There are two I can choose from: the Stocks and Shares ISA and the Lifetime ISA. Both give me the opportunity to create wealth and shield it from the eroding effect of capital gains tax (CGT) and dividend tax.

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.

Sure, these products place more restrictions on me than a General Investment Account (GIA). There are annual allowances, and the Lifetime ISA have restrictions on when I can withdraw my funds, for instance.

However, for me, the benefits they offer me in tax savings far outweigh the drawbacks. And with the Lifetime ISA, I get a handy cash injection by receiving tax relief, too.

More pain to come?

The importance of these tax wrappers is growing, too, as successive governments try to raise funds to fix the huge hole in public finances and boost investment in public services.

Dividend allowances — the amount investors can receive in dividends before tax is paid — has plummeted to just £500 a year.

Any dividends over this amount are charged at 8.75% for basic-rate taxpayers, and 33.75% and 39.35% for higher-rate and additional-rate taxpayers, respectively.

To add further strain on investors’ returns, the first Labour Budget for 15 years last week increased “the lower rate of CGT from 10% to 18% and the higher rate from 20% to 24%.” The annual allowance is £3,000, but many investors could be in for a shock when they finally sell their shares.

The worry for individuals is that further tax raids may be on the horizon. The Institute for Fiscal Studies (IFS) reckons the government will have to raise another £9bn in taxes to avoid fresh cuts to public services.

So the first step on my investing journey would be to open a Stocks and Shares ISA and/or a Lifetime ISA.

Here’s what I’d do next

With my tax wrappers set up, I’d be ready to start filling them with shares, funds, and exchange-traded funds (ETFs).

What I buy would depend on my investment goals and my attitude to risk. These differ from person to person, so there’s no blueprint as to what my portfolio should look like

However, an important general rule is to diversify across a number of different stocks. This way, I spread risk by not putting “all my eggs in one basket.”

So if I was beginning my investing journey, I’d consider opening a position in the BlackRock Greater Europe Investment Trust (LSE: BRGE). With holdings in 35 different companies, it gives me excellent diversification straight off the bat.

Key holdings include Danish pharma giant Novo Nordisk, Dutch semiconductor manufacturer ASML, and French luxury goods maker LVMH.

As you can see from these holdings, the trust’s breakdown spreads my capital across different sectors and territories, too. This gives me exposure to different investment opportunities while reducing risk.

Unfortunately the ongoing charge here is somewhat high, at 0.98%. This can take a bigger bite out of my returns than other trusts.

But given the cheapness of European shares right now, I still think the trust could be worth it. It could deliver market-beating returns as investor appetite for stock market bargains accelerates.

The post Here’s how a Stocks and Shares ISA and Lifetime ISA could supercharge my wealth! appeared first on The Motley Fool UK.

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.

With investments diversified across various industries and regions, localised losses are minimised. And in many cases, they’re offset by gains made in other areas.

With an investment trust, it’s possible to diversify into an unknown region or unfamiliar industry. Rather than learning about an entirely new market, investors can let the trust do the hard work.

Here are three UK investment trusts investors may want to consider as a way to diversify an ISA account.

The best of the West?

Scottish Mortgage Investment Trust (LSE: SMT) is a is a popular option for investors seeking US tech stock exposure. Despite the name, it leans far more heavily towards US tech stocks than anything based in Scotland.

Some of its largest holdings include Nvidia, ASML, Amazon and Tesla. A few non-tech holdings include Moderna, Ferrari, and Ocado. In this way, it provides exposure to both the UK and US markets and diverse industries like healthcare, retail and luxury goods.

However, the price has been volatile. In 2020 it climbed 112% only to collapse by 46% in 2022, making it less attractive to risk-averse investors. Still, it’s up 315% in the past 10 years, delivering annualised gains of 15.3% per year. Its price-to-earnings (P/E) ratio is still low at 8.5, giving it room for more growth.

Eastern exposure

abrdn Asian Income Fund (LSE: AAIF) primarily invests in Asia Pacific securities with higher-than-average dividend yields. This makes a great income stock for those looking to compound returns and save for retirement. Some of the top 10 holdings include TSMC, Samsung, BHP and Rio Tinto.

While some Asian markets have struggled to recover since Covid, abrdn Asian has faired better than most, up 8% in the past year. But slow earnings have pushed its P/E ratio up to 39.4, more than double the industry average. As such, I wouldn’t expect a lot of growth from the shares.

Fortunately, it has a 5.5% dividend yield that’s well above the FTSE 100 average of 3.5%. This makes it a solid earner even if the price remains stagnant. Being an Asia-focused trust, it’s at risk from issues like the US-China trade war and a sluggish post-Covid economy.

Something closer to home

BlackRock Greater Europe Investment Trust (LSE: BRGE) focuses on stocks in Europe, including some of our best homegrown companies like RELX. This protects against issues such as the recent market slump following comments from US politicians regarding Taiwan and the export of semiconductor technology to China.

With holdings including Novo Nordisk, ASML, Ferrari and LVMH, there’s a good mix of healthcare, tech and luxury stocks. The stock price was also hit by the 2022 economic downturn but has made a spectacular recovery, climbing 43% in the past two years. And with a P/E ratio of 5.3, the shares still look cheap to me.

Naturally, the stock is at risk from any localised issues affecting the European economy. The ongoing Ukraine-Russian conflict and knock-on effects from the war in Israel are two such examples. It also comes with a higher-than-average annual charge of 0.98%, so this will eat into any returns. 

