I don’t think I’m alone in saying that my stocks portfolio is in the red for 2022. I do get the perks in my Stocks and Shares ISA regarding tax benefits, such as not having to pay capital gains tax when I sell for a profit. But for the moment, my main priority isn’t selling for profits, but rather taking action to get out of the red and back to the black. In that pursuit, here are five steps that I’m taking at the moment.
Reviewing the good and the bad
First, I want to filter the performance of my existing holdings from best to worst. There are two reasons why I should do this. To begin with, I want to review the worst-performing stocks that I have in my ISA. Are these fundamentally doomed or is it just a product of the jittery market at the moment?
For example, the tech sector has been hit hard since the start of the year. But I think that the large tech companies offer attractive long-term gems. When I look at stocks like Meta, Amazon and Alphabet, all have strong cash flow, limited debt and a good spread of revenue drivers.
I also want to review the performances to understand which areas are doing well at the moment. From there, I can move to my second point of taking advantage of what’s going well. If I own a penny stock that has outperformed, I might look to buy more penny stocks. If I bought a dividend payer that has increased the dividend per share, I can buy more similar stocks.
Putting fresh cash to work
My Stocks and Shares ISA is a home that I use for long-term investments. So my third action point is to look for new ideas that I think could do well in my target timeframe. This timeframe is important because the stock market could fall further in the short term. But if I have the view of holding in my ISA for years to come, this shouldn’t overly concern me.
For example, earlier this week I wrote about Barclays and the Scottish Mortgage Investment Trust. Both stocks are down over the past few weeks, but I think the companies look like attractive, undervalued options.
When I decide on the stocks I want to buy with some fresh money, my fourth point comes into play. I’m going to invest in chunks over the space of a few weeks (or even months). To get my ISA back to profit overall, averaging my purchases over time could really help. If the market falls over the summer, I’ll be investing at lower prices each time, giving me a better average price overall.
Long-term success for my Stocks and Shares ISA
After reviewing the best and worst performers, adding in some fresh cash and staggering fresh purchases, I think my Stocks and Shares ISA could be in a much better position going forward. Even if my portfolio doesn’t flip to being in the black quickly, I’m not going to beat myself up. The long-term trend of the market has been higher, so if I’m patient I’m confident it should get there eventually.
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.