The new financial year begins on 6 April. That means that I have until the end of 5 April to use my remaining ISA allowance. I have £750 left in my Stocks & Shares ISA. Here’s how I plan to invest it before the deadline.
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.
Spread the risk
First of all, I’m planning on investing in more than one stock with my remaining allowance. In order to spread my risk out, I’m looking to buy shares in companies with different characteristics. This might involve buying businesses of varying sizes, that are from different sectors, or that are based in different parts of the world.
In doing so, I’m hoping to protect from my portfolio from macroeconomic headwinds that might affect specific types of businesses. For example, I think that rising interest rates might negatively affect small-cap growth stocks. So I don’t want to put all of my £750 into unprofitable tech companies. But I’m happy to commit some of my capital to a promising business in that sector.
Buy steadily
Second, I intend to spread my buying out between now and 5 April. Rather than trying to invest the full £750 at the very best time, I intend to commit around £35 each day. Since I don’t think that I can identify the best moment before the ISA deadline, my plan is to invest at regular intervals, thereby achieving best average price overall.
Importantly, buying steadily doesn’t mean that I’m going to buy a stock regardless of the price it trades at. My plan to avoid overpaying for an investment is to stick to stocks that I think are trading at a discount to their intrinsic value. This means that even if I purchase shares in a company one day at a slightly higher price than I paid before, I can still be content that the price I’m paying is a good one.
The stocks I’m buying
With this in mind, here are the stocks I’m looking at buying.
First up is Verizon. I already own shares of Verizon in my portfolio. It’s a large-cap US stock that typically trades at a low price-to-earnings (P/E) multiple.
Second is Howden Joinery Group. This stock is a consumer cyclical based in the UK with a much smaller market cap. I’ve been looking for an opportunity to add shares to my portfolio and I think there’s an opportunity before the ISA deadline.
Third is StoneCo. As with Verizon, I already own some shares, but I’d like to add more to my portfolio. The company is a payment processing company based in Brazil with a relatively small market cap. The company has had some issues, but I think that those are largely behind it, so there’s an investment opportunity for me here.
My plan is to invest £250 in each stock, buying a little each day before the ISA deadline.