Becoming an ISA millionaire is a goal that many investors aim to achieve. While it is clearly likely to take a prolonged period to get there, there are a number of steps that could improve an investor’s chances of reaching seven-figure ISA status.
With that in mind, here are three moves that may be worth making today. They could lead to an improved risk/reward ratio within a portfolio, while providing increased scope for capital growth over the long run.
UK value opportunities
While the prospects for the UK economy may be highly uncertain at the present time, there are a number of UK-focused stocks that offer wide margins of safety. Indeed, it appears as though investors have factored in significant difficulties for the UK economy, with the share prices of a variety of retailers, banks and other companies that operate in the UK still trading well below their 2018 highs.
While such companies could experience difficulties in the near term from weak consumer and business confidence, in the long run, their low valuations may provide scope for improving capital returns. As a result, now could be a good time to buy a range of companies that operate predominantly in the UK.
Property stocks
While buy-to-let was previously viewed as a worthwhile investment due to its track record of growth, real estate investment trusts (REITs) could be a more realistic means of gaining exposure to property for most investors these days. They can be purchased with modest amounts of capital, offer a high degree of diversification and do not carry the high risk that often comes with borrowing to fund a buy-to-let.
Since a number of commercial property-focused REITs are trading well below net asset value, they could offer excellent value for money. In some cases, they have yields that are well in excess of the FTSE 100’s dividend yield of 4.5%. As such, their total returns over the long run could prove to be highly attractive, with them offering a mix of income and capital growth potential.
Regional focus
While the UK economy may offer value opportunities, having exposure to fast-growing economies such as India and China could enhance the growth prospects of an investor’s portfolio.
Both countries are expected to deliver growth that is significantly higher than that of any developed economy over the next few years, while rising wages mean that a wide range of consumer goods and services may become increasingly in-demand over the long run. This could create growth opportunities for a wide range of FTSE 350 companies that operate across the emerging world.
Therefore, having exposure to the emerging world through companies that are listed in the UK but which operate in a variety of economies could be a shrewd move. While such economies may experience high volatility, their reward potential appears to be high as they become increasingly consumer-focused.