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Here’s how I’d invest £500 per month in a Stocks and Shares ISA in 2021

Rupert Hargreaves
·3-min read
Image of person checking their shares portfolio on mobile phone and computer
Image of person checking their shares portfolio on mobile phone and computer

It’s never too late to get started with investing. I already have a Stocks and Shares ISA that I contribute to every month. But if I didn’t, I’d be looking to set one up in 2021.

There are many good reasons why it makes sense to set up an investment ISA. For example, any investments held inside a Stocks and Shares ISA don’t attract income or capital gains tax. Investing can also produce higher returns than holding money in a savings account, especially with interest rates where they are today.

These products are also relatively easy to set up. Most online stockbrokers now offer a Stocks and Shares ISA service, and they’re managed just like traditional dealing accounts.

Many also come with regular investment plans. These allow investors to set up a monthly contribution into a specific stock or fund. Once the contribution and investment are all set up, no further effort is required. All that has to be done is to ensure the money’s there for the direct debit to pick up every month.

I make full use of this automated investing in my own Stocks and Shares ISA.

Automated Stocks and Shares ISA

I have a basket of investment funds set up to buy every month. A direct debit picks up the money from my current account and deposits it into my investment account. From there, the online stockbroker manages the investments into various funds. I have little or no input in the entire process.

I have a mix of active and passive investment funds in my portfolio. Passive funds are only designed to track the market. Meanwhile, active funds employ a fund manager to select individual securities.

I reckon the blend of both provides a right balance between stock picking and tracking the market.

I own passive tracker funds in my Stocks and Shares ISA that replicate the performance of America’s leading stock index, the S&P 500 as well as the FTSE All-Share. There’s also exposure to stock markets in Japan and Europe. I believe this mix of funds provides me with a good spread of investments around the world with low costs.

Active investments

On the active side of the portfolio, I own funds managed by Fundsmith and Lindsell Train. Both of these fund management groups have a strong track record of running capital for investors, unlike so many other active managers. That’s why I decided to add them in favour of other funds. I also like their preference for buying high-quality businesses trading at attractive prices.

Another fund manager I also invest with, which doesn’t have such a substantial reputation, is Blue Whale. This firm specialises in finding undervalued growth stocks which may not be suitable for everyone. However, I think it provides some much-needed diversification to my Stocks and Shares ISA.

When combined, I believe all of these investments provide exposure to the market’s central themes, which should help me grow my nest egg over time.

The post Here’s how I’d invest £500 per month in a Stocks and Shares ISA in 2021 appeared first on The Motley Fool UK.

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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2020