Business & Investment

Here’s how I invest £ 250 a month in stocks and stock ISA in 2021

With a monthly investment of £ 250 Stocks and stocks ISA Will you grow up? Barclays We have seen the UK stock market dating back over a century. And they found an average annual return of 4.9% over inflation.

At that rate, including 1.8% inflation, £ 250 a month will grow to over £ 42,000 over a 10-year period. And in over 20 years, it will reach almost £ 125,000. That would certainly be enough incentive for me to get started. It’s not difficult to open a stock and stock ISA account, and you don’t transfer cash to it. When I first started investing, my first question was to be more annoying. The problem is that I faced a competing purpose.

One was to diversify the investment to achieve some degree of diversification. But that means splitting the cash into smaller pots and reducing the purchase of each stock. And that increases the cost, which is very bad. For example, a fixed fee of £ 10 is sufficient for an investment of £ 5,000. But it instantly saves £ 250 by 4%. And that’s not a good way to start a stock and stock ISA.

Purchase of stocks and stock ISA

So, for £ 250 a month, accumulate until you reach £ 1,000 before investing that amount. That £ 10 bill drops to 1%, making it easier to manage. But that also means I have to wait four months to make my first investment. I was enthusiastic when I started and wanted to check the stock price as soon as possible, but I was urged to quit.

Even purchasing every four months means that diversification will take time. I’ve never been good at diversifying, and I’ve always had a hard time deciding on more than a handful of shares I want to own. But starting now, with the new Stocks and Shares ISA in 2021, I’ll do something else. I start with an investment trust.

When I buy shares in an investment trust, I own some of the assets in the trust. And trusts usually invest their assets in a wide range of investments. For example, I am currently London City Investment TrustInvest in the top range FTSE 100 stock. As a result, you can instantly diversify with a single investment without having to pay multiple fees.

Minimize risk

Well, there are still risks here, and a single investment can get worse. Ask someone who lost a packet after investing in a Neil Woodford investment trust a few years ago.So to minimize my risk, I choose investment trusts on the list of investment firms associations Dividend hero.. These are investment trusts that have paid dividends annually for at least 20 years. The City of London has been in control for 54 consecutive years.

So I think it’s what I’m trying to do to launch a new stock and stock ISA in 2021. For every £ 1,000 I bought one of the investment trusts from that dividend hero list and ended the year with four. And next year, I’ll probably start adding shares in individual companies.

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Alan Oscroft I own a stake in the City of London Investment Trust. Motley Fool UK recommends Barclays. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, by considering different insights, Better investors than us.

Here’s how I invest £ 250 a month in stocks and stock ISA in 2021 Here’s how I invest £ 250 a month in stocks and stock ISA in 2021

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