How I’d invest £20k in a Stocks and Shares ISA to try and double my money

Our writer considers how best to invest a Stocks and Shares ISA to try to double his money over the coming years.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Happy young plus size woman sitting at kitchen table and watching tv series on tablet computer

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Every year I try to maximise my Stocks and Shares ISA. That’s because I want to make my money work harder so I don’t have to.

Investing in shares can be lucrative, but there are risks too. Ideally, I’d like to maximise my returns and minimise my risk. Here’s how I’d get started.

Doubling a Stocks and Shares ISA

First, the simplest option could be for me to buy a FTSE 100 tracker fund. This would track the performance of the UK’s leading stock index.

Should you invest £1,000 in Games Workshop right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Games Workshop made the list?

See the 6 stocks

The long-term performance for this large-cap index looks promising. On average, it has gained by 8% a year.

Note that if I achieve the same performance over the coming decade (and that’s not guaranteed), I’d double my money in nine years.

That’s not too bad, but what if I want to double my money in five years instead? To do that, I’d need to earn 15% a year. But just how likely is that?

It’s interesting to see that 25% of FTSE 100 shares achieved this return over the past decade, so it’s certainly not impossible.

Winning shares

For the best chance of finding these winners, I’d look for certain characteristics. First, I think smaller companies stand a better chance of achieving double-digit share price returns. That’s because they can often grow faster than larger and more mature businesses.

Many of the biggest winners from the FTSE 100 may have spent time as mid-cap companies in the FTSE 250 index, so I’d look there too.

I’d look for businesses that are experiencing earnings growth. I want to see companies that are steadily growing both sales and profits over several years.

But I also want them to make efficient use of their capital. That’s why I’d prefer companies that demonstrate double-digit return on capital employed (ROCE). This is a good measure of business quality, in my opinion.

Right now, a few shares stand out to me. These include Softcat, Games Workshop, Dunelm, Safestore Holdings and Greggs. I’d happily buy all of these shares for my Stocks and Shares ISA.

Growth with technology shares

To target 15%, I’d also look abroad to capture the largest technology companies. The past decade has been particularly kind to tech shares. In fact, the Nasdaq 100 achieved an annual return of 17%.

A word of warning, however. This tech-filled index might not perform as well over the coming decade. The US federal reserve has embarked on a journey of higher interest rates to tackle surging inflation. That’s typically not the best environment for high-growth shares.

That said, it includes many fast-growing and innovative companies like Tesla and Nvidia. It also includes the world’s technology behemoths that are superb, high-quality businesses. These include Microsoft, Apple, Amazon and Alphabet.

Overall, were I investing £20,000 in my Stocks and Shares ISA today, I’d split it into four parts. I’d invest £3,000 in a FTSE 100 index tracker, £3,000 in a FTSE 250 index tracker, £10,000 into my selected top picks, and the remaining £4,000 in a Nasdaq 100 index tracker. That may make a 15% target harder to achieve, but it should spread my risk sufficiently and avoid me putting all my eggs in one basket.

But there are other promising opportunities in the stock market right now. In fact, here are:

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Harshil Patel has positions in Amazon, Apple, Microsoft, and Tesla. The Motley Fool UK has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Games Workshop, Microsoft, Safestore Holdings, Softcat, and Tesla. 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.

More on Investing Articles

Passive income text with pin graph chart on business table
Investing Articles

£11,000 in savings? Here’s how investors could use that to target an annual passive income of £12,892 over time!

Money put into high-dividend-paying shares with the returns used to buy more of them can generate potentially life-changing passive income.

Read more »

Investing Articles

Down 10% and 15% in a month! 2 cheap shares investors might consider buying with £2k today

It's always a good time to buy cheap shares! Harvey Jones picks out two FTSE 100 companies that have fallen…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

Here’s how £350 a month could put a stock market beginner on the road to wealth!

Interested in getting a foot on the stock market ladder? Our writer breaks down the facts and figures so aspiring…

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

The 5 most popular FTSE 100 shares on the AJ Bell trading platform

Our writer’s been looking at the FTSE 100’s most bought stocks on one particular investment platform. And he’s heartened by…

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

Why isn’t everyone aiming for £37m in stocks and shares?

It’s never too early to start investing in stocks and shares through a SIPP or ISA. Dr James Fox explains…

Read more »

Happy couple showing relief at news
Investing Articles

Here’s how much an investor needs in an ISA to generate a £27,500 second income

Imagine creating a second income that's the equivalent of the average post-tax salary in the UK. Dr James Fox explains…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Here’s the Tesco share price forecast for the next 12 months!

Tesco's valuation has dropped to multi-year lows after recent share price weakness. Is now the time to consider buying the…

Read more »

Illustration of flames over a black background
Investing Articles

Just released: March’s higher-risk, high-reward stock recommendation [PREMIUM PICKS]

Fire ideas will tend to be more adventurous and are designed for investors who can stomach a bit more volatility.

Read more »