The Stocks and Shares ISA deadline is fast approaching. As such, I have been looking for attractive equities to add to my portfolio.
While investors do not have to invest their ISA allowance immediately, I like to get my money working as hard as possible, as soon as possible.
That is why I am always on the lookout for new additions for my Stocks and Shares ISA, even though I do not have to spend the money inside the wrapper as soon as it is deposited.
Investing a lump sum
If I had to invest a lump sum of £7,500 today, I would spread the money across four different investments.
I do not like to have too much diversification in my portfolio, but at the same time, I realise that it is sensible to diversify my assets. That is why I would invest the £7,500 figure across four different assets. This would enable me to invest just under £1,900 in each opportunity.
I would split this money between high-yield stocks and growth investments.
The great thing about the Stocks and Shares ISA is the fact that any income or capital gains earned on assets held within one of these tax-efficient wrappers is not liable for additional tax.
As such, they are perfect instruments in which to own high growth investments and income stocks.
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.
Stocks and Shares ISA income stocks
The two income stocks I would buy for my portfolio are the insurance group Phoenix and another insurer Direct Line.
The former offers a dividend yield of around 7% at the time of writing, while the latter yields around 9%.
Both of these companies are leaders in their respective sectors.
Direct Line is a leader in the UK general insurance market and has a substantial market share in the car and home insurance. Meanwhile, Phoenix has a large share of the UK pension and life insurance management market.
This market is quite cash generative, which is why the business is able to offer investors such a healthy dividend yield.
The one risk both of these companies face is the risk of financial disruption. A sudden increase in interest rates or stock market crash could hit the value of their investment portfolios, forcing management to reduce investor payouts.
Growth stocks to buy
Alongside these income investments, I would also buy some growth stocks. Right now, two of my favourite growth stocks are the IT group Softcat and homebuilder Berkeley.
These are two different companies in two different sectors, but they are both benefiting from significant growth tailwinds in their respective markets.
The UK housing market is structurally unsupplied, suggesting that the demand for homes should only continue to increase.
At the same time, the world is becoming more digitised, meaning the demand for IT services is likely to increase gradually over the next decade.
Even though these firms have tremendous potential, they are not the only businesses in their respective sectors.
Competition is the biggest challenge they are all likely to face in the years ahead. Even after taking this risk into account, I would buy both companies for my Stocks and Shares ISA today.
The post How I’d invest £7.5k in a Stocks and Shares ISA today appeared first on The Motley Fool UK.
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Rupert Hargreaves owns Direct Line Insurance. The Motley Fool UK has recommended Softcat. 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.
