It’s the end of another tax year and the ISA deadline is upon us. At least it is at 23:59 on Monday, April 5th 2021. That means by the time you are reading this, you probably have a matter of hours to beat the deadline if you still have an unused portion of your £20,000 2020/21 ISA allowance, or £40,000 pensions allowance.
But even if the deadline has already passed and we’re into the new tax year before you read this, it will give you some ideas for your wrapper allowances over 2021/22. It’s always a better idea to drip-feed your investments over the whole course of the year than store up cash and then rush to invest it at the last minute.
Drip-feeding gives you the best chance of making the most of positive runs for markets throughout the year. And any negative market volatility will also be evened out. Trying to time the market is a risky business.
Whichever situation you find yourself in, just before the ISA and pensions deadline and identifying promising investments to use up remaining allowance or into the 2021/22 tax year and drip-feeding investments, ideas for what to invest in are always welcome.
This is our list of 5 ISA and pensions investment ideas. They are, it should be stressed, only ideas. The five shares represent varying risk profiles and you should judge if those fit your own personal financial circumstances and investment goals. And of course, do your own deeper research and due diligence. This list only scratches the surface of the pros and cons of each of the 5 investment ideas presented.
Individual stocks are usually riskier individual investments compared to funds because fund risk is spread across at least tens, and sometimes hundreds, of stocks. But many investors who invest a majority of their capital in funds also set aside 10% or 20% to try their hand at stock-picking. But only do so if you are prepared to put in the necessary research time, both before investing in individual stocks and periodically reassessing your investments.
This article’s sister article focuses on ideas for fund picks for the 2021/22 tax year.
In the context of these ISA and pensions investment ideas and any other investment you make, keep in mind these three golden rules:
- Don’t put all your eggs in one basket – never be over-exposed to the performance of any single investment.
- Diversify your savings across different types of investments and regions.
- Be very wary of investing in anything you don’t understand.
Five ISA share investment ideas
Our first share idea is alcoholic drinks giant Diageo, which owns brands including Guinness, Johnny Walker and Captain Morgan, among many more. Despite holding up well over the lockdown periods that have seen bars and restaurants shuttered thanks to more of its products being bought for consumption at home, especially higher-margin premium products, Diageo’s valuation is still some way of its pre-coronavirus level. And its recent 2019 high.
Diageo historically pays good dividends and is popular with income investors for that reason. Its valuation should receive a boost when the hospitality industry opens back up later this year. And the overall market trend is towards punters spending more on higher-quality alcoholic drinks.
Coca-Cola Hellenic Bottling
A bottling and distribution company is certainly not a sexy investment but with exclusive rights to bottle and sell Coca-cola products across large swathes of Europe and beyond, 28 countries across 3 continents, Coca-cola Hellenic Bottling has a captive audience for the foreseeable future.
Like Diageo, the company saw a hit to sales over 2020 and into 2021 as a result of lockdowns but should benefit from a combination of the hospitality industry spluttering back to life. A return of footfall to shops on commuter routes and international and regional travel hubs would be expected to have a similarly positive effect on sales.
The company’s share price is also still down on its pre-pandemic levels and good exposure to emerging markets should prove a long-term positive.
A British technology company, Sage’s accountancy software is now used for as much as 25% of all VAT returns made in the UK. It is the market leader by some distance as an accountancy SaaS for British SME’s and still has plenty of room to capture more.
After a period of high-growth, Sage’s rate stalled three years ago and its share price growth has followed a similar pattern. However, it has a new management team, has been upgrading its technology and now seems to have a clear vision on how it will pursue future growth.
Sage has solid profitability and a strong balance sheet. Its current share price should mean plenty of upside opportunity.
Best known for its original and biggest website Moneysupermarket, which compares pricing between comparable offers of services from utilities to bank accounts, the group also owns moneysavingexpert.com, travelsupermarket.com and broadbandchoices.co.uk.
The company lost revenues from travel insurance over the past year but the rest of the business has held up well and is high-margin. Also offers a very solid 4.4% dividend yield at the current shares price, which looks to have plenty of upside compared to historic performance.
Our final idea to beat the 2020/21 tax year deadline for ISA and pension investments, or as an early investment in 2021/22 is a stock from Europe and is listed on the Stockholm exchange. The other four are all London-listed.
In the past, many investment platforms either didn’t offer many stocks listed on European exchanges or charged prohibitively expensive transaction fees. That’s now changed and most major investment platforms offer a good range of international stocks that can be bought and sold relatively cheaply. This is great because spreading your portfolio’s international exposure is a golden rule to reducing risk and hopefully boosting long-term returns.
Our Stockholm-listed option is Assa Abloy. Not exactly a household name, the company makes what it call “access solutions”. In layman’s terms that means products such as automatic doors, electronic and smart locks and key cards of the kind most associated with hotel rooms and also increasingly popular in office buildings.
The Assa Abloy share price took a heavy hit last March when the coronavirus sell-off gripped markets but has since recovered to new record highs. That might suggest the window of opportunity has already passed but the future looks bright.
The post-pandemic world is expected to see significantly higher demand for hands-free doors in public spaces. And it is hands-free doors the company sells. Another major plus is that as much as 70% of Assa Abloy’s revenues are generated not from initial sales but from aftersales services maintaining its products. That means recurring revenues of the kind institutional investors love.
The next few years look promising for this Scandinavian stock idea.