The end of the tax year is fast approaching, which means the deadline for contributing to a Stocks and Shares ISA for the current tax year is also fast approaching.
Investors can put away £20,000 a year in an ISA wrapper. As long as the money is inside the wrapper before the end of the tax year, they can take as long as they want to invest it.
However, the allowance itself is a ‘use-it-or-lose-it’ allowance. Investors only get £20,000 a year, and any unused allocation is not rolled over.
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.
That is why I try to use as much of my allowance as possible every year. I am currently planning to invest a lump sum of £20,000, which I already own in my Stocks and Shares ISA.
There are a handful of investments on the market right now that I would like to put into my portfolio.
Stocks and Shares ISA buys
The companies I am targeting are spread across a broad range of sectors of industries. At the one end, I would like to have some exposure to the resource sector. One of the best ways to do this, in my view, is to buy the commodity trading giant Glencore.
This company has its fingers in many different pies. It trades everything from coal and oil to grain and other foodstuffs. It also owns a vast network of infrastructure assets to shift these commodities around the world.
This is not the sort of network any corporation can build overnight. It has taken the group decades. I think this is a substantial competitive advantage for the business, which is why it is my favourite commodity sector buy.
Despite its competitive advantages, the company remains exposed to the volatile commodity market. A sudden drop in prices could significantly impact its balance sheet and profit margins.
Consumer goods and technology
I would also invest some of my portfolio in consumer goods companies. I would buy Reckitt for my portfolio to play this theme. This consumer goods group is investing heavily in diversifying its product lines. While it will face challenges such as higher commodity prices due to inflation, management believes the enterprise can offset this with higher prices.
I also want some exposure to the technology sector in my ISA. I think the Scottish Mortgage Investment Trust can provide this exposure. The trust has a fantastic track record of picking and choosing companies in the tech sector. It has an experienced management team and an internationally diverse existing portfolio.
The one downside of outsourcing the investment management process is that I will not be able to choose investments. As a result, I could end up owning companies in the portfolio that I would like to avoid.
Despite this challenge, I would be happy to invest a percentage of my £20,000 Stocks and Shares ISA investment in this successful investment trust.