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UK shares to buy now: how I’d invest my first £10,000

·3-min read
One English pound placed on a graph to represent an economic down turn

Everyone is at a different stage of their share-buying journey. I’m not a novice, but today I’m looking at which UK shares I’d buy now if I was.

Let’s say I’m investing my first £10,000. That’s not a small amount and I could buy many different stocks. But dealing fees mean buying that might not be cost-effective. Instead, I would start by investing £5,000 in a diversified fund within a Stocks and Shares ISA.

Fund time

It would have to be a well-managed fund, and for my first investment, I’d prefer a global approach. Although the UK has some phenomenal shares, some of the largest and fastest-growing companies are found in the US.

I’d like the fund to be concentrated and want the fund managers to have conviction in their stock picks. So rather than holding hundreds of companies, I’d like to see around 30. Bear in mind though, a few wrong selections could have a greater impact on the fund’s overall performance.

There’s one fund that springs to mind that ticks all of those boxes: Fundsmith Equity. Founded and run by renowned fund manager Terry Smith, Fundsmith has returned an impressive 19% per year over the past 10 years.

More UK shares to buy now

I’d split the remaining £5,000 between several UK shares. As a first-timer, I’d stick to established-but-growing companies that I feel could thrive for many years. My five picks are:

  • Fashion retailer Next

  • Fantasy miniatures expert Games Workshop

  • Homewares retailer Dunelm

  • IT expert Softcat

  • Sofa seller SCS

My Top 5

I’d consider clothing-to-homewares retailer Next to be one of the highest quality UK shares to buy now. It’s incredibly well run, respected CEO Lord Wolfson has been running the company for 20 years, and it has an excellent track record of earnings growth and cash generation. That said, the industry is competitive and online-only retailers like Boohoo are keeping Next on its toes.

Games Workshop is another UK share with superb management, I feel. They take a long-term view when running the business. I like that this fantasy miniatures company generates high returns and profit margins. It could struggle if new users disengage from the hobby post-pandemic, however. That said, it owns much intellectual property and I’m looking forward to seeing more games and movies based on characters from its universe.

Dunelm is a leading homewares retailer that I’d consider. It’s been seeing strong sales growth recently in what it describes as a “buoyant homewares market”. Despite some uncertainty in the short-term economic outlook, I’m confident pent-up demand from customers could continue for some time.

Softcat is an IT services company that’s proud of its strong customer service. It manages to consistently generate high returns, recent earnings have been strong and the company is confident in its outlook. Although the macroeconomic outlook is uncertain, I like that it’s successfully finding new customers and selling more to existing clients.

Finally, sofa seller SCS is one of my top UK shares to buy now. I like that it has a solid balance sheet and plenty of cash. Recent strong trading has been encouraging with more time spent at home having persuaded many people to invest in some new furniture. That said, this could only be temporary. Its share price is up by 116% over the past year, yet I think there’s still further room for growth.

The post UK shares to buy now: how I’d invest my first £10,000 appeared first on The Motley Fool UK.

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Harshil Patel owns shares of Games Workshop and boohoo group, and units in Fundsmith Equity. The Motley Fool UK owns shares of and has recommended Games Workshop and Next. The Motley Fool UK has recommended Softcat and boohoo group. 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 2021

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