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Maybe I’m too nerdy, but I get excited when I see a stock I bought appreciate. Watching the stock price rise in the short term can sometimes leave me staring at my screen too much throughout the day.
However, there is another way I can invest that is not nearly as exciting, but will ultimately make me a considerable amount of money through my Stocks and Stocks ISA.
idea details
I mean the strategy of dripping money into the stock market over time. Some people do this inadvertently, for example through a pension contribution. However, by actively taking this into my own hands with my Stocks and Shares ISA, I am able to have full control of not only as I invest a lot, but that I invest in
Since I am paid monthly, it makes sense for me to allocate some funds on this basis. In terms of the specific type of stocks you select, I’m not going to get too bogged down. Growth stocks, value plays, dividend gems, and other types of stocks may be included in my ISA.
The reason I’m not focusing on one particular area is because my focus for this strategy is timing. My priority is to make sure that each month I invest a specific amount of money in the market. I want to do this for years and years to come.
Over time, I expect dividend stocks to continue to pay me income. I expect value stocks to rise and growth stocks to rally. By focusing on time, I expect performance on all fronts.
because it’s boring
The time factor is why some would call this a boring strategy! True, I will not get rich overnight with this idea. But it should give me a better chance of getting richer in the end.
On a historical basis, the long-term trend of the stock market has been up. However, when I get closer to a few month stretch, it becomes much more difficult to tell whether the market will go higher or lower. That’s why I say that if I invest and hold (and add!) to my portfolio for a long time, the chances of earning are higher.
The other element of why it can be boring is actually something that I take as a positive. This strategy is quite passive in nature. Sure, I need to invest every month. I also need to keep an eye on my portfolio performance. However, when I compare this effort to people who trade every day, it is much more passive. This allows me to spend time on other activities.
Potential Earnings with the ISA
The reason I will use this idea in conjunction with my ISA is for the tax benefits. Within my ISA, I do not pay capital gains or dividend taxes. This allows me to capitalize my income and earnings, without having to take anything out for the tax collector.
To illustrate how I could get richer, I’m going to assume that I can invest £450 a month, with an average annual return of 6%. After 20 years my mutual fund would be worth just over £200,000.
Please note that tax treatment depends on each client’s individual circumstances and may be subject to change in the future. The content of this article is provided for informational purposes only. It is not intended to be, nor does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and obtaining professional advice before making any investment decisions.
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