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How I’d invest my Stocks and Shares ISA allocation for 2021/22

Jonathan Smith
·3-min read
happy senior couple using a laptop in their living room to look at their financial budgets
happy senior couple using a laptop in their living room to look at their financial budgets

I’ve written before about stocks I’d buy before the Stocks and Shares ISA allowance deadline next month. If I’ve already used my allowance, I can start to look ahead to the 2021/22 allocation. It might sound far away, but April 5 will be here in less than three weeks. I’ll have the ability to invest £20,000 that can be insulated from capital gains tax, and there are plenty of opportunities to think about.

There’s no rush

The first point I’m going to make sure about is that I don’t invest the full £20,000 in one go. This might sound obvious, as I don’t have that kind of spare cash lying around anyway. But even if I did, I wouldn’t go all in straight away. Instead, I’d prefer to drip-feed money into stocks on a monthly basis. The benefit of having the Stocks and Shares ISA doesn’t diminish over time if I don’t invest all in one go, so I’ve got nothing to worry about here.

Investing between £1k and 2k a month into my ISA allows me to benefit from events as they happen over the next year. I don’t know whether this will be good or bad, but I’d prefer to give myself the option. For example, over the last year I’ve seen a stock market crash and historically high volatility. Even though I can’t time the market, splitting up my investments over time allows me average my buying levels, often improving my overall price.

Mixing up my stock picks

I’m also going to split up my Stocks and Shares ISA allocation for the coming year both with the type of stock and the sector of the company.

Let’s take the type of stock first. Personally, I’d normally allocate 20% to 30% to income paying stocks, and the rest to stocks for capital growth. Given that companies are starting to return to paying dividends, and the lack of return I’m getting via cash, I’d increase it for this year. I’m looking at 40% in dividend shares and 60% in capital growth stocks.

The other split I’m looking at is the type of companies I buy. I’m fortunate that there aren’t many restrictions on what I can buy within my Stocks and Shares ISA. So I’d look to mix up my options with mostly large-cap FTSE 100 stocks, but also some smaller listed companies. Within this, I’d look to buy some utility companies in the FTSE 100 (that double up as income stocks).

For growth stocks, I’d look to allocate a high percentage towards travel and tourism for the fresh ISA money. This is high-risk, but I think that sector could really bounce back strongly over the next 12 months. Aside from this, I’d look for value in small-cap stocks that have international exposure. I don’t think being overly exposed just to domestic companies makes sense right now.

Getting set for my Stocks and Shares allocation

In reality, the points mentioned above are just the start when thinking about allocating my funds for the 2021/22 Stocks and Shares ISA. I now need to start thinking about specific companies that I need to put on my watch list!

The post How I’d invest my Stocks and Shares ISA allocation for 2021/22 appeared first on The Motley Fool UK.

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jonathansmith1 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.

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