My Stocks and Shares ISA is a vehicle created by the government that allows me to invest tax-free. More specifically, it allows me to invest £20,000 within the ISA each year, with the proceeds of the investments not being liable for capital gains tax or dividend tax. This provides me with a unique advantage over time when I’m aiming to double my money. Here’s how.
Noting the timeframes involved
Firstly, I need to acknowledge that this process isn’t some kind of get-rich-quick scheme. I do believe that I can achieve 100% returns on stocks, but over a period of time. Given the £20,000 limit to my Stocks and Shares ISA each year, it’ll also take several years before any kind of return will amount to a significant profit. For example, cases of people becoming ISA millionaires highlight that it often can take a couple of decades before this comes a possibility.
Yet I don’t see being patient as a bad thing. Particularly when it comes to the stock market, it has a funny way of penalising those that try to push too hard for a quick buck.
Picking long-term gems
The next step I’d take is to pick the stocks I want to include in the Stocks and Shares ISA. Given my aim to double my money in coming years, I want to pick stocks with long-term potential.
Some sectors that I think tick this box include healthcare, renewable energy and technology. These are broad areas, and I have my own favourite ideas within each.
For example, I like Contour Global, an energy stock in the FTSE 250. In the 2021 results, it showed that thermal energy is still the majority load for the business at 57%. However, renewable energy sourcing is now up to 29%. With the company making a push in the renewable energy space, I think it could perform well in years to come.
In the technology space, there has been a significant correction lower in some large names in recent weeks. The Amazon share price is down 18% in just the past month. Given that I think there’s long-term value in a company this size, I’d consider buying the shares now for my Stocks and Shares ISA. I’m conscious of some tech valuations, but the beauty of my ISA is that I can always invest in stages over a period of months or years. In this way, I can get an average price via buying on multiple occasions.
Perks of using the Stocks and Shares ISA
The final part of how I’d aim to double my money comes from the Stocks and Shares ISA benefit. Contour Global pays a generous dividend. I won’t have to pay dividend tax, enabling me to reinvest more of it back in the shares. With Amazon, if I decide to sell some shares for a profit, I’ll be able to keep 100% of this, and not lose a chunk to tax.
In this regard, it makes it easier for me to double my money because I’m able to retain more of the dividend and profit over time.
Please note that tax treatment depends on your individual circumstances and may be subject to change in the future. The content in this article is provided for information purposes only. It is not intended to be, nor 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.