The post 3 global investment trusts for maximum diversity in a Stocks and Shares ISA appeared first on The Motley Fool UK.

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.

Naturally, choosing the right stocks isn’t that easy. Getting it right requires lots of time spent researching. And that’s where the magic of investment funds comes in. For a small fee, an investment trust is managed by professionals who have all day to research and pick the perfect mix of stocks.

With that in mind, I’ve uncovered three investment trusts from around the world that have outperformed the S&P 500 over the past five years.

The best of the best in Europe?

Up 70.3% in the past five years, Blackrock Greater Europe Investment Trust (LSE:BRGE) is only just beating the S&P 500. This is because it’s largely focused on European stocks that don’t perform quite as well as their US counterparts. However, the fact that it’s maintaining equal growth with the S&P 500 is impressive.

The fund provides exposure to the leaders of European industry like pharma giant Novo Nordisk and semiconductor manufacturer ASML, along with global luxury brands like Ferrari and LVMH.

However, some believe EU economic growth is limited by high labour costs and a very strict regulatory environment. While this helps to reduce volatility, it also results in sluggish productivity. The S&P Global Eurozone GDP forecasts were recently reduced to 1.3% in both 2025 and 2026, down from 1.5% and 1.4%, respectively.

The world’s largest market

Up 82.9% in the past five years, India Capital Growth Fund (LSE:IGC) is doing slightly better than the S&P 500. As the country with the world’s largest population, India is an often-overlooked opportunity for UK investors. Yet its stock market has outperformed the majority of developed and emerging global markets over the past two decades.

The fund provides exposure to the nation’s leading businesses, although many are largely unheard of outside of the country. It’s weighted towards finance (22%), consumer discretionary (21%), industrials (14%) and materials (14%). 

However, with no diversification outside of the country, it would be heavily affected by a slump in the local economy. It’s been doing well so far but there’s no guarantee the economy will continue to grow. The country’s top talent tends to migrate abroad, leaving local businesses struggling to maintain a skilled workforce.

The booming US tech industry

Up 106.2% in the past five years, Polar Capital Technology Trust (LSE:PCT) is far outperforming the S&P 500. Most likely this is because it’s focused almost exclusively on the top-performing tech stocks in the S&P 500 like Nvidia, Apple and Microsoft. As such, it provides exposure to all the best bits of the index without the lower-end stocks bringing down the overall average.

At the same time, it lacks the kind of diversification that’s critical during a market slump. Tech stocks tend to fall in unison when things go south, so this fund is prone to high volatility and sudden drops. I myself would balance this fund in an ISA along with other funds to avoid this risk.

The post 3 market-beating international investment funds for a Stocks and Shares ISA appeared first on The Motley Fool UK.

Here, I’m going to highlight three investment trusts that have delivered great returns in recent years. I think they could be worth considering as part of a diversified ISA portfolio.

Easy access to tech stocks

First up is the Allianz Technology Trust (LSE: ATT), a niche trust that’s focused on technology stocks.

It’s managed by the highly experienced AllianzGI Global Technology team, which is based near Silicon Valley (where many of the world’s top tech companies are located).

One reason I like this trust is that it provides exposure to a broad mix of tech businesses. Not only does it hold mega-cap tech giants such as Microsoft and Nvidia but it also holds less well known companies such as cybersecurity specialist CrowdStrike and chip manufacturing equipment maker Lam Research.

While this trust has delivered outstanding long-term returns (for the five-year period to the end of January its share price rose 135%), it does carry a higher level of risk than a broad global equity trust. If tech stocks experience a short-term pullback (and they often do), it’s likely to underperform.

Taking a long-term view however, I think it’s likely to do well. Looking ahead, the world is only going to become more digital.

Beating the S&P 500

Next, we have JPMorgan American (LSE: JAM). This is a US equity-focused trust managed by experts at financial services powerhouse JPMorgan.

It aims to generate capital growth by investing in high-quality businesses with good management and strong balance sheets.

What I like about this trust is that it has exposure to both growth and value stocks. This means it has the potential to outperform in different market conditions.

Performance has certainly been strong lately. For the five-year period to the end of January, the trust’s share price rose 128% – miles ahead of the S&P 500 index’s return of 99%.

Of course, the risk here is that the US market – which has been strong in recent years – could experience a period of underperformance. This is something to consider.

In the long run however, I think the US market is likely to keep delivering strong returns. After all, it’s currently home to many of the world’s most dominant companies.

Europe’s best companies

Finally, we have the BlackRock Greater Europe Investment Trust (LSE: BRGE). This is another growth focused product.

However, its focus is on Europe (including the UK). European equities are often ignored by UK investors. And I think that’s a shame. While the region may not have the same track record as the US, it is home to some fantastic companies including the likes of diabetes drug specialist Novo Nordisk, semiconductor manufacturing equipment maker ASML, and luxury goods giant LVMH (all of which are in this trust).

One downside to this product is that its ongoing charges are 0.98% a year. That’s quite a high fee for an investment trust.

However, given that the trust has returned about 100% over the last five years (to 28 February), versus around 62% for its benchmark (the FTSE World Europe ex UK Index), I can justify the charges here.

The post 3 magnificent investment trusts to consider for a Stocks and Shares ISA in 2024 appeared first on The Motley Fool UK.