 33% since then.

Adding in the dividends, I calculate they would now have more than £27k. A cracking result, albeit a little fortuitous given the tariffs timing.

Looking ahead

I don’t envisage another 12 months like that but still see attractive opportunities in the FTSE 100 today. One is Legal & General (LSE:LGEN), which has fallen around 12.5% in the past month.

A big chunk of this came this week, as the life insurer reported results that underwhelmed the City. The problem appears to be that core operating profit of £1.62bn and a Solvency II cover ratio of 210% came in below market expectations.

However, core operating earnings per share growth of 9% was at the top of where management guided (6%–9%). And the massive £1.2bn share buyback announced was the largest in the company’s history.

Fair to say, the report was a mixed bag, and the risk now is that markets head south due to a protracted Iran conflict and constrained oil and gas supplies. The firm’s assets under management could shrink.

Yet the key attraction remains the blockbuster dividend yield, which now sits at just over 9% on a forward-looking basis. Given the level of income on offer, I think this FTSE 100 stock’s worth looking into for the 2026/27 ISA year.

The post £20,000 invested in a Stocks and Shares ISA on 7 April is now worth… appeared first on The Motley Fool UK.

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Ben McPoland has positions in Legal & General Group Plc and Rolls-Royce Plc. The Motley Fool UK has recommended Airtel Africa Plc, Diageo Plc, Fresnillo Plc, and Rolls-Royce Plc. 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.