If an investor puts £500 a month into a Stocks and Dividends ISA, here’s what they could have in 8 years.
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Many investors like the idea of compounding profits over the long term. But it can be difficult to stick to a regular monthly investment plan. In fact, the two go hand in hand. Using a Shares and Shares ISA and adopting a sound strategy can enable someone to speed up the process. Here is the way.
Building a strong portfolio
The advantage of using an ISA is that the investment portfolio can grow quickly. Any gains received are not subject to dividend tax, meaning the full amount can be enjoyed or reinvested. In addition, when you sell growing stock for a profit, there is no capital gains tax.
Please note that tax treatment depends on the individual circumstances of each client and may change in the future. The content of this article is provided for informational purposes only. It is not intended to be, and does not constitute, any form of tax advice. Students are responsible for conducting their own due diligence and obtaining professional advice before making any investment decisions.
Of course, these benefits only work if the portfolio is well positioned. So, the next important point is how to build a strong ISA. To do this, the investor needs to diversify his risk. This can be done in many ways.
Risk needs to be spread across sectors, so that means having companies from consumer staples to technology. It’s also about geography, having companies that have exposure not just in the UK but around the world. Finally, not just putting all the money in a few names, but instead of a broad portfolio, it can take a step to reduce the risk of concentration related to one or two stocks.
Show me the money
Now let’s talk numbers. Putting away £500 a month won’t work for everyone, but let’s assume this is the figure. I will also assume a 6% annual growth rate for the portfolio, which I believe is appropriate over time. At the end of year eight, the portfolio would be worth £62.2k.
This is just a guess based on my thinking. A higher or lower growth rate may be achieved by practice, which may give the investor a larger or smaller pot size.
You want nuggets
One stock that I believe fits the bill Blackrock World Mining Trust (LSE:BRWM), is up 73% over the past year. Over the broader five-year period, the stock is up 58%, outpacing the annual gain of 6%.
The investment trust buys mining and steel companies and is actively managed BlackRock’environmental resources team. Among the top 10 stocks out there Glencore, Anglo Americanagain Rio Tinto.
Given the stock rally in 2025, the trust is doing very well. I think the movement of precious metals will continue for years to come. Base metals such as copper and nickel are becoming increasingly important in global industrialization, and the transition to clean energy products (such as EVs).
Exposure to gold is also important. I think we’re in for another rocky year in terms of geopolitical uncertainty and macroeconomic uncertainty. So owning stocks that directly benefit from rising gold prices (people buy them as a safe haven) should work for confidence well.
In terms of risks, commodity stocks are known to be volatile. Trust price movements in the past have also been volatile. Therefore, investors should be aware that they may experience significant changes before committing.
However despite these concerns, I think it is a good stock to consider for an ISA as part of a long-term growth strategy.
